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Neil Peplow's Industry News Round-Up | 8–14 October 2018

A still from Netflix's Spanish series 'Cable Girls' where three women are using a switchboard to connect calls.
Netflix's Spanish series 'Cable Girls' | Photo courtesy of Hollywood Reporter

As ever there has been a lot of activity in the video platform sector over the last couple of weeks so I’m going to focus on that this week. Firstly, the European Parliament has passed a law which imposes a 30% local content quota on streaming platforms including Netflix, Facebook, YouTube and local SVODs. This may lead to a spending spree on local content and an increase in co-productions. The big question is will Australia follow?

In other news, there is a late entrant in the streaming race with Reddit now gaining traction with audiences. The internet’s favourite discussion board for diverse communities has surpassed 1 billion views a month – however, to put that into perspective Gangnam Style has had 3.2 billion views on its own, so it’s not a huge number. What Reddit does have is the potential to become a platform for reaching highly engaged audiences with very niche interests; the Reddit sub That Happened has already been turned into a segment on Netflix’s Joel McHale Show.

The stat of the week that caught my attention is that only 36% of US adults who own a screen have no streaming service, compared to 27% that own one streaming service, 26% that have two and 11% that have three (link). That’s a significant amount of subscription money going out in direct debits each month. Which is why it is no surprise the last week has seen the confirmed entrance of a number of new players who all want to take a slice of that ever-growing pie. These including the short form platform QuiBi, an AT&T video service which will carry content from HBO, WB and Turner and more details on the DC platform. Rumour also has it that Apple’s streaming service will be free for those with iOs or Apple TV, which might be because its original content will end up bland and mainstream due to Tim Cook’s surprising interference in the commissioning process. Staff are reportedly already calling it an “expensive NBC”.

Whilst Hollywood’s painfully slow reaction to Netflix’s advance has been fascinating to watch, trying to fathom out what Netflix’s closest global rival Amazon is up to has been just as engaging. Amazon is currently reconsidering its global TV strategy, as well as restructuring its film division. This could be because only one out of its three subscribers are actually bothering to watch it.

Although Amazon has very deep pockets (deeper than the debt-ridden Netflix), screen content is not its core business. Selling stuff online is. Its video offering is there to get people to sign up for Amazon Prime as customers who sign up to an annual membership and free delivery spend nearly double the number of non-members. So Amazon’s KPIs are significantly different to Netflix. They are based on how much someone who subscribes to Amazon video goes on to spend on their retail platform.

The strategy of retailers offering content to attract customers is not a new one. The DVD shelf at supermarket checkouts used to carry hugely discounted blockbusters to help entice customers into their stores. In 2010 the UK store Tesco even started to commission original straight to DVD movies based on Jackie Collins novels, which turned into them buying a video streaming service Blink Box the next year and then selling it in 2015 after losing £40m (link). The same strategy is currently is being played out in the US with Walmart rumoured to launch a free ad-supported streaming service under their Vudu brand.

Although I don’t think Amazon will ever shutter their original content platform, I do think it will start offering its platform to others for a fee; giving access to their technology and services in the same way they have with shopping (Amazon Services) and back-end tech support (Amazon Web Services). This could become an opportunity for indie distributors to start low-cost curated content channels on a fully realised, robust, white-label platform. Amazon could then end up as a global version of cable. A plethora of ad-supported or subscription channels that find an audience through precise targeting of interests, with Amazon taking a share of revenue. We saw this prospect with the launch of an Italian movie channel a few weeks ago.

That activity aside, Netflix still has the clearest focus and is most likely to be the dominant global platform. It has been in the entertainment industry since it launched in 1997, understands how to sell content to audiences, makes all its money from video and has been developing its technology for 20 years. Netflix is not only producing more content than ever, they are also focusing on technology as a key differentiator. Not happy with a robust 4K video streaming platform and an ever-improving suggestion engine, it is now moving into the interactive “choose your own ending” space for dramas. To facilitate this double down on new tech, Netflix bought a massive building in Hollywood that will house the army of coders who are clamouring to sign up and work for them. This may also be a way of disrupting the market and breaking through the subscriber ceiling that they seemed to have reached, without having to commission risky content.

I’m not sure how interactive dramas will go down with high-end showrunners and audiences. HBO did try it last year with Steven Soderbergh’s Mosaic which included an interactive story platform. That grand experiment proved too great an ask for the audience at the time. It seems that the majority of people just want to sit down and brainlessly binge a show without having to get involved in a virtual writer’s room. Maybe if an algorithm could work out what ending you’d prefer, and choose it for you based on what you’d liked before, it might just work. However, the downside of multiple endings is that it would make the ‘watercooler conversations’ with your friends about your favourite show incredibly confusing.

Talking of confusing, YouTube still doesn’t know whether it’s a high-end production subscription-based rival to Netflix or an ad-supported user-generated platform that relies on cute cats. Whilst it’s trying to figure out what it wants to be when it grows up, its users are constructing numerous strategies to reach audiences. From short films based on video games that go viral, reimagining Shakespeare, rebooting film criticism, producing web-series that broadcasters commission, to being a platform for the Intellectual Dark Web – YouTube is many things to many people. The problems it faces are whether it is a sustainable model when its algorithms are driving content creators to burnout, it is associated with extremists and children’s shows are re-edited and subverted to create content designed to disturb.

Without a doubt, the next few years are crucial for the screen content industry, as we see a power struggle unfold between global streaming platforms for world dominance, whilst local traditional broadcasters will continue to struggle. This increases the likelihood of further consolidation and a high risk of failure unless they adapt very quickly. The consequences of this on cultural identity and the increasing concentration of media ownership are huge.

The question is what role Government and organisations like ours can take in shaping that future, and in the also how the School can grapple with the change…. we live in interesting times.

Neil Peplow, AFTRS CEO

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