Comments
dmendyk
4/15/2016 3:39:30 PM
User Rank Platinum
Like buttah
The closer we creep toward true on-demand content delivery, the higher churn rates will climb. Demand will focus on specific pieces of content, not the providers. This is why the linear video industry has resisted a la carte packages. The key to profitability in the content business is to get people to pay for stuff they don't really want.
JohnBarnes
4/15/2016 10:24:04 PM
User Rank Platinum
Re: Like buttah
@dmendyk, you're quite right about the problem of getting people to buy content they don't want, but I think the more critical factor is that profit on content carries a huge discount for reliability; it's the same problem of that causes artists of all kinds to be able to "make a fortune but not a living", as Scott Fitzgerald put it. Real demand for any content tends to be so narrowly focused in space and time and so unpredictable that despite an enormous overall demand, nobody with any sense would invest, since you're almost certain to lose your investment. (Not unlike the lottery, come to think of it). So the only way to sustain investment is to artificially induce sales of things people don't actually want.
dmendyk
4/16/2016 9:31:10 AM
User Rank Platinum
Re: Like buttah
Hi, John -- If there can be such a thing as a three-edged sword, content creators would be among the first to feel its sting. To your point, the key to financial reward is in the distribution of content. OTT services are disrupting conventional video distribution, but so far it's not clear that OTT will generate enough reliable revenue. So far, it looks like video will stumble down the same path as the music business -- massive change and dislocation, with a net result of diminished value.
mhhf1ve
4/16/2016 6:08:38 PM
User Rank Platinum
Re: Like buttah
> "So far, it looks like video will stumble down the same path as the music business -- massive change and dislocation, with a net result of diminished value."
I don't think so.. music is a different business. People consume music in a different way -- and the value of music follows a much different life cycle than video. People are willing to buy movies for more than a single song track. But no one really goes to see a "live performance" of a movie. Comparing video and music industries is not as simple as it seems. Just because files can be downloaded on the same online markets (or bittorrent sites), doesn't necessarily mean video will follow the same path as music.
On top of all the differences, musicians generally don't need $200 million budgets and get celebrity actors and directors to collaborate to produce their works ....
It's also arguable that the music industry isn't suffering any kind of "diminished value"...
mhhf1ve
4/16/2016 6:18:32 PM
User Rank Platinum
churn...
> "..ongoing perceived value was the biggest factor for reducing churn over the long run. OTT services need to continue to provide users with reasons to stay on as subscribers, otherwise they'll disconnect to save money."
One of the biggest problems is fragmentation -- if content isn't available across iOS, Xbox, FireTV, Playstation, smart TVs, etc... it makes it harder for customers to see that perceived value. Being "stuck" with particular hardware is a drag, and that's part of the reason why Netflix is so dominant. Netflix has figured out how to play and resume its videos across almost any device.
faryl
4/16/2016 7:14:04 PM
User Rank Platinum
Re: churn...
Aside from the inconvenience, I think customers have a hard time wrapping their minds around the licensing structure.
When Hulu Plus first came out, people were constantly complaining about not being able to access more content via regular Hulu. They didn't really get that the licensing agreements with the different content owners dictated whether it could be made available for iOS, etc.
faryl
4/16/2016 7:17:06 PM
User Rank Platinum
Re: Like buttah
This article reminded me I need to cancel my documentary channel subscription before the free trial ends!
I signed up specifically to watch "The Spiral Staircase" - so I'm contributing to the content-specific churn. :)
mhhf1ve
4/16/2016 8:39:01 PM
User Rank Platinum
Re: churn...
> "I think customers have a hard time wrapping their minds around the licensing.."
I think the inside baseball of content licensing is still a real problem for many players. Customers are annoyed that Disney doesn't play that well with Netflix. Some people are annoyed enough to turn to VPNs to get around geo-blocking and other services such as easy-to-use pirate sites....
JohnBarnes
4/16/2016 10:01:16 PM
User Rank Platinum
Re: churn...
@mhhf1ve, ultimately the battle cry of the content demand revolution is probably "I just want the stuff I want, when I want it, on whatever screen I want it" and each successive step toward universal access on demand for content a la carte is going to immediately grab most of the market, every time, until that "universal access on demand for content a la carte" endpoint is all there is. It's a system where there's no turning back and all the rewards are for converging on one point.
But as for the path by which we will get there, beats me. And it might be a very long path indeed, which will probably forever bewilder customers, who don't see why we don't have it already.
elizabethv
4/17/2016 8:57:00 AM
User Rank Platinum
It's all about content....
There's no surprise that Netflix is leading the pack, they have the most content, and more than that, the most quality content. Amazon definitely competes where content and quality are concerned, but to make it worth it you have to have Amazon prime, which has a decent list of free content (once you pay for Prime) but the cost of prime is significantly larger. You do get more than just Prime Video, but if you aren't planning on using anything but Prime Video, it's really not worth it. I have CBS All Access, but really it was just to watch the Big Bang Theory, and once the new episodes end, I'll probably cancel. It is interesting that CBS All Access has added the ability to watch old CBS, instead of just the current ones. I'm sure they have to do something to compete with Netflix.
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