This is part one of the two-part series “Industry Takes: Content Is King.”
It’s no surprise that consumers have a lot of options when it comes to what they’re watching and more importantly how and when they’re watching it. Gone are the days when major television events meant that people cleared their schedule or even programmed their DVR’s to record. Well not completely gone anyway. With the rise of streaming and mobile video, on-demand television empowers viewers to shift away from traditional cable/network TV and watch across smartphones, tablets, and television sets. A look at the numbers shows that 55% of US households are subscribed to a paid streaming video service and nearly half (48%) of all US consumers stream content every day or weekly. We probably all thought it was higher, to be honest. Consumers are now paying almost 2 billion on subscription-based content, monthly. All this means that there is a battle being fought by media houses to deliver content to eager consumers and to monetize on their terms.
Big shake-ups have occurred already, most notably the announcement that Disney will pull its content from Netflix to coincide with the launch of its own distribution service, Disney +. There are signs that most (if not all) major US networks will launch their own direct to consumer platforms in the coming years. With content pullbacks from first to market services like Netflix and Amazon, a content void is slowly expanding, one you’ve no doubt noticed as you scroll endlessly through movies you don’t care to watch in search of something, anything to watch.
As a result, the option facing aggregate services like Netflix and Amazon is to invest big on original content. According to Netflix, 85% of its 8 billion investment in 2018 went to original content. If that’s not enough, its spending is expected to climb even more in 2019 and beyond. Keeping the pressure on Netflix, Amazon also looks to invest big in original content to the tune of 5 billion in video content across both original shows and sports rights. While original hit shows can help drive revenue, a significant concern for companies like Netflix and Amazon is that consumers don’t always join for the original programming, and instead subscribe to watch reruns of content licensed from other networks.
This amounts to a reckoning of sorts where networks are getting smart and holding onto their content for their own OTT services. If a wide range of content is the key to holding on to viewers, it makes sense as to why media giants are on a spending spree to shore up their programming roster in the face of new competition. That competition isn’t only coming from traditional media companies like Disney or Warner Brothers, but from tech companies too. Apple is investing heavily in its upcoming streaming platform, though early reports indicate that its original content might not be available at launch. This means Apple will be leaning on licensed content to get its service and viewership up and running.
What does all this mean for audiences? The cord cutting movement that consumers once welcomed as a means to free themselves from bundled packages and expensive billing statements is leading them right back to where they started.
Read “Industry Takes: Content Is King, Part 2” here.