Streaming Dynamics

There’s been a lot of talk recently about Netflix - the first earning share in quite some time, Netflix losing access to the Office and Friends in the not too distant future, and what it means when we don’t own any of our media. Overall, I think it’s going to lead to a few unknown factors.

The gold rush for rights

Much has been written about how Netflix got great content deals before other media companies became aware of their valuable content. NBC selling Friends and The Office, Disney sold the rights to The Avengers to Netflix for an extensive check, the number of examples continues to grow. Netflix was able to leverage that foothold into people’s subconscious into checking out their media. For example, one could imagine a customer saying, “I’m already paying eight bucks for Friends; let’s check out Orange Is the New Black.”

Companies are now pulling their content from Netflix for two reasons: to fund their streaming services and slow down Netflix’s momentum. By the nature of the world, every streaming service won’t become successful (and it’ll be fascinating to see which of those that do), but as that’s happening, companies are trying to spend as much as they can to bolster their catalogs. ¹

The implication from this becomes content will continue to fracture. Instead of having one place to grab “all the content,” now there will be Service A, Service B, etc. Word of mouth will continue to matter and only grow in importance - instead of watching whatever the algorithm suggests, you’ll rely on friends and family to tell you what service you should have.

The Benefits of Bundling - the additional value prop

It’ll become more critical for these streaming services to carve out strategically what niche they’ll occupy. HBO was the original network, Netflix followed suit, but “just streaming” isn’t going to be enough to differentiate ten different networks. Netflix smartly niched down. By pioneering narrow suggestions, they paved the way to discover hits such as dry British rom-com. Further, they invested heavily in owning great documentaries and standup specials. All are valuable niches and are what keep people on their network.

Concluding Thoughts

There’s much to be written about the recent digital media boom. As more of these apps start to pop up (Disney+, NBC’s app, etc.), the gold search for tv rights will only accelerate before some of these apps eventually fold. It’s going to be fascinating to see and is certainly an area to watch moving forward.