1. The Coming Content Bubble

In August 2015, FX CEO John Landgraf said there there was too much "good TV.”

Three years into “Content Mania” we fear he may be right.

Like many our peers, we scoffed at Landgraf’s comments back when it seemed that there would only be over 400 original series produced that year. What was Landgraf suggesting after all—that rather than produce “good TV” the industry start pumping out crap instead?

But when AT&T’s new “Warnerflix” is promising to match Netflix's $8 billion spend and Disneyflix isn’t even on the scene yet, when you add in whatever Apple’s got up its sleeve, plus the increased spend from Amazon, CBS All Access and Hulu … well then suddenly the laws of physics start to come into play.

As in there just aren’t enough people and enough hours in the day to make all those shows into hits, now matter how deserving those shows may be.

Why It Matters

Like the infamous “Tulip Bubble” of the 1630s, the “Content Bubble” of the 2010s will not have a happy ending.

Best case, there’s a whole lot of churn, as viewers subscribe and unsubscribe to services depending on what they want to binge on. (Like content, there is only so much elasticity in the subscription video market—few viewers are going to keep paying for subscriptions to services they’re no longer watching.)

This will then lead to one of two scenarios:

A. The big OTT services start will merging with each other, thus reducing the total amount of programming they are putting out,

or

B. Some of those big OTT services go out of business. Whether or not they do so will depend on their ability to sustain the losses brought on by the bust of the content bubble, and that will actually depend on their spreadsheets—how much they’d actually anticipated the degree to which many of their new shows would fail, and what they considered “not a hit” in an SVOD model where the goal is to obtain and retain subscribers, not ratings points.

The fallout will hit a number of industries hard, production in particular. All those production companies, edit houses, craft services providers and the like will suddenly feel a major pinch as production drops back to more sustainable levels.

Viewers will feel it too, though probably not in a bad way. As the noted psychologist Barry Schwartz pointed out in his 2004 classic The Paradox of Choice, eliminating a plethora of choices actually reduces anxiety and increases happiness. That’s something anyone who has tried to find an online movie the whole family is happy to watch can relate to.

Ditto an advertiser who's tried to make sense of the current TV landscape.

What You Need To Do About It

If you’re one of the platforms that's creating the mania, not much you can do about it now other than hope you’ve got more hits than misses coming up and make sure that your promo game is on point.

If you’re one of the networks on the edges, be glad you’re not rolling out 100+ series: there’s a lot to be said for a few “must-see” buzzed-about hits. As per our theory on “the binge list” (the mental list people have in their head of series they want to watch) if you can get one or two of your shows on a lot of people’s binge lists, you’ll be in excellent shape and will experience far less churn than your competitors (provided you keep pumping out the hits, that is.)

If you’re NBC, and you’re the only one of the major broadcast networks not to roll out a major OTT app, well, sometimes "he who hesitates" actually wins.

 

2. Sinclair Launches Local News App

Sinclair, which owns the largest group of local broadcast stations in the U.S., announced that they’d be rolling out an OTT app called Stirr, that has content from a bunch of online short-form platforms that pretty much nobody wants to watch along with local broadcast news, which is something a whole lot of people want to watch.

Why It Matters

Kudos to Chris Ripley and Sinclair: we’ve been preaching the value of local broadcast news for a while now and wondering why no one had tried to take it OTT. (Correction: why no one who actually owned the existing broadcasts had tried to launch them on OTT. Several companies had tried to start up OTT local news shows, but they didn’t have the connections or the star power.)

In addition to giving people access to local news on their mobile devices, Sinclair is giving advertisers are great platform for running ads on over 150 local stations at once. While many (most?) local stations have some sort of OTT app in play, we’re thinking that Stirr’s value will be that it’s slicker than the local standalones and has a superior ad platform and some marketing mojo behind it.

Whether that’s enough to help it supplant all those standalone station apps will depend on how viewers react to it once it’s live, but we’d say it’s got a better shot of making it than ATSC 3.0 does of reaching mass adoption ahead of self-driving cars.

What You Need To Do About It

If you’re an advertiser, you might want to check out what kind of deals you can get on addressable local OTT ads aimed at a sizable audience in hundreds of markets, a buy that’s you'll likely be able to group in with Sinclair’s linear addressable buys.

If you’re a competing local broadcaster with an existing OTT app, time to polish it up and invest some money into marketing it. Local OTT, especially for news, is going to be a big market and you don’t want to let Sinclair come in and blow all your hard work away.