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1. Streaming’s Mass Market Dilemma
When I first started working, a wise older colleague pointed out to me that People Magazine had many more subscribers than The Atlantic. It’s a story I’ve told on here before, but her point was to illustrate that mass market content is always going to draw the biggest audiences, hence the term “mass market.”
I’ve been thinking about that analogy again given the divergent critical and audience reactions to the new Netflix series Old Dads, which was created by (and stars) comedian Bill Burr.
Burr is quite popular, but with a very different audience than, say, Hannah Gadsby, whose far more intellectual 2018 Netflix special, Nanette, drew rave reviews and “future of comedy” thought pieces. 2018, of course, being a lifetime ago in streaming years.
It illustrates a key problem the streaming services will face over the next few years as they seek to differentiate themselves from each other.
On the one hand, unlike traditional networks, they are not bound by the constraint of time and can have a stack of “HBO-like” shows debuting at the same time as a stack of mass market shows.
The problem is perception: do the people who like Netflix for shows like The Queen’s Gambit and BoJack Horseman see shows like Old Dads and decide that Netflix is now crap? Or is it possible to keep both audiences happy and relatively contained within their own bubbles?
Why it matters
Churn is still a major issue. New research from Antenna this week, research we actually find to be valid, shows that over one-third of all SVOD subscriptions now come from what they call “serial churners”, e.g. people who drop a service once they’ve finished watching a particular series, only to pick it up again when something new comes along.
The fact that the number of serial churners is up from just 10% of all new SVOD acquisitions in 2019 seems to indicate that this sort of behavior is becoming ingrained. That is a bad sign in general, but a particularly bad sign for SVOD services with an ad-supported tier, e.g. all of them, because it makes it hard for them to guarantee audiences more than a few weeks out.
The balancing act seems like it might be easier for some services to pull off than others. Max and Paramount+, for example, have established sub-brands in HBO and Showtime that serve as destinations for that sort of more critic-friendly content. It gives them a way to keep those shows separate from their other programming, and, more importantly, makes it easy for viewers to wrap their heads around the fact that the services are home to a number of very distinct genres. Which, given that the SVOD services are all ultimately going to wind up becoming iterations of the full pay TV bundle, with news, sports and entertainment programming, is not a bad thing.
What you need to do about it
If you are one of the other streaming services, you need to create your own version of HBO and Showtime. It can just be a submenu or a little icon that calls out “Netflix Gold” or similar and lets people know that this is where they can find your version of HBO.
I get that doing so might create some issues for your ad sales teams, what with people cherry-picking and all that—but it might also create opportunities for targeting the sort of highly educated, high net-worth individuals that are so hard to reach pretty much anywhere.
You also need to start thinking of your offerings as more akin to a cable bundle than to a network. You will eventually have a wide array of programming that will appeal to a wide array of people at a price point that is multiples above what you charge now. That sort of strategy will help you reach different audiences while conveying the breadth of your offering.
I mean algorithms have their value and all, but so do actual buckets, which is why creating a separate bucket (and name) for your more premium series, will prove to be a very smart move.
2. Amazon Takes On SMB
There’s a saying that Facebook knows who you want to be, Google knows who you’re trying to be, but Amazon knows who you really are.
That’s because the company has massive amounts of data on the shopping habits of millions of Americans. Data that they are slowly but surely infusing into the greater television ecosystem.
Case in point, their newest product, Sponsored Ads, a self-service platform that will allow small and medium businesses that already sell through Amazon, to run ads on Amazon’s panoply of ad-supported video products, from Twitch to Freevee to Fire TV.
It’s being positioned as a companion feature to search ads, one that takes advantage of the fact that many small and medium brands now have video that they’ve shot for Instagram or their Amazon page.
And if they don’t, Amazon has tools to help them create commercials using AI.
Meaning we are not talking Cannes Lions winners here, but given the ads intended purpose, that may not make much of a difference.
Why it matters
Amazon has always been an outlier in the streaming game because for most people, Prime Video is just a nice additional feature that makes the free two-day delivery slightly more worth it.
To start off with, Prime can be confusing AF—some things are free, some are free with ads, some you have to pay for—but not confusing enough to actually put most people off using it.
Mostly, as noted, because they view Prime as a nice perk, not the actual thing they are paying for. And because many people mostly use it to rent or buy current movies.
What’s notable about the new Sponsored Ads product is that it allows small companies to target customers on the sort of content where their brand is an easy fit. So a company that sells whey protein might run an ad during a program about triathlons. Or a company that sells packing cubes might run ads during a travel program.
It’s not all that different from what Google has going on with YouTube, only most of the inventory on Amazon will be against high production quality TV programming.
That’s going to be even more true when Amazon rolls out their new pricing structure where viewers will have to pay extra to watch shows free from ads. Because if you’re someone who mostly uses Amazon to rent movies or watch Thursday Night Football, the ad-free tier is just not going to seem worth it.
So there’s that.
Then there’s the part where Amazon will use AI and their proprietary software to help brands create their own ads. Provided the end results look good, this should remove a major barrier for many small and medium businesses, the sorts of companies that rarely engage an actual ad agency.
Especially given that Amazon is promising that the ads can be interactive and shoppable.
Making for a very tight retail media loop that makes those ads as easy to measure as digital, only with the emotional impact that comes from the sight, sound and motion available on television.
That’s not a given though—much will depend on how clearly AI-generated the ads seem—but if Amazon can make it work for most brands, we can expect to see others entering into this space too, as not every brand is going to want to exist in the Amazon bubble.
What you need to do about it
If you are Amazon, pay attention to the quality of those ads you are cooking up. Nothing is going to turn viewers off quicker than a bunch of amateurish looking ads. (Okay, pharma ads, but you get my point.) Ditto advertisers with real ad budgets: a big brand that spent $2 million on its new commercial is not going to want to run in a pod with a bunch of spots that make late night car dealer commercials look slick.
If you are everyone else in the industry, Amazon is likely doing you a favor. TV advertising has long been limited to a small number of brands and the more brands there are looking to advertise on TV, the more competition there will be for ad slots, the higher CPMs you can charge.
That, and it allows consumers to see ads that actually align with their interests. Sort of what Instagram has been doing with its ads, but more interactive and on a bigger screen.
For everyone in the industry, that's going to be a very good thing.
Alan Wolk is co-founder and lead analyst at the consulting firm TV[R]EV. He is the author of the best-selling industry primer, Over The Top: How The Internet Is (Slowly But Surely) Changing The Television Industry. Wolk frequently speaks about changes in the television industry, both at conferences and to anyone who’ll listen.
Week in Review is an opinion column. It does not necessarily represent the opinions of StreamTV Insider.