1. Crackle Leads FAST Charge Into Developing Countries

Chicken Soup For The Soul Entertainment, the company that owns Crackle, purchased Locomotion Global, an Indian-based production company in preparation for its expansion into the Indian market. CEO Willian J. Rouhana, Jr calls the expansion into India a “top priority.”

Why It Matters

In case you hadn’t noticed, there are a whole lot of people in the developing world. And most of them don’t have the resources to pay for SVOD services.

That’s a lesson Netflix, Amazon and others are learning as they struggle to make headway in India.

Netflix was originally charging the equivalent of $10 and when they didn’t get many takers, they rolled out a mobile-only plan at around $5, which has had only marginally better success.

Amazon has faced similar struggles.

Disney, OTOH, inherited HotStar in its deal with Fox, and the service, now rebranded as Disney+ Hotstar controls over 80% of the Indian streaming market. That number is no doubt due to the fact that Hotstar has ad-supported options that cost as little as 50 cents a month. (Well that, and rights to the wildly popular Indian Premier League cricket matches.)

Point being though, price is indeed a huge factor in the developing world and that the companies most likely to succeed are those, like Crackle, whose price points start at zero.

The US-based FASTs are all in a great position to expand in the developing world by following Crackle’s game plan: hook up with a local production company that can help you make original content and trust that your library of US and European movies and series will be as popular in India as it is in Indiana.

Given that several of the FASTs are owned by larger network groups, launching a service like Pluto in a developing market could be a great way for ViacomCBS to gain traction for Paramount+ or one of the Comcast collabs they’ve been putting together.

That’s likely to be a lucky strike extra, however, in a market where free is going to be a very popular price point for some time to come and where the next level of viewers may only have resources to subscribe to one or two services at most.

The aggressive entry of FASTs into these markets is likely to impact the various US-based Flixes, making it harder for them to establish any sort of meaningful market share unless they either drastically reduce prices or offer some form of free or almost free model as well.

What You Need To Do About It

If you’re one of the bigger FAST services, you need to follow Crackle’s lead: buy or partner with a local production company, set up your ad sales operations and start making headway. You have a much easier sell than any of the subscription services do. Just make sure you are on mobile too, as TV sets are still not the norm in many of those countries, especially compared to the US and Europe.

If you’re one of the Flixes and you’re starting on your Quest For Total World Domination, then you should definitely look into the pros and cons of offering a free ad-supported version in the developing world as a way to increase your presence in those countries. Maybe use Peacock as a benchmark, only remember to follow up with pitches for the paid version.

It will definitely be long-term play that banks on those free subscribers someday upgrading to paid ones, but given the degree of competition, it’s a way to set yourself apart.

2. 71% Of US Households Still Have Pay TV

Meanwhile, back here in the U.S., Leichtman Research Group, a company most industry players and analysts consider to be highly legit, has a new study out that shows 71% of U.S. households still have a pay TV subscription of some sort.

Why It Matters

While that number represents a significant drop from the 87% of households that had pay TV at its peak in 2011, it’s important to note that 71% is not nothing.

It also matters because there are no doubt many people reading this who are thinking “How can that be? No one I know still has pay TV?” 

Exactly.

Too often people in the industry assume that their social sphere represents the norm, rather than a highly educated, well-compensated exception.

So there’s that.

There’s also the fact that the audience will be split between two alternate universes, with the majority of viewers still maintaining some form of pay TV subscription for the next few years.

And even then, we don’t see that number falling much below 30% to 40% of all households. There are a lot of people who actually like pay TV in its current state and even if you were to dismiss that cohort as “people over 50” the fact is that in ten years, they will just be “people over 60” and very much alive and functioning.

Meaning that the challenge of managing a bifurcated audience will be with use for the rest of the 2020s and that it will continue to be an issue for networks, streamers and (particularly) advertisers in the years to come.

I say “an issue” because the audience is unlikely to be easy to tease apart: people will not be strictly watching cable or strictly watching streaming and it will be important to find ways to reach them both places, something that is often easier said than done.

What You Need To Do About It

If you’re a journalist who covers the TV industry, either occasionally or regularly, look at the Leichtman Report to get a sense of what cord cutting really looks like, even in 2021. (Hint: it’s not a “massive wave.”)

If you’re one of the networks, you need to figure out what the hybrid viewing world looks like from both a programming and advertising point of view because it’s going to be your reality for the next while and because it’s complicated—there’s not much consistency as to streaming versus linear viewing habits which can vary greatly even within the same household and not just kids vs adults.

If you’re an MVPD, you also have some longer-term decisions to make, namely figuring out when it no longer makes financial sense to keep your current pay TV offering in place and what to do next--create some form of streaming-based bundle, partner with a vMVPD or get out of the content distribution game altogether, given that the bulk of your income comes from broadband and all.