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The Rise Of The Niche SVOD Service

It feels like we’re waking up to news about a new subscription VOD service being launched every week. This year alone has seen the launches/announcements of HBO Now, Showtime’s standalone subscription service, CBS All Access, and many more.

This can be both exciting and overwhelming for creators who are looking for the best ways to monetize their content. Sure, it’s encouraging that there are more and more potential buyers – but in an increasingly fragmented market where both new platforms and new content are proliferating, where should these creators look next?

The answer may lie in the many new, much more specialized SVOD services being launched.

Today, the SVOD market and the conversation around it have largely been dominated by three key players: Amazon, Hulu (which just announced the launch of a $11.99/month ad-free subscription tier), and – the giant everyone is still trying to catch up to – Netflix. These are all either huge standalone players or platforms with the backing of massive companies, and it shows: these three platforms acquire aggressively, and acquire broadly.

This is well and good for many creators, but it becomes harder to sell to these guys without the potential for a huge audience. As Netflix’s Director of Global Media Relations Jenny McCabe once said, “we can’t license everything and also maintain our low prices, so we look for those titles that deliver the biggest viewership relative to the licensing costs. This also means that we’ll forgo or choose not to renew some titles that aren’t watched enough relative to their cost.”

Fair enough. So where else can creators look if their content doesn’t command all the eyeballs needed to justify a buy from one of these players?

The good news is it looks like there’s more than enough space for growth in the coming years to accommodate many more: a June 2015 report from Digital TV Research has found that global OTT revenues could reach $51.1 billion in 2020 – and given that 2010 revenues were at $4.2 billion, that’s a pretty staggering annual growth rate of roughly 112%.

SVOD Graph

Source: Digital TV Research

And as you can tell by the graph, one of the main drivers of growth will be subscription services., and by 2020 is likely to be the largest source of revenue ($21.6 billion per year).

It looks like a lot of players want to get a piece of the pie. Established traditional players – HBO, Showtime, CBS, among others, as previously mentioned – are launching OTT services hoping to lure some cord-cutters and cord-nevers. These players are largely banking on the popularity of their own original content to lure viewers though, so they aren’t too likely to buy content outside of huge blockbusters.

Other content owners with huge libraries are also launching SVOD services to capitalize on what they already have. It stands to reason that some of these players may eventually look to grow their libraries through some additional acquisitions, but they are by and large banking on what they already have – at least for the time being.

Warner Instant Archive, for example, charges users anywhere from $7.08-9.99 a month to give them access to their massive archive of old films and television spanning the ‘20s to the ‘90s. Lionsgate and Tribeca earlier this year announced that they would be partnering to launch Tribeca Shortlist this fall, a service aimed at film buffs. They haven’t announced what specific content will be on the platform, but it is safe to assume that Lionsgate and Tribeca will be taking advantage of their respective libraries somehow. Lifetime is capitalizing on their made-for-TV dramas by launching a $3.99/month service that will let audiences watch all the Lifetime movies they want.

So where does this leave us?

What content creators and distributors should be keeping an eye out for are the ultra-specialized SVOD platforms that are just starting to come to the fore. These are platforms aimed squarely at a very specific, very niche audience. They are going for depth and focus, instead of the broad approach that has come to define the largest SVOD platforms today.

AMC and DramaFever, for example, are in the process of beta testing Shudder, which specializes in horror films from around the world. As of this writing, they have 270 films in their service and plan to charge $4.99 a month. Nerd audience-oriented platforms Con TV (from Cinedigm and Wizard World) and Comic Con SVOD service (from Lionsgate and Comic Con International) will be competing against each other next year. MUBI is aimed at cinephiles and introduces a handpicked film every day. Each film is on MUBI’s library for a month, so that means there are 30 films for users to watch at one time.

Even international content is getting some love. DramaFever’s eponymous service, which specializes in Korean dramas, has about 8 million active users. Acorn TV, meanwhile, boasts “the best British TV streaming”.

All of these platforms (and presumably more) will be making acquisitions to ensure more depth instead of breadth in their libraries to attract smaller, but hyper-loyal audiences. They will be on the hunt for content that will appeal to their niches – so it might be time to ask if the content you have meets their very specific needs.

Although they will be buying on a smaller scale relative to the Netflixes and Amazons of the world, if a creator’s content is something that resonates with their particular audiences, they might find themselves in a pretty sweet spot.


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