From Disney+, to Marvel leaving Netflix, to Hulu expanding and going global - not to mention Apple’s upcoming ‘Netflix killer’, or even WarnerMedia or NBCUniversal’s future standalone services, the big question is, will these new unbundled customer-direct platforms beat Netflix and Amazon Video at their own game, or ultimately present a loss leader for these brands?
There’s a new band in town. After years of Netflix domination in the world of online and IP-delivered paid TV, we’re set to see all of the major gunslingers swing into sight. The word everyone’s whispering is unbundling, with broadcasters and brands launching their own direct-to-consumer VOD offerings. And in many ways, they’re really just falling into line with consumer demand – responding to the consumer trends around binge watching, greater choice and anywhere, anytime multi-platform viewing.
From Disney+, to Marvel leaving Netflix, to Hulu expanding and going global - not to mention Apple’s upcoming ‘Netflix killer’, or even WarnerMedia or NBCUniversal’s future standalone services, the big question is, will these new unbundled customer-direct platforms beat Netflix and Amazon Video at their own game, or ultimately present a loss leader for these brands?
Longer term, what will be the overall effect from a consumer perspective – greater choice, or simply more fragmentation, and back to the need for someone to package services together. Much has been made of the ‘cord cutting’ phenomenon, particularly in the US – but is so much cutting (and splitting) ultimately set to take us in a circle, from content and provider overload and back again?
Shifting Platforms, Switching Priorities?
According to IABM, the assembled forces of Pixar, Marvel, Star Wars, Fox, ESPN and Discovery, also known as Disney+ - set to launch on 12 November - is predicted to reach almost ten million subscribers in 2020. That would equal around 5% of Netflix’s customer base. But the argument this could put a significant dent in the latter’s business, rests on the assumption that these are either/or subscribers, not people happy to sign up to both.
As the Hollywood Reporter’s Tim Goodman has argued, it may just be that many consumers will be fully prepared to pay for two or three of these services. As he goes on to suggest, what may be at stake here – especially in the US - is the unbundling process actually speeding up cord cutting, rather than a case of the direct-to-consumer services cannibalising each other.
Cupertino Content
Apple TV+ is launching even sooner than Disney on 1 November, a service consistent with a wider shift in Cupertino towards subscriptions, including music and news too, and diversification away from softening hardware sales.
Meanwhile Netflix spent a whopping £12bn on content in 2018, and is set to increase its investment to $15bn in 2019. And according to IABM’s figures, Hulu’s content investment versus its subscriber base may be even higher. Little wonder then that it is looking to expand internationally, where Netflix has already seen so much success.
But the overall effect of so much increased demand for original programming, as in any market, can only mean higher production costs. Another point to consider is how many of the most popular programmes on Netflix may well be owned by some of its new direct competitors. And while an unspoken consumer USP for the streaming giant (especially in the US) has always been its lack of ads, cash rights issues and content production costs have the marketing industry continually speculating that a Hulu-style, cheaper ad-supported subscription option is just around the corner.
All in all, following what streaming incumbents do next (as well as its newest entrants) in the coming months will be as fascinating as even the best new 80s-set drama series.
The VOD Everywhere Consumer
Will broadcaster D2C offerings stand toe to toe with – or even top Netflix and Amazon Video? Moreover, might this all even mark a new period in TV history, where demographics or age groups align more tightly around specific broadcast brands in their new online guise? Or, once again, will this fragmentation take us full circle - from cord cutting, to individual apps, back to group subscriptions again - and if so, who will be the new gatekeepers?
Given all our new-found choice, we’re unlikely to see a return to the old problem of being held hostage by cable tv providers, selling us bundled package deals to extort a huge sum. But since VOD is an OTT service, it is certainly possible telecom and internet companies could profit by offering VOD packages that are more competitive, covering a range of different services.
What may also be quite likely is a new trend of ‘part-time’ or more promiscuous subscribers, who sign up only for example when there is a new medieval-set series featuring dragons, watch, then churn. Lower loyalty, the cousin of consumer choice, could also entail higher marketing investment in future to grow, or perhaps even just to retain the same number of subscribers.
All in all, the implications are pretty clear. Even if in future, as some have argued, finding your favourite programme might not be. The streaming gunfight is upon us – though, to be fair, this town may be big enough for more than one sheriff.
If we all want to be as fast on the draw as Netflix, broadcasters still need to become a lot more efficient, in new ways – to work smarter than ever before. For those not fully committed, or aware of the scale of task and long-term commitment, the implications are clear.
This is not just any old duel – what happens next could decide the future of TV and film for years to come.