Netflix's 'The Crown'. The streaming service faces a challenge from the wealth of options opening up for their viewers. Photo / Supplied
Netflix's 'The Crown'. The streaming service faces a challenge from the wealth of options opening up for their viewers. Photo / Supplied
There are tremors rippling through the world of video on demand. Streaming giant Netflix revealed last week that it lost 130,000 US subscribers in the previous quarter; its shares have since fallen almost 15 per cent. Its slate of competitors is rapidly expanding.
Disney+ and the BBC-ITV joint service BritBoxare set to launch this year, with others to follow. Their owners are clawing back their most popular content, with Netflix set to lose both The Office and Friends by 2021.
Expenditure on original content, already in the billions of dollars, will only grow as Netflix and others battle to keep customers paying their monthly dues.
For traditional media companies, the opportunity of connecting directly with the global mass of binge watchers seems too good to pass up. Netflix, the dominant service, faces a serious challenge from the wealth of options now opening up for their viewers. It is not the only service that will struggle, however.
Analyst reports suggest that while significant numbers of customers may pay for two video streaming services, the proportion falls considerably for three or more. As the contest heats up, co-operation could be the only way for many services to survive.
Netflix's triumph in France, where it turfed out the established local competitor Canal Play, is evidence that consumers are willing to switch subscriptions if new arrivals offer sufficiently appealing content.
Disney has one of the best chances to make a bid for the crown. Its mixture of family-friendly movies and blockbuster science-fiction series have a strong appeal across age groups, thanks to a string of purchases including Marvel and Star Wars. The company owns the two highest-grossing movies in box office history and has shown a long-term vision for expanding its most popular franchises.
Marvel Studios' Thor: Ragnarok. Disney has one of the best chances to make a bid for Netflix's crown. Photo / Supplied
Many efforts are likely to flounder, however. The closure of Yahoo View and NBC's comedy-focused Seeso show that success in the sector is not guaranteed. Original content alone is not enough to keep subscribers coming: it has to be of sufficient quality. That brings with it threats to the diversity of material. The glut of high fantasy epics in production, on the tail of the runaway success of Game of Thrones, points to a focus on emulating tried and tested formulas. Executives may balk at supporting more avant-garde projects which risk failing to appeal to mass audiences.
Partnerships between media companies would be a more efficient use of resources. This approach is being trialled on a small scale with BritBox, a joint venture between ITV and the BBC combining a wide back catalogue with new releases. Apple is experimenting with Channels, allowing access to third-party material from HBO, Showtime and others through its TV app.
Traditional television groups have already moved into the space, with US cable operator Comcast offering Netflix and Amazon Prime alongside traditional channels. Streaming services undercut clunky and expensive television bundles. But the number of new entrants to the streaming market may force such services to rethink the merits of being bundled with traditional TV.
Customers' time is finite, with free distractions such as YouTube and Fortnite competing for attention along with nascent forms of entertainment such as augmented and virtual reality. Customers' money is limited, too; beyond video streaming, music, video games and news media are all increasingly subscription-based.
Media groups should realise that their slice of the video-on-demand pie may be smaller, and more expensive, than they think. Heavy casualties can be expected in the streaming wars to come.
