Streaming, Progressive Downloads, Over The Top or “OTT”, Video On Demand or “VOD”; whatever you want to call it, this general form of content delivery is having its day. Partially fueled by the current circumstances of the pandemic, which gives many of us too much time to kill at home, and few other entertainment options, what I will loosely refer to as streaming has become the go-to entertainment delivery vehicle. We haven’t been able to go the movies, but we can still receive content wherever we are, when we want, and on the screen we want including smartphones, tablets, desktop computers, digital media players, video game consoles and, of course, TVs.
As the coronavirus and subsequent global shutdown forced film and television production into a standstill, streaming services have only accelerated their takeover with original content they already had in the pipeline and by churning old movies and TV to fill the void. With most of the world in mandatory lockdown, the leader of the pack, Netflix, doubled its quarterly subscriber estimates from January through March by adding 16 million new subscribers.
Netflix’s initial business model at the company’s inception back in 1997 included DVD sales and rentals by mail, and it wasn’t until 2007 that they introduced their hugely successful streaming model. As of April 2020, the company had over 193 million paid subscriptions worldwide, including 73 million in the United States. It is available worldwide except in the following countries: mainland China (due to local restrictions), Syria, North Korea, and Crimea (due to U.S. sanctions).
Netflix didn’t enter the content-production industry until 2013, with House of Cards, and now produces some of the highest end content available on any platform. They spent $15 billion on content in 2019, 85% of which was for originals. Although the company remains committed to producing original content, it is also licensing more content around the world from independent producers and distributors at an accelerating rate over the next few years to fight off emerging competition. The Irishman and Roma are among the many marque features they produced or picked up in the finishing stages. They also have a string of highly successful series like Orange is the New Black, Narcos, and Stranger Things, as well as documentary programing like Tiger King.
Of course Amazon is another major contender in this space and they have also produced high-end programming such as Tom Clancy’s Jack Ryan, The Man in the High Castle, and Hunters starring Al Pacino, along with Emmy favorites The Marvelous Mrs. Maisel and Fleabag.
Although it was Steve Jobs’ last initiative for the company he founded, AppleTV has never lived up to his dream of being the central hub for streaming content. It seems content owners have not been willing to give Apple the kind of cut they demand. The majors, (conglomerates including ViacomCBS, Disney, Comcast and WarnerMedia), have instead aspired to build out their own delivery channels. So, Apple has also now started to produce its own original content such as The Morning Show and the WWI Tom Hanks naval drama Greyhound. They have a lot of catching up to do, but on the other hand, have very deep pockets.
It is not only Apple that is getting denied the best content. Heretofore, the largest content distributors have traded access to their film and television libraries to companies like Netflix and Amazon for lucrative licensing fees. However, the next battle on the horizon will be for content exclusivity. Now that the majors have been developing their own streaming platforms, they will likely want to keep their prestige titles to themselves.
The struggle over exclusivity will effect all licensees. For instance, Warner’s HBO relies heavily on films from the Comcast/Universal, Disney and Fox libraries, which will likely change or cease as current licensing agreements expire. Now that Disney controls Fox, they will likely also pull Fox movies from HBO when their current licensing agreement expires in 2022. It is expected that Disney will then send films released by Fox to their own Hulu or Disney+. Comcast could also move its NBCUniversal titles to its streaming service Peacock, when its current contract with HBO expires next year.
The slow decline of the Exhibition business was already in motion as we entered the pandemic, but the trend has only picked up momentum. It’s a poorly kept secret that movie ticket sales have been flat for the past few years as theatrical receipts have dropped. Now, the “Theatrical Window,” (the length of time a movie plays exclusively in theaters,) has been shattered by the shut down of movie theaters. Exhibitors had fought to keep the theatrical window at a minimum of 90 days, even threatening to refuse to show future releases from studios who didn’t honor the timeline. However, some major releases were piling up.
Studios were afraid that if they missed the prime summer release slots, especially for family fare, they may never be able to recoup their investments. The release of Tenet and Mulan were postponed, but Universal was forced to release Trolls and Warner Bros’ also released Scoob! direct to consumers as PVOD, (premium video on demand.) Moving big titles to their streaming services, as opposed to providing an exclusive period, doesn’t mark the end of movie theaters, but it does worry Exhibitors. As a result, they had to begrudgingly accept the new reality, settling on a 17 day window, which may be codified as the new normal, even after the lockdown is history.
Many titles originally designed as major theatrical releases have gone to streaming outlets to be used as bait to get viewers to sign onto programing contracts. The Hamilton movie, originally designed as a theatrical release, debuted to great success on Disney+; (note that it was not available as part of the free trial offer; you had sign up for a contract at a minimum of $6.99 per month.)
Other exclusive originals like The Mandalorian, not to mention Disney’s rich library of family fare necessary to entertain kids as they are cooped up at home 24 hours a day, have made for a strong rollout of Disney+. The nascent service racked up 50 million subscribers in the first five months, becoming the strongest rival Netflix has.
And then there’s…reruns. Who would have thought that Friends, decades since it first aired on broadcast TV, would build the kind of audiences it now enjoys on streaming, both ad supported and premium? It even started a bidding war between Netflix and Hulu; (which Hulu won).
Old episodes of the FBI procedural drama Criminal Minds is even more of a head scratcher. l would have thought that either of these shows might instead be vying for a slot on TV Land or MeTV between Leave It To Beaver and The Love Boat. Instead, they have built up quite significant new audiences for Hulu. The Criminal Minds phenomenon was apparently spurred by a TikTok fueled obsession many teens and young women have developed in regard to one of the actors, Matthew Gray Gubler. My youngest daughter, who is a fan, tried to explain it, but it is still a mystery to me.
I’ve not yet talked about the explosive growth in the sector of streaming informational content. Like everything the pandemic touches, it has been unprecedented. Traffic increased 30% between the end of February and the end of March, 10 times greater than the normal month-to-month growth rate. Beyond the sheer volume of internet traffic is the fact that the increases were both for downstream and upstream. Normally, during a big traffic event, like a live sports playoff, or a new game being released, the content comes off centralized servers with relatively minor upload traffic, even though it is being downloaded to large audiences. In the case of the pandemic, with so many people working from home, socializing, videoconferencing, and many students participating in online learning, traffic is flowing at heightened volumes in both directions across the internet.
The Zoom conferences with “Brandy Bunch” grids of callers filling the screen, represents a lot of data going in both directions. In the early days of the lockdown, there were constant complaints and demands for more bandwidth, but the service providers did an admirable job expanding services to help meet consumer demand. It is still not perfect and probably never will be, but in the process they got consumers hooked on higher bandwidths.
Not too many will ever go back to slower speeds, even if, and when, things get back to normal. Once 5G is actually rolled out and widely available, it should ease the flow of data, but don’t expect the telecoms to just give this service away after the billions they will have spent on building out the infrastructure.
I have to admit, I’m getting a little tired of so many webinars, but there is not much I’m not getting tired of during this pandemic. I am so ready for this whole nightmare to be over and see my family, friends and colleagues in person without fear of impending doom. In the meantime, I’ll see you online, and DCS will continue to do its part to contribute to internet traffic, hopefully with valuable content that will entertain and inform.
Update as of September 2, 2020: the intended tentpole release of “Mulan,” which had its theatrical released pushed back several times due to the pandemic will now premiere in the US on Disney+ for a premium of $29.