The New TV: Get Me Subscribers!
Peak TV isn’t just about attracting the biggest audience for a show anymore.
In 1987, the Emmy nominees for Outstanding Drama Series were:
— L.A. Law (NBC) — winner
— Murder, She Wrote (CBS)
— Moonlighting (ABC)
— St. Elsewhere (NBC)
— Cagney & Lacey (CBS)
Law, investigation, medicine; these types of shows provided formulas for weekly, serialized conflict. They generally attracted broad audiences, hanging out mostly in the top 20.
And these were the same large audiences the brands of America wanted to reach with TV spots.
These were your TV choices in 1987. Life was simple.
2017 is not like 1987.
In 2017, the Emmy nominees for Outstanding Drama Series were:
— The Handmaid’s Tale (Hulu) — winner
— Better Call Saul (AMC)
— House of Cards (Netflix)
— Stranger Things (Netflix)
— The Crown (Netflix)
— This Is Us (NBC)
— Westworld (HBO)
The nominees included dystopian women slaves, law(lessness), political intrigue, a supernatural 1980s otherworld, a royal British period drama, one unconventional family over the years, and futuristic robotic vacation destination.
How very un-formulaic.
2017 was the first time a streaming service won the Emmy for Outstanding Drama. Execs at Amazon and Netflix were undoubtedly flummoxed over Hulu; Mr. Bezos in particular has recently proclaimed, “get me the next Game of Thrones!”
No doubt CBS and ABC were having similar angst over their exclusion of being nominated in this category.
This isn’t to say there weren’t any out-of-the-ordinary TV shows in 1987. There were. Like Max Headroom, Beauty and the Beast, and The Tracy Ullman Show.
The TV business model has changed.
I’m comparing these two sets of nominees thirty years apart because I think they help paint a picture about how the TV business model is changing. For TV people, these have been some of the major news pegs over the past year:
- Netflix is investing $7 billion in content in 2018.
- Amazon is investing $4.5 billion in content this year.
- Hulu is investing $2.5 billion in content this year.
- Peak TV probably means 500 shows.
Of this year’s seven nominees, four of the seven were on ad-free services (five if you count the no-ads Hulu tier).
Of this year’s seven Emmy nominees for Outstanding Drama Series, four were on ad-free services.
So excluding product placement (another story), ad revenue isn’t the primary driver for at least four of these shows.
Get me subscribers!
Netflix catches hell for not releasing its viewers, or as the industry calls it, “ratings.” Netflix insists it doesn’t matter, and for them, they are right. All that matters is:
What will bring in new subscribers?
What will keep existing subscribers from canceling?
In today’s Modern Media Culture, I would wager that it doesn’t even matter if anybody actually watches the shows. It’s like the paid gym membership for the person who never goes to the gym. That is the ideal scenario — revenue without the wear and tear.
No, I stand corrected. If a lot of people fall in love with a show, then it might go crazy viral and that will attract more subscribers. I thought that would happen with Netflix’s Ozark, but it didn’t.
All Netflix or Amazon or Hulu or yes, even HBO, has to do is convince viewers they have to subscribe in order to not miss out.
Netflix now has 104 million subscribers around the world.
I heart data.
If I worked at Netflix, Amazon or Hulu, and if I were great with data, I’d do three things:
- Segment audiences to understand if there was a large enough group of people who would love 80’s retro horror. And 20th century British family drama. And others types of shows.
- Prioritize these segments to define the upside of investing in this content; meaning, the more mutually exclusive the segment is, the bigger the potential impact on subscriber growth.
- Define additional segments and repeat; all with an eye on also keeping existing subscribers.
Viewers win and lose.
Major broadcasters are struggling with cord-cutting. Their business model is still tied to big hits with large-scale linear TV ad buys. They generally aren’t as equipped for niche content, because the prime time TV schedule is limited to 21 hours a week.
eMarketer reports that cord-cutting is accelerating. Some linear broadcasters are making bold moves: for example, CBS All Access has the new Star Trek: Discovery and a Good Wife spin-off, only available to stream.
Ad revenue still matters. Netflix appears to have product placement. Amazon is working on ads. Hulu offers ad-supported options. And while ads get a bad rap, without ads, there would be much less to watch.
My hypothesis is that broadcasters are going to aim to plant a foot in three worlds:
- Large scale hits for linear TV viewers;
- Niche shows that attract subscribers to streaming services; and
- Some sort of short-form strategy for platforms like Facebook Watch.
There will be a limit to how many services a subscriber are willing to pay for, or has the capacity to watch. This is why the viewer is both the winner and the loser: we get the greatest shows in the history of American entertainment, but we have to pay to get them, and it’s going to be impossible to watch them all.
Todd Lombardo is a Digital Strategist and Editor at Mistress.