As if the pool of big fish in on-demand video wasn’t already stuffed full, this past week saw three more sharks dive in, just to make it interesting, along with a big price hike by the biggest shark of all, to make it more expensive for everyone to keep swimming.
That Great Red Shark, Netflix, continued to surprise, bumping up prices across all its plans by as much as 18 percent, its biggest ever increase. In the case of its most popular plan, the two-stream Standard, its price will jump $2 per month, to $12.99.
Netflix said the hike would pay for more programming, and certainly finding more cash the old-fashioned way, rather than through billions of dollars in more junk-bond financing, seems prudent, especially now, with share prices down a bit and interest rates up. The somewhat mixed quarterly results released after trading hours on Thursday suggest some need for attention too (though they did add nearly 9 million subscribers in the quarter).
Netflix is betting demand for its vast store of programs is relatively immune to price hikes. The company is probably right, for now, though as Apple is finding out in a saturated and mature mobile-phone market, consumers do have limits and options.
But inflicting the price hike now might, paradoxically, make life easier for Netflix as more competition jumps in, and viewers have to make choices.
The current (eminently reasonable) thesis in Streaming and is that people have a limited entertainment budget. That will translate in most households to no more than a handful of SVOD subscriptions, the thinking goes. Netflix aims to be first on the list of preferred SVOD services for most people, and is spending massively on content across the globe to make that so.
And if that entertainment wallet does indeed have a relatively inelastic limit, say, $50 a month, Netflix just laid claim to a bigger share of it, just as many other big challengers are jumping in.
The competitors may have to push down their prices to get the scale they need for sustainable business, especially early on, when viewers are sampling who else they might pay for.
As it is, the pool already just got a little more full.
Last week, Amazon launched IMDb Freedive, an ad-supported service featuring older films and TV series streaming on its IMDb entertainment database. That service competes directly with ad-supported services such as the Roku Channel, Tubi, Xumo and Pluto.TV.
It’s not quite clear what Amazon’s video strategy is. For now, it appears to be “D) All of the above.”
Freedive joins a bewildering portfolio of Amazon video options, including the on-demand Prime Video, and Twitch, the live-streaming platform showing more non-gamer content.
Prime subscribers also can add on more than 100 other SVOD channels, building their own skinny bundles. With its resources, Amazon can afford to make a lot of bets, and see what wins out.
Freedive will compete in part with STIRR, a different approach to ad-supported online video by Sinclair Broadcast Group, for now the largest chain of U.S. broadcast stations.
The service will offer on-demand content from Sinclair stations and 20 partner channels, such as Dove, Comet, Cheddar and Stadium. But Sinclair CEO Christopher Ripley and STIRR General Manager Adam Ware make a point of the service’s live and local components, a differentiator from many of the competitors.
When you log in, the service gives you a choice of feeds from its stations in about 75 markets. You can pick one of those, or grab the national feed from its Washington, D.C.,-based affiliate, WJLA.
STIRR programmers are weaving local news, sports and other content from those stations into a lean-back experience. They’re also leveraging underused local content such as drone footage into themed programming for entire new channels.
Sinclair VP of Emerging Platform Content Scott Ehrlich said the company hopes to have 50 channel partners by the end of the year. Tellingly, he said it’s not difficult to find services that want to be part of STIRR. The challenge is curating the right ones. Expect more movies and esports in particular, he said.
STIRR is Sinclair’s effort to get a jump on ATSC 3.0, the new broadcast standard with transformational interactive potential for local stations. The technology holds much promise, but analysts agree it will take at least two years to become widely available, with consumer uptake even slower.
In the meantime, Sinclair will use STIRR as its first draft of an ATSC 3.0 future. As Ware joked, it’s “OTT for the OTA crowd.”
The week’s other notable newcomer was a really big, and really late, one.
Comcast’s NBCUniversal announced it will launch its own subscription service by 2020., and shook up its management structure, putting cable monarch Bonnie Hammer in charge of the new unit. The announcement makes NBCU the last of the media giants to jump in the pool, even later than WarnerMedia and Disney, both of whom set to deliver their services late this year.
In its defense, the late-arriving service won’t be NBCU’s only online-video play.
Last week, I talked with NBCU cable execs about Bluprint, their revamped, renamed and expanded hobbyist-learning subscription site. Bluprint represents a significant NBCU push into e-commerce across all of its operations. In that, it may find some competition from Amazon, which knows a little bit about e-commerce.
The week also brought news that membership big-box retailer Costco is also considering a streaming service for “average Americans” it believes aren’t well served by Netflix and Amazon programming. Costco is talking to the same executive, Mark Greenberg, who previously had been in talks with Walmart for such a service. Walmart is now reportedly focusing on beefing up its existing Vudu TVOD/AVOD offerings.
Not to be lost in all the week’s news, Hulu CEO Randy Freer took to TV to say his company now has 25 million U.S. subscribers, and bravely said it was “absolutely possible” that Hulu could catch Netflix. As it is, Hulu still isn’t making money, has lots of questions about its direction after Disney gains majority control, and still has less than half of Netflix’s 58 million U.S. households.
For all that, 25 million subs still makes Hulu a big shark in a very full pool that just added a few more fish.