Screen Shot 2021-06-17 at 5.51.26 PM.png
Screen Shot 2021-06-17 at 5.56.45 PM.png

Article text here. Layout follows that.

Streaming Wars are Here

by Cathy Corcoran

 

They’ve been coming for years - the promises, the warnings, the excitement, the fears. TV and production execs have either been jumping for joy or quaking in their boots. Now, the wait is over. The Streaming Wars have begun.

 

Disney+ and Apple TV+ both launched in November, 2019, Peacock, the streaming service from NBC Universal, will launch in April, 2020, and HBO Max will launch in May.

 

Established streamers Hulu (20 million subscribers) and Amazon (100 million subscribers) are still pumping out content, and the big gorilla in the room, Netflix (162 million subscribers worldwide) says it is untroubled by its new competitors. 

 

But how many streaming services will the market support? How many will survive? At this point, no one knows for sure. Streamers tout their program lineups - everything from old classics to fresh new original series - but does a successful streamer need more than great content?

 

“The three pillars of a successful streamer are content, technology and customer service,” said Mark Greenberg, NATPE Board member and industry consultant. “Content is king and always will be, but all the big players have great content. The more pertinent questions are: can they deliver product efficiently and profitably, and can they gain and hold consumers? That remains to be seen.”

 

That point became obvious last November when Disney+ kicked off its new streaming service at 12 midnight, Pacific time, 3AM Eastern time. More than 10 million subscribers signed up the first day alone, but the surge lead to a temporary shutdown of the platform.

 

Greenberg, who’s had more than 25 years experience with Showtime, HBO and other companies, is the former president of cable network EPIX, now owned by MGM. He said that, back when he was promoting premium pay-per-view Mike Tyson fights for Showtime, an average of 2 million viewers purchased the fights at $54.95 each. “That was great,” he said, “but 90% of those purchases were placed within 10 minutes of the start of the fight. That’s what we call ‘system congestion.’ That’s what happened with the Disney launch.” Greenberg will speak on the NATPE panel The Future of Television on January 22 at 9:30AM in the Fontaine Room at the Fontainebleau.

 

New technology is critical to streamers; in fact, it’s at the very heart of the streaming explosion. NATPE board member and managing partner of MAG Consulting Group, Shahid Kahn, said, “When providers like Comcast and Verizon installed high speed internet to individual homes, they made it possible to stream video content over the internet. Then the doors blew off! Now, there’s a seemingly endless amount of bandwith.” Kahn will also speak on the Future of Television panel with Greenberg.

 

In 2019, Verizon estimated that 8.4 billion smart phones, TVs, tablets, computers and other devices were in use globally. That number is expected to climb to more than 20 billion by the end of 2020. The new 5G technology will be able to handle them, ultimately enabling peak data rates of 10 gigabits per second. 

 

Verizon built an entire infrastructure of expensive high-speed fiber optic cables made of glass that transmit data as pulses of light. Google Fiber is also building its own infrastructure, and Comcast has announced new technology that will deliver gigabit speeds over traditional cable connections. The service will launch in early 2020.

 

“These days, video is much less profitable for cable companies,” Kahn said, “but they’re all making money on broadband.”

 

Ricky Girson, VP of Business Development for tech consultant TaskUs, 

said that technology is seldom a core competency for Hollywood studios or other streamers. “The technology involved in signing up millions of people in a short period of time is just astounding,” he said. TaskUs works with streamers and other clients to help them set up, operate and maintain the hardware, software and the people necessary to deliver programming to consumers. Girson will be at NATPE, offering tech solutions for streamers.

 

Problems with big launches should probably be expected, Girson said. For years, the gaming industry has dealt with congestion when players surged online when a new game was released. The volume and the resulting problems were something of a surprise for Disney though. In an interview with The Verge, Kevin Mayer, head of Disney’s direct to consumer division, said that they underestimated the demand when their streaming service launched. “There were some limits to the architecture that we had in place,” he said. Most of the initial problems have been fixed, and Mayer acknowledged how much more respect he now has for Netflix. “Netflix is operating their platform at a massive scale,” he said. “Having gone through this launch, I see how difficult that is.” 

 

So millions of customers have already signed up for new streaming services and millions will sign up for those that will launch in 2020. But will they stay? That depends on customer service, and that’s a whole new area for some streamers.

 

“Think of it this way,” said Mark Greenberg. “In the old days, Hollywood studios functioned as manufacturers. They produced the product. Then the product went to Comcast, which functioned as a wholesaler. Now, Netflix, and of course, Amazon are functioning as retailers. They have relationships with the viewers. The new streamers are going to have to do the same thing.”

 

TaskUs’ Ricky Gerson said, “You can have best content in the world, but if you don’t attract and keep customers, you’re nowhere.”

 

If you build it, they won’t necessarily come, and if they do come and they get annoyed, they’ll leave.

 

“Let’s say you sign up a million customers,” Gerson said. “If even one percent of them want to talk with you every month, that’s 10,000 customers a month. If it’s 10 percent, that’s 100,000 customers every month. Most streamers just aren’t equipped to handle that kind of volume. They have to outsource that function.”

 

Outsourcing can be expensive. In fact, everything in the streaming world is expensive, especially content. The numbers can be staggering.

 

“Netflix is spending more money on content than all the Hollywood studios combined,” Kahn said. “The networks have to be profitable - they spend money on programming, then they have to sell advertising in order to make a profit. But Netflix isn’t a network, it’s a digital company, and digital stocks have been going up whether or not they’re profitable.”

 

That kind of thinking has sent content prices through the roof.

 

In a recent interview with Variety, Jamie Erlicht and Zack Van Amburg who lead Apple TV+ video programming worldwide, said they were exhilarated when they realized they were no longer bound by old Hollywood ideas. Both Erlicht and Van Amburg came to Apple from Sony Pictures Television, where they served as presidents, responsible for TV hits Breaking Bad, Better Call Saul, The Crown, Rescue Me and many more. They said that the traditional factors that had defined their options - budget deficits, international sales, and syndication potential - no longer applied at Apple. Now, the guiding principle was to build a service worthy of the Apple brand that also harnessed the power of digital media.

 

“There’s a lot of money in the marketplace as people build these new streaming businesses, and it’s not really tied to any revenue,” said Dante DiLoreto, President, Scripted Programming for Freemantle.

 

A veteran of TV hits including Glee, American Horror Story, and others, DeLoreto oversees Freemantle’s current programs American Gods (Starz/Amazon), The Young Pope (HBO) and others. His drama series, Mosquito Coast, is based on the 1981 novel The Mosquito Coast by Paul Theroux. The series will air on Apple TV+. Freemantle is working on other new programs for streaming services too.  

 

“Some streamers are actually operating a primary businesses other than TV or movie content,” he said. “They’re making immense capital investment in streaming. There’s a bit of a gold rush going on in content right now.” 

 

Which brings Amazon to mind. Once a simple online book seller, Amazon now sells everything to everybody in the world. It’s founder, president and CEO Jeff Bezos, famously quipped that, when Amazon wins an Emmy award for its programming, “It helps us sell more shoes."

 

Shahid Kahn said, “There’s a lot of cash coming into the business, and it’s not necessarily tied to audience or even to revenue. If a $1 trillion dollar company want a relationship with certain talent, they’re going to pay for it, no matter what the cost is. That can distort true value of talent, and the true value of a program. They’re playing with Monopoly money.”

 

There are actually more than 200 companies currently streaming content, and obviously, not all will survive. “With all this technology, it’s easy to forget we’re still dealing with human behavior,” said Mark Greenberg. “At a certain point, the consumer will become overwhelmed with too many choices. Then things will start to shake out.”

 

He added that the situation is similar to what happened way back when cable disrupted the old broadcast model. “Comcast started aggregating channels and offered them to consumers as bundles. Now, Roku and Amazon are playing the role that Comcast used to play, aggregating streamers and offering them as ‘skinny bundles.’”

 

What goes around, comes around, which brings us back to content, because bigger bucks don’t necessarily mean better content or more subscribers, and fiber optics, and skinny or fat bundles are meaningless if there’s nothing good on TV.

 

Dante DiLoreto said that, rather than chasing the current content gold rush, his business is built on sustaining ongoing relationships with creative talent. “We have found that, regardless of what the market is doing at any given time, powerful human drama that connects with the audience is what delivers the best long term value.”

 

He added that a 50 year-old woman living in France, a 35 year old man in India and a teenager in Connecticut can identify with - and fall in love with - a show that’s set in the Latin American jungle. “We love stories because we all share so many fundamental human experiences,” he said. “We see ourselves in other people’s stories. That’s really what this business is all about.”

Screen Shot 2021-06-17 at 5.42.54 PM.png

Article Layout

Screen Shot 2021-06-17 at 5.43.16 PM.png
Screen Shot 2021-06-17 at 5.43.27 PM.png