Streaming is Officially in a Crisis
There is a debate around which was a bigger failure — Quibi, which lasted 6 months or CNN+ which lasted well, less than few weeks. But this is part of a larger question being posed, exactly how bad is it?
Streaming has morphed into a financial blackhole. New OTT platforms, big or small are wrapping up and absorbing the sunk costs. This is a contrasting image compared to a decade ago, when OTT were the messiah, who preserved quality content, as well as the biggest villains of cable TV, with the Cut the Cord trend.
So many case studies, articles and posts raved about the “Future of TV”. Marketers claimed how pro-consumer the OTT industry is, by providing high quality content, at a monthly subscription cost.
The big studios woke up to a strange reality, where they were no longer the kings of the game. Their understanding was that their content was being propped up by these OTT platforms for a monthly revenue from a growing subscriber base, while they had to be happy with a fixed amount. Like a chump.
So what happened? Well, they thought, “Hey, what if we were Netflix instead of Netflix being Netflix”. They invested heavily in the tech, created new shows. I am still waiting to hear how much money Paramount, CNN and so many others threw into the void at creating their platforms.
Unfortunately, almost none of them could be, Netflix. The first instinct of the brilliant marketers at these companies was, to monopolise and corner, instead of letting an ecosystem flourish with mutual benefit.
Well, fast forward to today, the highlight of the week has been the cancellation of BatGirl movie and the uncertainties around HBO Max. Warner Discover is increasingly trying to unify into one streaming service for all.
Based on these moves in the industry, here are a few things to deliberate upon:
1. Back to the way things were
Are we starting to see the return to companies breaking up their streaming services and selling off their shows and movies back to the likes of Netflix and Amazon PrimeVideo?
2. Advertising Struggles
The industry’s struggles to separate themselves from advertisers which paid them irrespective of the low quality content that has been put on lately. With streaming, companies are beholden to customers who will cancel if they’re not impressed, something Netflix is really struggling with in Asia
3. A Financial Black Hole for Customers Too
It is a black hole for customers too. Want to watch that new show? Too bad, you need to subscribe to this new platform you haven’t yet tried. If you look at Netflix’s decisions recently, along with the recently released investors call at Paramount, the future of these platforms has been toutes as one of “free, ad-supported streaming”, which is well, TV! An entire generation migrated away from TV and will now return to it
4. The Biggest Winner of Streaming?
Who has been the biggest winner in the streaming wars? Sony! Sony has never made a major streaming service. Yes, there is Sony LIV in India, Crackle (sold off), but these are not focus segments. They can sell whatever movie they make to the highest bidder and are minting record high profits on the back of it. Companies shelled out millions for Morbius. Morbius, perhaps the most trolled Marvel movie of all time. Sony is building up their Music IP, while selling them for record high prices to Spotify, Apple Music, Amazon etc.
A Cautionary Tale for the Remaining OTT Companies
The newer streaming companies have been offering unsustainable low susbscription prices while spending all of their available capital to generate low-tier content in an attempt to capture makret share.
It was fine to put big Hollywood blockbusters (not you Morbius) on a streaming service and lose tens of millions of dollars because you were increasing your subscriber count and market share.
But now, the playing field if levelling off, and the players that are left standing have to figure out how to play the game ahead.