The great Streaming Video content arms race. Is it time to change the battle plan?
Putting together the Forever Has Fallen business model revealed potential solutions for how companies such as Netflix could raise additional revenues from their customers, while delivering more value, to create loyal communities of fans. But before we get to the solution, here’s some brief context for the problem…
Streaming Video On Demand (SVOD) is locked in a titanic arms race, which has billions of dollar pouring in, all based on the same model; score as many monthly subscribers as possible, as fast as possible. To do that you need the most desirable content, but come in at a price that makes you hugely affordable, because people will pay about $40 per month, spread across about three providers. The pain behind this arms race can be seen from Netflix, the great destroyer of video shops. And perhaps it has created a monster it cannot tame.
Netflix has 125 million subscribers globally and spent $8 billion on content, covering 700 original TV shows and 80 movies. How freaking awesome would it be, to be an actor right now?! Even former Presidents are getting a gig with Barack and Michelle Obama signing on to produce documentaries. Throw in the binge watching habits of many and you have a feeding frenzy of content that has no end and needs a lot of money to fund; right now Netflix burns through US$3 billion more than it earns on subscribers, needing debt markets to stay in business.
The imperative to stay ahead, while swimming in debt, won’t be easy as Apple, Amazon and Disney start to get their act together and begin to soak up eyeballs that Netflix would be counting on. There is a lot of room for growth with 700 million broadband and pay-TV homes around the world (excluding China) yet to take up a subscription. At the current pace of new subscribers and revenues, the model is sustainable; but with more competition, more binge watching and content providers like Disney pulling their content off Netflix to protect their interests, a slowdown would be catastrophic and not entirely unrealistic.
The major sticking point is raising revenues with subscribers — you simply can’t. And inevitably a debt financed business will eventually run out of goodwill. So in this arms race of SVOD, does it make sense to compete on the basis that the one with deepest pockets wins? Perhaps a change in strategy and model to bring in other sources of revenue outside of subscriptions would provide a decisive advantage, limit the bleed and perhaps generate more value to customers.
Our Forever Has Fallen model could be useful for Netflix type companies to realise more revenues and lower the costs of blockbuster production, while raising the value for fans. It does not work with every genre, but can offer huge opportunities with the right story, executed in the right manner. The model is pretty simple, made up of just three parts: blockbuster story, fused with gameplay, and an economic system that generates sales revenues and rewards fans to keep them insanely loyal.
At the heart of this is the need to step away from traditional blockbuster entertainment production. You have to stop thinking screen-only, a method that has been around since the 1890s. Today’s consumer has multiple screens, is constantly distracted, is part of numerous social media groups and — as evidenced by Pokemon Go! and the rise of escape rooms — loves getting out and experiencing challenges with other people.
Forever Has Fallen is Hollywood storytelling using a fictional world made of film, AR, websites, mobile devices and live events. Fans also engage in global gameplay as they hunt for the truth, solve challenges and earn rewards. Supporting the business model is an economic system, using Forever Coin, an exclusive cryptocurrency. Fans can buy, earn and sell Forever Coin or use it in the Forever Has Fallen marketplace.
The model requires a minimal amount of high quality film production; Forever Has Fallen has just 20 minutes per season, against approximately 8 to 10 hours for SVOD. A significant saving with production costs of a program such as House of Cards or Billions costing between US$70,000 to $90,000 per minute. In place of this is fan immersion into a fictional world, where the story is told via websites, social media profiles of characters and interaction using AI for texting and voice. Doing this generates more value for fans, providing excitement, challenges and building stronger relationships with characters.
It also enables producers to unlock new revenue streams. In the case of Forever Has Fallen, we have Forever Coin, a cryptocurrency that functions within an economic system. We have worked out how to control scarcity on exchanges and how to drive demand in the marketplace, in a manner where fans who are most engaged, gain incredible value. Within the game play and storytelling are numerous ways to gain high value sponsorship revenues.
An interesting feature of the economic system is that fans get paid to help build, promote and support Forever Has Fallen; for example, as a fan you earn Forever Coin when you project manage a fan event or help build a website that is part of the story. Being listed on an exchange, means you can cash out your Forever Coin for real currency, or spend it in the marketplace.
Applying this to a SVOD series, fans will willingly spend more money because they are getting more value and it is not part of the subscription. It’s tapping into the era of micropayments. And if you are like Netflix and have 125 million subscribers, generating $0.20 per day (what Pokemon Go! does) from just a small percentage of your customers can go a long way to make up the US$3 billion shortfall you experience every year.
Forever Has Fallen started with the the big question, “what would we do to meet the demands of today’s consumer with blockbuster entertainment?” We are pretty excited by the answer and with our own story, IP and community, we look forward to creating a new type of entertainment and would love to see other areas of the industry evolve to deliver more to fans, because after all, they are everything.