Content Wars (Pt 2) — Do Streaming Services Value TV More Than Film
Continuing with the content theme, let’s break down the value between television or episodic content vs. feature films for streaming platforms.
The streaming industry is a very lucrative business. The streaming services market surpassed $50 billion in 2020 and is expected to grow over 21% CAGR for the foreseeable future. Streaming revenue accounts for more than 50% of total digital media revenue in the US alone. It’s clear that streaming companies are doing something right — but what? Some people say that streaming services value episodic content more than film. In contrast, others believe they have no preference between them. Let’s explore both sides of the argument and see what type of content will most likely make someone subscribe!
In my opinion, TV and film content fulfill two very different roles for these companies. One is to attract viewership through brand affinity, the other is to maintain viewership. But it’s a battle for attention at the end of the day. Amazon is an excellent example of how content is valued and how consumer viewing patterns have other DTC players trying to replicate the online shopping behemoth.
The Amazon model is heavily reliant on consumers shopping on their platform, right? Why else would they be charging a nominal $119/annually for free shipping? Consumers are getting Prime Music, Prime Gaming & Prime Videos — that’s a great value! Amazon spent $904M in 2014 and a whopping $6.2B last year on content alone — it’s obvious they want to keep consuming eyes on Prime Video. The longer consumers are on using the streaming platform, the more chance they buy something. So how do they do this?
The streaming giant’s Prime Video is doubling down on episodic content and reimagining well-known intellectual property to keep viewers hooked and buy more of their products. In the last year, Amazon has been investing heavily in developing original series for its streaming service and acquiring or licensing content from other networks like AMC (Fear The Walking Dead) & BBC America (Orphan Black). Then you have Amazon acquiring MGM just recently for $8.5B with a catalog of +4000 films (James Bond, Legally Blonde, Tomb Raider) and more than 17,000 TV shows (Handmaid’s Tale, Fargo, Vikings).
“We’re looking forward to reimagining and developing the deep catalog of MGM” — Jeff Bezos
Have you ever gone to a Cheesecake Factory and marveled at their menu? Or in the instance of my wife, frustrated with the sheer number of choices? Lots of options, right? Imagine having multiple options for watching Lord of The Rings or James Bond or being tortured to see the next episode of Jack Ryan. As such, the value of episodic content is crucial due to the longer viewing times and replayability. A consumer can spend an entire week binge-watching a series. This is evident if you look at the original Amazon Prime content list — they’re releasing far more original TV shows than films.
It isn’t to sell subscriptions for Amazon specifically but to keep you on their platform long enough to buy shoes…
“When we win a Golden Globe, it helps us sell more shoes,” Bezos said at a 2016 technology conference near Los Angeles. He said film and TV customers renew their subscriptions “at higher rates, and they convert from free trials at higher rates” than members who do not stream videos on Prime. Prime members also buy more goods from Amazon than non-members, Bezos has said, further boosting profit.
How does this relate to other streaming platforms?
Heck, I can’t count how many times I’ve watched Family Guy or the Simpsons and have practically kept it on loop as white noise in the evening on Disney+.
It differs depending on the stage of the streaming company and the legacy brands it controls. Does it really matter for Disney+, who owns their own legacy IP and the entire Fox, Lucasfilm, and Marvel catalogs? There’s a reason why they’re utilizing existing IPs like StarWars to push out Mandalorian and their Marvel ownership to push out shows like WandaVision. It’s the benefit of owning the IP. But for an HBOMax, Hulu, or Netflix. That blend of episodic content and film is crucial for attracting and maintaining subscribers. Hulu seems to value TV more, largely thanks to the original content on the platform. 56% of users said they’d subscribe to Hulu just for the original content, including popular shows like The Handmaid’s Tale. Netflix, defending against the continued push for DTC by their former content providers, fall into the middle ground. It has to continue building a solid balance of film and TV content, with originals in both categories. Unless they begin to acquire libraries like Amazon, they’ll be required to keep pumping out original IP across all formats, day in and day out.
Overall, the battle between TV vs. film continues to rage on. Different streaming platforms have different approaches, but it’s also linked to original and new content. Users are more likely to subscribe if they know they’re getting fresh content all the time.
Triumph Culture Capital is not alone when we say that content is the center of the entire media & entertainment universe. And content is cultural currency. By tackling the technology that connects, supplies, distributes, or evolves how we create, interact and experience content, we are able to reimagine the future of content and entertainment.