Welcome to the blog of Dr. Lisa Burns' Media Studies senior capstone class (2 pm section) at Quinnipiac University. If you're looking for the latest on media industry trends and insightful media analysis, you've come to the right place!
Saturday, January 13, 2018
Media Consolidation & Multiple Platforms Blog 1, Question 2 (Jan. 30th)
How sustainable are the business models of SVOD services like Netflix, Hulu,
Amazon Prime, and YouTube Red? Limit: 12
responses
People still overwhelmingly prefer to watch programs not when the TV tells them to, but when they want to, and with the rise of SVOD (streaming video on demand) services it is easier than ever for them to do so.
That being said it’s possible that as we stand here in the infancy of 2018 that the viability of some of these SVOD services is dwindling. Looking at services like Netflix, Hulu, Amazon Prime and YouTube Red it clear that some of these may be able to weather the hardships of the upcoming year, but the fate of the others is not so easy to predict. The reason for this is the recent repeal of net neutrality which left many wondering how this repeal will end up affecting SVOD services.
Looking at the article titled, Hollywood in 2018: The Old Order Ends, a New One Rises, we see that author Sharon Waxman argues that we’re currently seeing a few things happening in Hollywood. Firstly, Major Studios are taking hits. Secondly, in light of that, new powers are emerging in the form of companies like Facebook, Google, Netflix, Apple and Amazon. Thirdly, Independent studios are on the rise but their future may be uncertain. Lastly, that major changes are happening in Hollywood with how we deal with sexual harassment and assault (Waxman). I think that all of these are very fair judgements but in light of the repeal of net neutrality laws they may need a slight tweaking. If it becomes harder to access the SVOD services that are producing their own content, then we may see a resurgence in the Old Order. Similarly this would affect independent studios which is in line with how Waxman points out that their future is rocky.
I think this question of sustainability of SVOD services is perhaps best understood when looking at the redheaded stepchild of SVOD services, YouTube Red. The article titled YouTube Grows Up: Inside the Plan to Take on Netflix and Hulu written by Natalie Jarvey does a really good job at explaining the moves YouTube is making to get into the internet era custom content scene, but what the article fails to explain is how much this isn’t really working for YouTube.
Looking at an article titled Where YouTube Red Stands after a year written by Robert Elder for Business Insider we can see that in the second quarter of 2016 YouTuber Red held 3 per cent of the SVOD Market Share in the US and Canada. That is compared to Netflix commanding 53.7% or the same market for reference (Elder). While a year has passed since the release of this article I would venture to guess that while YouTube Red may have grown a bit, nothing drastic has probably happened. The reason this is happening is the same reason no one wants to pay for news online. If it was free before (and I can more or less still get it for free now with just a few ads) why would I pay for it now? YouTube has been a free service for so long that it will be hard for it to claw its way to being a major player in the SVOD market.
Similarly this same thought process will end up affecting other SVOD services when it comes to net neutrality. They will end up having to raise their prices but people will not be willing to when their cable is faster anyways and also has good options. People even now are upset about increases in the cost of Netflix subscriptions but that will only get worse. These are the type of questions I think need to be raised to the sustainability of these SVOD services in the coming year.
Elder, Robert. “Where YouTube Red Stands after a Year.” Business Insider, Business Insider, 5 Jan. 2017, www.businessinsider.com/heres-where-youtube-red-stands-after-one-year-2017-1.
Jarvey, Natalie. “YouTube Grows Up: Inside the Plan to Take on Netflix and Hulu.” The Hollywood Reporter, 4 Oct. 2017, www.hollywoodreporter.com/features/youtube-grows-up-inside-plan-take-netflix-hulu-1045443.
Waxman, Sharon. “Hollywood in 2018: The Old Order Ends, a New One Rises.” TheWrap, 31 Dec. 2017, www.thewrap.com/hollywood-2018-new-order-netflix-facebook-amazon-disney/.
In recent years, SVOD services have been on the rise in terms of popularity. There is an increase in demand, with younger generations especially, to buy into services that provide diverse and comprehensive selections. Services like Netflix and Amazon Prime have blown up by creating their own original series’. The major successes of original content have allowed for increased subscriptions and overall demand for the services. The addition of original content has proven to be a major factor in the sustainability of the services’ business models. In comparison, Hulu has remained dependent on preexisting shows, but has gained great popularity recently. Hulu has gained power through its alliances with major programs that are ultimately competing with Netflix content. In Victor Luckerson’s article, he discusses Hulu, writing “Hulu is uniquely positioned to become a giant in its own right, if it can keep its tenuous Hollywood alliances intact and find more shows that manage to stand out in a glut of content”(Luckerson). Netflix has emerged as one of the front-runners of SVOD services, due to its continuous popularity and increase in successful content. Sharon Waxman discusses Netflix’s success in her article Hollywood in 2018: The Old Order Ends, a New One Rises. She writes, “Netflix has continued to swell in size, with a market cap now at $83 billion, making it bigger than any media company besides Disney, including Time Warner. Just as important, the streaming service has signed deals with some of the most talented show runners in Hollywood, Shonda Rhimes and Jenji Kohan, women who are on the cutting edge of where pop culture is going”(Waxman). With SVOD services creating original content and converging with major actors and organizations, it is clear they have set up a strong foundation for sustainability within the market. Many articles discuss how SVOD services have changed the television game, and created controversy and panic for mainstream tv providers. Benedicte Guichard discusses OTT programming, specifically Netflix, and its domination within the media market. He writes “In the U.S, revenues from OTT streaming services and through-TV subscriptions are on a constant rise, and things look even brighter in the years to come. As every other business out there, costs are a key aspect for sustainable growth, and providers and more then aware”(Guichard). SVOD services provide a vast array of content for a reasonable monthly price, which in part makes them so successful. Netflix has had the ability to dominate the market because both of its content and price has motivated people to cut ties with linear television subscriptions. Looking at the current success of services like Netflix, Hulu, and Amazon Prime, it can be assumed that such success will continue, as these providers seek to create more original content, and merge with major organizations. In today’s market, and likely in the future market, the low prices of SVOD services, and diversity in content, will allow these providers to remain dominant within the media market.
Guichard, Benedicte. “Original Content - The New Focus of SVoD and OTT Providers.”Cleeng, Cleeng B.V., 9 Mar. 2017, cleeng.com/blog/original-content-new-focus-of-svod-and-ott-providers#gs.CDZBODw.
Luckerson, Victor. “Hulu Is Hollywood's Last Line of Defense Against a Tech Takeover.” The Ringer, The Ringer, 12 Jan. 2018, www.theringer.com/tech/2018/1/12/16881390/hulu-netflix-amazon-ces-2018.
Waxman, Sharon. “Hollywood in 2018: The Old Order Ends, a New One Rises.” TheWrap, 31 Dec. 2017, www.thewrap.com/hollywood-2018-new-order-netflix-facebook-amazon-disney/.
Within just the last few years, SVOD services have become the new titans of the media streaming industry. With more platforms growing into mainstream popularity, these streaming services have created a new model for convience for viewers all while providing equal or better content than found on television or in movie theaters. These new platforms are now offering content that is creating a new type of media and business model for the entire entertainment industry. Of course with a shift such as this, the more traditional forms of media are taking their hits. As stated by Natalie Jarvey from The Hollywood Reporter, “An arms race among cash-rich new players — led by Netflix and Amazon and now including Hulu, Apple, Facebook and, yes, YouTube — has electrified the content business as legacy distribution models continue to fracture (see the 25-year low in box-office attendance this summer).” She also notes how this new business model is taking a large toll on the major television powers. “The shift is redrawing the hierarchy of the television industry, where all five broadcast networks saw a decline in total viewers last season while the streamers committed about $20 billion to programming delivered without a cable subscription.” (Jarvey)
But the question comes into play as to how sustainable this model may be in terms of future viewing. As this model of SVOD services becomes more and more popularized, more and more companies are converting to this type of model. For example, even Disney announced that would soon be developing their own streaming service in an attempt to compete with many of these new successful programs. “For some, this might indicate a future where Netflix’s preeminence in the streaming video space is overtaken by Disney, which is also set to pull some its programming from Netflix when its own service launches. On this outline, it might seem like Disney is developing a Netflix killer.” (Udland) With more and more competition arises within this type of business model, I see it as being sustainable for years to come. With more and more companies (even those as large as Disney) joining in on this more direct and convienient type of of streaming, then this model will slowly become the norm in social for audiences.
It also helps that the original content being produced by these companies is competing with and slowly taking over for shows on traditional television and in movie theaters. Every Emmy season we’re seeing each category taken over by Netflix, Hulu and Amazon Prime. These same companies are also signing A-list movie stars to star in their original movies and producing blockbuster-like budgets for them. It’s this rise in content and convienience to audiences that has helped to create this sustainable model of viewing. As stated by Kevin Roose in The New York Times, “Last quarter, nearly a million Americans dropped their pay-TV subscriptions, according to an estimate from Craig Moffett, a media analyst with MoffettNathanson. (Netflix added roughly that many new subscribers in the United States in the same time.) With cable cutting becoming a common trend in modern times, as well as the rise in popularity of these streaming services and their content, I see this specific model to be sustainable for years to come as more services are development and more convienience is brought to audience screens.
Jarvey, Natalie. “YouTube Grows Up: Inside the Plan to Take on Netflix and Hulu.” The Hollywood Reporter, October 4, 2017, www.hollywoodreporter.com/features/youtube-grows-up-inside-plan-take-netflix-hulu-1045443.
Roose, Kevin. “The Messy, Confusing Future of TV? It’s Here.” The New York Times., August 13,2017,https://www.nytimes.com/2017/08/13/technology/the-messy-confusing-future-of-tv-its-here.html Udland, Myles. “Disney's new streaming service shouldn't scare Netflix” Yahoo Finance., November 10, 2017 https://www.yahoo.com/finance/news/disneys-new-streaming-service-shouldnt-scare-netflix-174745047.html
As we sit here in the beginning of 2018, streaming video on demand (SVOD) services are stronger and more popular than ever. Three of the most popular streaming services are Netflix, Hulu, and Amazon Prime. According to the article “Hollywood in 2018: The Old Order Ends, a New One Rises,” by Sharon Waxman, Netflix now has a market cap of $83 billion. In a different article titled “Disney’s New Streaming Service Shouldn’t Scare Netflix,” the author makes the point that Netflix has become so popular that it is now a part of our everyday vocabulary with the phrase “Netflix and chill.” Looking at “Hulu Is Hollywood’s Last line of Defense Against a Tech Takeover,” Victor Luckerson states that Hulu has gained 5 million subscribers over the past year and a half, upping its total to 17 million in total. In “Why Amazon Could Soon Be Headed for a $1 Trillion Market Cap,” Annie Palmer explains that Amazon Prime ended 2017 with 95,000 subscribers which increased from 71,000 in 2016. In addition, Prime gained more new subscribers in 2017 than any other year.
Perhaps the biggest reason for these recent increases is people want to watch what they want to watch when they want to watch it. Cable television does not allow you to create your own television schedule like these streaming devices do. According to an article from “Variety,” an estimated total of 22.2 million adults from the U.S. have cancelled cable subscriptions in 2017, which is a 33% increase compared to 2016.
Based on these statistics, it is hard to confidently say that these streaming services are not sustainable. I believe that the only threat to the sustainability of these streaming services is the Federal Communications Commission’s recent repeal of net neutrality. It is possible that these streaming services will eventually have to raise their prices, which may cost them to lose some subscribers. I still believe that customers will still pay for the big name services like Netflix, Hulu, and Amazon Prime. These services are way too big and popular to quickly die out. Rather, net neutrality could potentially be harmful to the smaller streaming services that are trying to climb up the ranks.
At the end of the day, these large streaming services are far too big for people to be worried about their sustainability in the near future. Who knows what’s going to happen years and years down the line. However, as the statistics in the articles show, these services are still growing and they will not be going anywhere anytime soon.
Waxman, Sharon. “Hollywood in 2018: The Old Order Ends, a New One Rises.”TheWrap, 31 Dec. 2017, www.thewrap.com/hollywood-2018-new-order-netflix-facebook-amazon-disney/.
Udland , Myles. “Disney's New Streaming Service Shouldn't Scare Netflix.” Yahoo! Finance, Yahoo!, 10 Nov. 2017, finance.yahoo.com/news/disneys-new-streaming-service-shouldnt-scare-netflix-174745047.html.
Luckerson, Victor. “Hulu Is Hollywood's Last Line of Defense Against a Tech Takeover.”The Ringer, The Ringer, 12 Jan. 2018, www.theringer.com/tech/2018/1/12/16881390/hulu-netflix-amazon-ces-2018.
Palmer, Annie. “Why Amazon Could Soon Be Headed for a $1 Trillion Market Cap.”TheStreet, TheStreet, 10 Jan. 2018, www.thestreet.com/story/14445272/1/amazon-trillion-dollar-market-cap.html.
Spangler, Todd. “Cord-Cutting Explodes: 22 Million U.S. Adults Will Have Canceled Cable, Satellite TV by End of 2017.” Variety, 13 Sept. 2017, variety.com/2017/biz/news/cord-cutting-2017-estimates-cancel-cable-satellite-tv-1202556594/.
Services that are considered to be a part of streaming and video-on-demand have sustainable business models – for now. Analysts are finding, and news reporters keep parroting, that millennials are less likely to buy homes, have children later, and are more likely to get higher degrees before entering the workforce for their chosen career (Matchett, 2017). It begs the question: what are we doing with the money that we save by staying home with mom and dad or not buying baby clothes at the age of 25?
Netflix’s “most popular plan is $11 per month” and Disney’s new streaming service is aiming to be cheaper than that (Udland, 2017). Business models that can have a long tail of niche market items to bring in millions of people – each with as many differing interests – and still keep costs lower than what I put in my gas tank every week are going to do well with 20 to 30 year-olds. While we aren’t working or studying, it is easy to fall into the habit of watching a Netflix original or embracing the renewed life of cable shows through Hulu’s new acquisitions (Luckerson, 2018).
Cord-cutters and cord-nevers are going to rise in popularity because no one wants to pay around $70 to get 600 channels if they are not going to use 580 of them. It is cheaper to get Netflix and Amazon for their originals and then pay Hulu for the shows you would have watched on regular cable television (Goldberg, 2017).
Now that Disney’s CEO Bob Iger has confirmed the new streaming service for Disney and is pulling its content from Netflix, the argument can’t be made that the millennials with children have to pay for cable in order to get child-friendly content (Udland, 2017). Unfortunately, the children that are growing up with SVOD services are going to be their downfall or at least be the downfall for the services that millennials use now.
Millennials have done wonderful things: create Facebook, watch enough YouTube personalities to make YouTube Red possible and enjoy shopping so much that Amazon Prime can buy the rights to stream millions of library titles. We have changed the market drastically from what the generation before us had. Is it crazy to assume that the next generation won’t make more leaps and bounds?
The teenagers in high school right now are going to grow with SVOD services. They’re being taught code in school from a young age. It’s likely that they can create a better business model that is more sustainable than what we experience now. Those same young adults are growing up with Hulu and Netflix, but everything can run faster, be cheaper and have more to offer. Hollywood is fighting SVOD services, but that will only get worse as the children who are growing up without cable create new services running on a better business model (Luckerson, 2018).
What the upcoming generation can create is unfathomable, but I have no doubt that the SVOD services we have now will drastically change once again by the time their generation is having similar technology takeovers.
Works Cited
Goldberg, L. (2017, October 04). Where Streamers Get Their Original Content: Comparing Netflix, Amazon and Hulu. Retrieved January 30, 2018, from https://www.hollywoodreporter.com/news/streaming-services-get-original-tv-shows-movies-1045444
Luckerson, V. (2018, January 12). Hulu Is Hollywood's Last Line of Defense Against a Tech Takeover. Retrieved January 30, 2018, from https://www.theringer.com/tech/2018/1/12/16881390/hulu-netflix-amazon-ces-2018
Matchett, C. (2017, December 22). Don't Judge Millennials For Finding Adulting So Hard. Retrieved January 30, 2018, from https://www.elitedaily.com/life/millennials-hard-adulting/1778099
Udland, M. (2017, November 10). Disney's new streaming service shouldn't scare Netflix. Retrieved January 30, 2018, from https://finance.yahoo.com/news/disneys-new-streaming-service-shouldnt-scare-netflix-174745047.html
Netflix is currently the number one SVOD service in the world. Examining its ability to adapt to the changing times explains how it has become so successful. With the rise of smartphones and new technology, Netflix remodeled and paved the way for streaming video on demand. The on-demand access to a library of shows that can be watched anywhere at anytime has really put a dent in cable television ratings. Within the past few years, Netflix has ventured to create original content and are becoming even more of a force to be reckoned with. “Netflix plans to raise an additional $1.6 billion in debt to fund ‘content acquisitions, production and development,’ among other ‘general corporate purposes,’ the streaming giant said on Monday”(Maglio).
Competing services such as Hulu, Amazon Prime, and YouTube Red are following the Netflix model, and are beginning to see more success. Amazon Prime is a streaming service that is offered to Amazon Prime members, but the selection isn’t that immense and a lot of the better content isn’t offered for free. Hulu is the same idea as Netflix except it offers lower subscriptions and profits off advertisements. The lower subscription may appeal to consumers however the commercial ads can be a turnoff. However, as of this past year Hulu has been slowly coming up in the ranks and may even give Netflix a run for its money. Their library is twice of that as Netflix or Amazon, and the subscriptions are slightly cheaper. They are also creating original content in order to expand their horizons. “The 11-year-old company, whose tagline for yours could have been I guess there’s nothing on Netflix is finally starting to develop an identity all its own” (Luckerson 2018). They saw a lot of recent success with its award winning The Handmaid’s Tale.
YouTube has been an entity of its own separate from true television or cinematic entertainment because it promotes user generated content. However, YouTube Red is recently making waves by creating original content styled like mini-series or documentaries. Most recently Demi Lovato did one called “Simply Complicated.” YouTube is still considerably different than the other SVOD services and never seemed to pose an immediate threat to sites like Netflix, but this is beginning to change. Hulu, Amazon and Netflix are competing to attract user attention for subscriptions, while YouTube and Facebook are competing for watchers so they can profit off a large sum of advertiser money. “While nearly all of the streamers are competing for awards recognition and prestige, only Facebook, with its 2 billion monthly users worldwide, and YouTube truly can duke it out over sheer audience scale” (Jarvey 2018).
Streaming video on demand services are definitely sustainable and are actually making other media services unsustainable. The major players are becoming more and more competitive with one other. It all comes down to offering the best content for the better price. One of the biggest game-changers is the creation of original content in order to cultivate a following. SVOD is continuously making cable television obsolete. The biggest threat to them is television networks pulling their shows from the sites. These services can only thrive when they offer a selection of different content, so this can be detrimental factor. This is where YouTube Red may rise up in the ranks because they don’t necessarily need that kind of content to survive. However, technology has been working in favor of SVOD with the surge of multimedia devices (Roku), smartphone apps, and Apple TV’s, and even gaming consoles that offer direct access. Overall, SVOD services are sustainable so long as they remain two steps ahead of cable networks and constantly fight to maintain their subscribers.
Jarvey, Natalie.“YouTube Grows Up: Inside the Plan to Take on Netflix and Hulu.” The Hollywood Reporter, 4 Oct. 2017. 28 Jan, 2018. https://www.hollywoodreporter.com/features/youtube-grows-up-inside-plan-take-netflix-hulu-1045443
Luckerson, Victor. “Hulu Is Hollywood’s Last Line of Defense Against a Tech Takeover.” The Ringer, 12 Jan. 2018. 28 Jan, 2018. https://www.theringer.com/tech/2018/1/12/16881390/hulu-netflix-amazon-ces-2018
Maglio, Tony. “Netflix to Raise 1.6 Billion to Further Expand Content Production, Purchases.” The Wrap, 23 Oct. 2018. 28 Jan. 2018. https://www.thewrap.com/netflix-raise-billion-debt-content-production-development/
In theory, the relatively new streaming services, Netflix, Amazon Prime, Hulu, and YouTube red should have no doubts regarding their futures as people step away from the TV and bring shows with them on their phones, tablets, etc. Ask me this question two years ago, and I would have told you that these companies have nowhere to go but up.
Today, I still believe that streaming services are clearly the way of the future. The power behind time shifting media content is too strong to ever go back to simply flipping through cable channels. And as Sharon Waxman states for The Wrap, “In the last three months, Netflix has continued to swell in size, with a market cap now at $83 billion, making it bigger than any media company besides Disney, including Time Warner.” A battle for supremacy within the streaming landscape is underway. Whether the new and original content of Netflix and company win, or if it some combination of old guard companies partnering up with streaming companies like Hulu is yet to be seen. As The Ringer’s Victor Luckerson points out, “Hulu is uniquely positioned to become a giant in its own right, if it can keep its tenuous Hollywood alliances intact and find more shows that manage to stand out in a glut of content (2017 set yet another record for original scripted shows). Neither outcome is guaranteed, but Hollywood’s sudden urgency in addressing the Netflix threat indicates if Hulu fails, it won’t be for lack of trying.”
Either outcome seems very possible, but a third and much darker possible is still looming in the realm of possibilities. With the FCC’s plan to get rid of net neutrality it is entirely possible that the power to decide whether or not the business models of the aforementioned streaming companies is in the hands of Internet service providers. It is possible that any current business practices done by these companies will have little to do with their success, but rather that the future of streaming platforms will be determined by the deals that they cut with internet service providers. As Brian Feldman of Select All states, “In the U.S., the death of the open internet will likely be one by a thousand cuts — buffering video, pages slow to load, the further centralization under a few online behemoths with deep pockets willing to pay ISP extortion fees.” Each of these streaming companies are likely to pay ISP’s for the best speeds at first, but specifics of contracts and other legal technicalities could mean that some of the streaming giants get preferred treatment from various IPS. For now I think that until we see further implementation of the future of a non neutral internet the future of which streaming company is dominant or sustainable is up in the air.
Feldman, Brian. “Without Net Neutrality, What Happens to My Netflix?” Select All, 21 Nov. 2017, nymag.com/selectall/2017/11/what-happens-to-netflix-when-net-neutrality-is-gone.html.
Luckerson, Victor. “Hulu Is Hollywood's Last Line of Defense Against a Tech Takeover.”The Ringer, The Ringer, 12 Jan. 2018, www.theringer.com/tech/2018/1/12/16881390/hulu-netflix-amazon-ces-2018.
Waxman, Sharon. “Hollywood in 2018: The Old Order Ends, a New One Rises.” TheWrap, 31 Dec. 2017, www.thewrap.com/hollywood-2018-new-order-netflix-facebook-amazon-disney/.
People still overwhelmingly prefer to watch programs not when the TV tells them to, but when they want to, and with the rise of SVOD (streaming video on demand) services it is easier than ever for them to do so.
ReplyDeleteThat being said it’s possible that as we stand here in the infancy of 2018 that the viability of some of these SVOD services is dwindling. Looking at services like Netflix, Hulu, Amazon Prime and YouTube Red it clear that some of these may be able to weather the hardships of the upcoming year, but the fate of the others is not so easy to predict. The reason for this is the recent repeal of net neutrality which left many wondering how this repeal will end up affecting SVOD services.
Looking at the article titled, Hollywood in 2018: The Old Order Ends, a New One Rises, we see that author Sharon Waxman argues that we’re currently seeing a few things happening in Hollywood. Firstly, Major Studios are taking hits. Secondly, in light of that, new powers are emerging in the form of companies like Facebook, Google, Netflix, Apple and Amazon. Thirdly, Independent studios are on the rise but their future may be uncertain. Lastly, that major changes are happening in Hollywood with how we deal with sexual harassment and assault (Waxman). I think that all of these are very fair judgements but in light of the repeal of net neutrality laws they may need a slight tweaking. If it becomes harder to access the SVOD services that are producing their own content, then we may see a resurgence in the Old Order. Similarly this would affect independent studios which is in line with how Waxman points out that their future is rocky.
I think this question of sustainability of SVOD services is perhaps best understood when looking at the redheaded stepchild of SVOD services, YouTube Red. The article titled YouTube Grows Up: Inside the Plan to Take on Netflix and Hulu written by Natalie Jarvey does a really good job at explaining the moves YouTube is making to get into the internet era custom content scene, but what the article fails to explain is how much this isn’t really working for YouTube.
Looking at an article titled Where YouTube Red Stands after a year written by Robert Elder for Business Insider we can see that in the second quarter of 2016 YouTuber Red held 3 per cent of the SVOD Market Share in the US and Canada. That is compared to Netflix commanding 53.7% or the same market for reference (Elder). While a year has passed since the release of this article I would venture to guess that while YouTube Red may have grown a bit, nothing drastic has probably happened. The reason this is happening is the same reason no one wants to pay for news online. If it was free before (and I can more or less still get it for free now with just a few ads) why would I pay for it now? YouTube has been a free service for so long that it will be hard for it to claw its way to being a major player in the SVOD market.
Similarly this same thought process will end up affecting other SVOD services when it comes to net neutrality. They will end up having to raise their prices but people will not be willing to when their cable is faster anyways and also has good options. People even now are upset about increases in the cost of Netflix subscriptions but that will only get worse. These are the type of questions I think need to be raised to the sustainability of these SVOD services in the coming year.
Elder, Robert. “Where YouTube Red Stands after a Year.” Business Insider, Business Insider, 5 Jan. 2017, www.businessinsider.com/heres-where-youtube-red-stands-after-one-year-2017-1.
Jarvey, Natalie. “YouTube Grows Up: Inside the Plan to Take on Netflix and Hulu.” The Hollywood Reporter, 4 Oct. 2017, www.hollywoodreporter.com/features/youtube-grows-up-inside-plan-take-netflix-hulu-1045443.
Waxman, Sharon. “Hollywood in 2018: The Old Order Ends, a New One Rises.” TheWrap, 31 Dec. 2017, www.thewrap.com/hollywood-2018-new-order-netflix-facebook-amazon-disney/.
In recent years, SVOD services have been on the rise in terms of popularity. There is an increase in demand, with younger generations especially, to buy into services that provide diverse and comprehensive selections. Services like Netflix and Amazon Prime have blown up by creating their own original series’. The major successes of original content have allowed for increased subscriptions and overall demand for the services. The addition of original content has proven to be a major factor in the sustainability of the services’ business models. In comparison, Hulu has remained dependent on preexisting shows, but has gained great popularity recently. Hulu has gained power through its alliances with major programs that are ultimately competing with Netflix content. In Victor Luckerson’s article, he discusses Hulu, writing “Hulu is uniquely positioned to become a giant in its own right, if it can keep its tenuous Hollywood alliances intact and find more shows that manage to stand out in a glut of content”(Luckerson).
ReplyDeleteNetflix has emerged as one of the front-runners of SVOD services, due to its continuous popularity and increase in successful content. Sharon Waxman discusses Netflix’s success in her article Hollywood in 2018: The Old Order Ends, a New One Rises. She writes, “Netflix has continued to swell in size, with a market cap now at $83 billion, making it bigger than any media company besides Disney, including Time Warner. Just as important, the streaming service has signed deals with some of the most talented show runners in Hollywood, Shonda Rhimes and Jenji Kohan, women who are on the cutting edge of where pop culture is going”(Waxman). With SVOD services creating original content and converging with major actors and organizations, it is clear they have set up a strong foundation for sustainability within the market.
Many articles discuss how SVOD services have changed the television game, and created controversy and panic for mainstream tv providers. Benedicte Guichard discusses OTT programming, specifically Netflix, and its domination within the media market. He writes “In the U.S, revenues from OTT streaming services and through-TV subscriptions are on a constant rise, and things look even brighter in the years to come. As every other business out there, costs are a key aspect for sustainable growth, and providers and more then aware”(Guichard). SVOD services provide a vast array of content for a reasonable monthly price, which in part makes them so successful. Netflix has had the ability to dominate the market because both of its content and price has motivated people to cut ties with linear television subscriptions. Looking at the current success of services like Netflix, Hulu, and Amazon Prime, it can be assumed that such success will continue, as these providers seek to create more original content, and merge with major organizations. In today’s market, and likely in the future market, the low prices of SVOD services, and diversity in content, will allow these providers to remain dominant within the media market.
Guichard, Benedicte. “Original Content - The New Focus of SVoD and OTT Providers.”Cleeng, Cleeng B.V., 9 Mar. 2017, cleeng.com/blog/original-content-new-focus-of-svod-and-ott-providers#gs.CDZBODw.
Luckerson, Victor. “Hulu Is Hollywood's Last Line of Defense Against a Tech Takeover.” The Ringer, The Ringer, 12 Jan. 2018, www.theringer.com/tech/2018/1/12/16881390/hulu-netflix-amazon-ces-2018.
Waxman, Sharon. “Hollywood in 2018: The Old Order Ends, a New One Rises.” TheWrap, 31 Dec. 2017, www.thewrap.com/hollywood-2018-new-order-netflix-facebook-amazon-disney/.
Within just the last few years, SVOD services have become the new titans of the media streaming industry. With more platforms growing into mainstream popularity, these streaming services have created a new model for convience for viewers all while providing equal or better content than found on television or in movie theaters. These new platforms are now offering content that is creating a new type of media and business model for the entire entertainment industry. Of course with a shift such as this, the more traditional forms of media are taking their hits. As stated by Natalie Jarvey from The Hollywood Reporter, “An arms race among cash-rich new players — led by Netflix and Amazon and now including Hulu, Apple, Facebook and, yes, YouTube — has electrified the content business as legacy distribution models continue to fracture (see the 25-year low in box-office attendance this summer).” She also notes how this new business model is taking a large toll on the major television powers. “The shift is redrawing the hierarchy of the television industry, where all five broadcast networks saw a decline in total viewers last season while the streamers committed about $20 billion to programming delivered without a cable subscription.” (Jarvey)
ReplyDeleteBut the question comes into play as to how sustainable this model may be in terms of future viewing. As this model of SVOD services becomes more and more popularized, more and more companies are converting to this type of model. For example, even Disney announced that would soon be developing their own streaming service in an attempt to compete with many of these new successful programs. “For some, this might indicate a future where Netflix’s preeminence in the streaming video space is overtaken by Disney, which is also set to pull some its programming from Netflix when its own service launches. On this outline, it might seem like Disney is developing a Netflix killer.” (Udland) With more and more competition arises within this type of business model, I see it as being sustainable for years to come. With more and more companies (even those as large as Disney) joining in on this more direct and convienient type of of streaming, then this model will slowly become the norm in social for audiences.
It also helps that the original content being produced by these companies is competing with and slowly taking over for shows on traditional television and in movie theaters. Every Emmy season we’re seeing each category taken over by Netflix, Hulu and Amazon Prime. These same companies are also signing A-list movie stars to star in their original movies and producing blockbuster-like budgets for them. It’s this rise in content and convienience to audiences that has helped to create this sustainable model of viewing. As stated by Kevin Roose in The New York Times, “Last quarter, nearly a million Americans dropped their pay-TV subscriptions, according to an estimate from Craig Moffett, a media analyst with MoffettNathanson. (Netflix added roughly that many new subscribers in the United States in the same time.) With cable cutting becoming a common trend in modern times, as well as the rise in popularity of these streaming services and their content, I see this specific model to be sustainable for years to come as more services are development and more convienience is brought to audience screens.
Jarvey, Natalie. “YouTube Grows Up: Inside the Plan to Take on Netflix and Hulu.” The Hollywood Reporter, October 4, 2017, www.hollywoodreporter.com/features/youtube-grows-up-inside-plan-take-netflix-hulu-1045443.
Roose, Kevin. “The Messy, Confusing Future of TV? It’s Here.” The New York Times., August 13,2017,https://www.nytimes.com/2017/08/13/technology/the-messy-confusing-future-of-tv-its-here.html
Udland, Myles. “Disney's new streaming service shouldn't scare Netflix” Yahoo Finance., November 10, 2017 https://www.yahoo.com/finance/news/disneys-new-streaming-service-shouldnt-scare-netflix-174745047.html
As we sit here in the beginning of 2018, streaming video on demand (SVOD) services are stronger and more popular than ever. Three of the most popular streaming services are Netflix, Hulu, and Amazon Prime. According to the article “Hollywood in 2018: The Old Order Ends, a New One Rises,” by Sharon Waxman, Netflix now has a market cap of $83 billion. In a different article titled “Disney’s New Streaming Service Shouldn’t Scare Netflix,” the author makes the point that Netflix has become so popular that it is now a part of our everyday vocabulary with the phrase “Netflix and chill.” Looking at “Hulu Is Hollywood’s Last line of Defense Against a Tech Takeover,” Victor Luckerson states that Hulu has gained 5 million subscribers over the past year and a half, upping its total to 17 million in total. In “Why Amazon Could Soon Be Headed for a $1 Trillion Market Cap,” Annie Palmer explains that Amazon Prime ended 2017 with 95,000 subscribers which increased from 71,000 in 2016. In addition, Prime gained more new subscribers in 2017 than any other year.
ReplyDeletePerhaps the biggest reason for these recent increases is people want to watch what they want to watch when they want to watch it. Cable television does not allow you to create your own television schedule like these streaming devices do. According to an article from “Variety,” an estimated total of 22.2 million adults from the U.S. have cancelled cable subscriptions in 2017, which is a 33% increase compared to 2016.
Based on these statistics, it is hard to confidently say that these streaming services are not sustainable. I believe that the only threat to the sustainability of these streaming services is the Federal Communications Commission’s recent repeal of net neutrality. It is possible that these streaming services will eventually have to raise their prices, which may cost them to lose some subscribers. I still believe that customers will still pay for the big name services like Netflix, Hulu, and Amazon Prime. These services are way too big and popular to quickly die out. Rather, net neutrality could potentially be harmful to the smaller streaming services that are trying to climb up the ranks.
At the end of the day, these large streaming services are far too big for people to be worried about their sustainability in the near future. Who knows what’s going to happen years and years down the line. However, as the statistics in the articles show, these services are still growing and they will not be going anywhere anytime soon.
Waxman, Sharon. “Hollywood in 2018: The Old Order Ends, a New One Rises.”TheWrap, 31 Dec. 2017, www.thewrap.com/hollywood-2018-new-order-netflix-facebook-amazon-disney/.
Udland , Myles. “Disney's New Streaming Service Shouldn't Scare Netflix.” Yahoo! Finance, Yahoo!, 10 Nov. 2017, finance.yahoo.com/news/disneys-new-streaming-service-shouldnt-scare-netflix-174745047.html.
Luckerson, Victor. “Hulu Is Hollywood's Last Line of Defense Against a Tech Takeover.”The Ringer, The Ringer, 12 Jan. 2018, www.theringer.com/tech/2018/1/12/16881390/hulu-netflix-amazon-ces-2018.
Palmer, Annie. “Why Amazon Could Soon Be Headed for a $1 Trillion Market Cap.”TheStreet, TheStreet, 10 Jan. 2018, www.thestreet.com/story/14445272/1/amazon-trillion-dollar-market-cap.html.
Spangler, Todd. “Cord-Cutting Explodes: 22 Million U.S. Adults Will Have Canceled Cable, Satellite TV by End of 2017.” Variety, 13 Sept. 2017, variety.com/2017/biz/news/cord-cutting-2017-estimates-cancel-cable-satellite-tv-1202556594/.
Services that are considered to be a part of streaming and video-on-demand have sustainable business models – for now. Analysts are finding, and news reporters keep parroting, that millennials are less likely to buy homes, have children later, and are more likely to get higher degrees before entering the workforce for their chosen career (Matchett, 2017). It begs the question: what are we doing with the money that we save by staying home with mom and dad or not buying baby clothes at the age of 25?
ReplyDeleteNetflix’s “most popular plan is $11 per month” and Disney’s new streaming service is aiming to be cheaper than that (Udland, 2017). Business models that can have a long tail of niche market items to bring in millions of people – each with as many differing interests – and still keep costs lower than what I put in my gas tank every week are going to do well with 20 to 30 year-olds. While we aren’t working or studying, it is easy to fall into the habit of watching a Netflix original or embracing the renewed life of cable shows through Hulu’s new acquisitions (Luckerson, 2018).
Cord-cutters and cord-nevers are going to rise in popularity because no one wants to pay around $70 to get 600 channels if they are not going to use 580 of them. It is cheaper to get Netflix and Amazon for their originals and then pay Hulu for the shows you would have watched on regular cable television (Goldberg, 2017).
Now that Disney’s CEO Bob Iger has confirmed the new streaming service for Disney and is pulling its content from Netflix, the argument can’t be made that the millennials with children have to pay for cable in order to get child-friendly content (Udland, 2017). Unfortunately, the children that are growing up with SVOD services are going to be their downfall or at least be the downfall for the services that millennials use now.
Millennials have done wonderful things: create Facebook, watch enough YouTube personalities to make YouTube Red possible and enjoy shopping so much that Amazon Prime can buy the rights to stream millions of library titles. We have changed the market drastically from what the generation before us had. Is it crazy to assume that the next generation won’t make more leaps and bounds?
The teenagers in high school right now are going to grow with SVOD services. They’re being taught code in school from a young age. It’s likely that they can create a better business model that is more sustainable than what we experience now. Those same young adults are growing up with Hulu and Netflix, but everything can run faster, be cheaper and have more to offer. Hollywood is fighting SVOD services, but that will only get worse as the children who are growing up without cable create new services running on a better business model (Luckerson, 2018).
What the upcoming generation can create is unfathomable, but I have no doubt that the SVOD services we have now will drastically change once again by the time their generation is having similar technology takeovers.
Works Cited
Goldberg, L. (2017, October 04). Where Streamers Get Their Original Content: Comparing Netflix, Amazon and Hulu. Retrieved January 30, 2018, from https://www.hollywoodreporter.com/news/streaming-services-get-original-tv-shows-movies-1045444
Luckerson, V. (2018, January 12). Hulu Is Hollywood's Last Line of Defense Against a Tech Takeover. Retrieved January 30, 2018, from https://www.theringer.com/tech/2018/1/12/16881390/hulu-netflix-amazon-ces-2018
Matchett, C. (2017, December 22). Don't Judge Millennials For Finding Adulting So Hard. Retrieved January 30, 2018, from https://www.elitedaily.com/life/millennials-hard-adulting/1778099
Udland, M. (2017, November 10). Disney's new streaming service shouldn't scare Netflix. Retrieved January 30, 2018, from https://finance.yahoo.com/news/disneys-new-streaming-service-shouldnt-scare-netflix-174745047.html
- By Caroline Gottlieb
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ReplyDeleteNetflix is currently the number one SVOD service in the world. Examining its ability to adapt to the changing times explains how it has become so successful. With the rise of smartphones and new technology, Netflix remodeled and paved the way for streaming video on demand. The on-demand access to a library of shows that can be watched anywhere at anytime has really put a dent in cable television ratings. Within the past few years, Netflix has ventured to create original content and are becoming even more of a force to be reckoned with. “Netflix plans to raise an additional $1.6 billion in debt to fund ‘content acquisitions, production and development,’ among other ‘general corporate purposes,’ the streaming giant said on Monday”(Maglio).
ReplyDeleteCompeting services such as Hulu, Amazon Prime, and YouTube Red are following the Netflix model, and are beginning to see more success. Amazon Prime is a streaming service that is offered to Amazon Prime members, but the selection isn’t that immense and a lot of the better content isn’t offered for free. Hulu is the same idea as Netflix except it offers lower subscriptions and profits off advertisements. The lower subscription may appeal to consumers however the commercial ads can be a turnoff. However, as of this past year Hulu has been slowly coming up in the ranks and may even give Netflix a run for its money. Their library is twice of that as Netflix or Amazon, and the subscriptions are slightly cheaper. They are also creating original content in order to expand their horizons. “The 11-year-old company, whose tagline for yours could have been I guess there’s nothing on Netflix is finally starting to develop an identity all its own” (Luckerson 2018). They saw a lot of recent success with its award winning The Handmaid’s Tale.
YouTube has been an entity of its own separate from true television or cinematic entertainment because it promotes user generated content. However, YouTube Red is recently making waves by creating original content styled like mini-series or documentaries. Most recently Demi Lovato did one called “Simply Complicated.” YouTube is still considerably different than the other SVOD services and never seemed to pose an immediate threat to sites like Netflix, but this is beginning to change. Hulu, Amazon and Netflix are competing to attract user attention for subscriptions, while YouTube and Facebook are competing for watchers so they can profit off a large sum of advertiser money. “While nearly all of the streamers are competing for awards recognition and prestige, only Facebook, with its 2 billion monthly users worldwide, and YouTube truly can duke it out over sheer audience scale” (Jarvey 2018).
Streaming video on demand services are definitely sustainable and are actually making other media services unsustainable. The major players are becoming more and more competitive with one other. It all comes down to offering the best content for the better price. One of the biggest game-changers is the creation of original content in order to cultivate a following. SVOD is continuously making cable television obsolete. The biggest threat to them is television networks pulling their shows from the sites. These services can only thrive when they offer a selection of different content, so this can be detrimental factor. This is where YouTube Red may rise up in the ranks because they don’t necessarily need that kind of content to survive. However, technology has been working in favor of SVOD with the surge of multimedia devices (Roku), smartphone apps, and Apple TV’s, and even gaming consoles that offer direct access. Overall, SVOD services are sustainable so long as they remain two steps ahead of cable networks and constantly fight to maintain their subscribers.
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ReplyDeleteWorks Cited
ReplyDeleteJarvey, Natalie.“YouTube Grows Up: Inside the Plan to Take on Netflix and Hulu.” The Hollywood Reporter, 4 Oct. 2017. 28 Jan, 2018.
https://www.hollywoodreporter.com/features/youtube-grows-up-inside-plan-take-netflix-hulu-1045443
Luckerson, Victor. “Hulu Is Hollywood’s Last Line of Defense Against a Tech Takeover.” The Ringer, 12 Jan. 2018. 28 Jan, 2018. https://www.theringer.com/tech/2018/1/12/16881390/hulu-netflix-amazon-ces-2018
Maglio, Tony. “Netflix to Raise 1.6 Billion to Further Expand Content Production, Purchases.” The Wrap, 23 Oct. 2018. 28 Jan. 2018. https://www.thewrap.com/netflix-raise-billion-debt-content-production-development/
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ReplyDeleteIn theory, the relatively new streaming services, Netflix, Amazon Prime, Hulu, and YouTube red should have no doubts regarding their futures as people step away from the TV and bring shows with them on their phones, tablets, etc. Ask me this question two years ago, and I would have told you that these companies have nowhere to go but up.
ReplyDeleteToday, I still believe that streaming services are clearly the way of the future. The power behind time shifting media content is too strong to ever go back to simply flipping through cable channels. And as Sharon Waxman states for The Wrap, “In the last three months, Netflix has continued to swell in size, with a market cap now at $83 billion, making it bigger than any media company besides Disney, including Time Warner.” A battle for supremacy within the streaming landscape is underway. Whether the new and original content of Netflix and company win, or if it some combination of old guard companies partnering up with streaming companies like Hulu is yet to be seen. As The Ringer’s Victor Luckerson points out, “Hulu is uniquely positioned to become a giant in its own right, if it can keep its tenuous Hollywood alliances intact and find more shows that manage to stand out in a glut of content (2017 set yet another record for original scripted shows). Neither outcome is guaranteed, but Hollywood’s sudden urgency in addressing the Netflix threat indicates if Hulu fails, it won’t be for lack of trying.”
Either outcome seems very possible, but a third and much darker possible is still looming in the realm of possibilities. With the FCC’s plan to get rid of net neutrality it is entirely possible that the power to decide whether or not the business models of the aforementioned streaming companies is in the hands of Internet service providers. It is possible that any current business practices done by these companies will have little to do with their success, but rather that the future of streaming platforms will be determined by the deals that they cut with internet service providers. As Brian Feldman of Select All states, “In the U.S., the death of the open internet will likely be one by a thousand cuts — buffering video, pages slow to load, the further centralization under a few online behemoths with deep pockets willing to pay ISP extortion fees.” Each of these streaming companies are likely to pay ISP’s for the best speeds at first, but specifics of contracts and other legal technicalities could mean that some of the streaming giants get preferred treatment from various IPS. For now I think that until we see further implementation of the future of a non neutral internet the future of which streaming company is dominant or sustainable is up in the air.
Feldman, Brian. “Without Net Neutrality, What Happens to My Netflix?” Select All, 21 Nov. 2017, nymag.com/selectall/2017/11/what-happens-to-netflix-when-net-neutrality-is-gone.html.
Luckerson, Victor. “Hulu Is Hollywood's Last Line of Defense Against a Tech Takeover.”The Ringer, The Ringer, 12 Jan. 2018, www.theringer.com/tech/2018/1/12/16881390/hulu-netflix-amazon-ces-2018.
Waxman, Sharon. “Hollywood in 2018: The Old Order Ends, a New One Rises.” TheWrap, 31 Dec. 2017, www.thewrap.com/hollywood-2018-new-order-netflix-facebook-amazon-disney/.
Brendan Splaine