Kate Bulkley, Media Analyst.

Keeping SVoD in perspective

By Kate Bulkley

Broadcast News

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For Broadcast January 21, 2016

Netflix and Amazon are about subs not viewers, says Kate Bulkley

We all know big is best, right? Goodness knows the TV market has been awash with M&A: Sky now spans three European countries; America’s Viacom and Discovery have extended their reach globally; and super-indies have become mega-indies, aka Endemol Shine and Zodiak-Banijay.

Yes, big audiences are still crucial (though numbers approaching the 20 million mark, the golden age of British TV, are as rare as an Oscar for a black actor). Right now, however, the big stuff doesn’t always look like the only road to future success. SVoD services like Netflix won’t even tell us how many people are watching their content. We’ve marvelled for several years at Netflix’s growth in worldwide subscriptions (now more than 69 million), but that’s a different metric.

The recent sniping between NBC and Netflix is all about this question – the big US broadcaster commissioned research to underscore its claim that the audience for Netflix’s Marvel’s Jessica Jones (pictured) is so tiny as to be almost insignificant next to linear TV.

Why do this? Well, if Netflix ever thinks of offering advertising, NBC wants to be able to kick that idea into touch. Ampere Analysis reckons that if Netflix went ad-funded in the UK, it would be like adding another Channel 5 into the mix: not great news for traditional broadcasters, but by no means catastrophic.

The very fact that there’s a row going on about eyeballs shows how the world is changing. Sky already preaches the value of cumulative viewing figures, but really, both Sky and BT are more interested in counting subscriptions than eyeballs.

The VoD market is just 3% of all TV viewing in the UK, and although Ampere reckons the number of UK VoD subs will grow from 8.5 million to 10.5 million this year, the marketing noise is still out of proportion to their overall market share. Netflix’s excitement about upcoming royal drama The Crown, starring Claire Foy and Matt Smith, and Amazon’s touting of Clarkson and co’s new motoring show make it feel as if the end is nigh for traditional broadcasters.

Clearly, it’s not, but the customer-friendly functionality and cheaper pricing of these players should light a fuse under established players’ tactical and strategic roadmaps. Getting small things right, like a service that remembers who you are, is pretty basic.

And if you are suddenly in love with small, then look at the indie marketplace. The newest name in town is Sister Pictures, created by former Kudos drama supremo Jane Featherstone and reportedly backed by Shine founder Lis Murdoch. This is a classic start-up – small and perfectly formed.

So maybe small is the new big. Netflix and Amazon are not an existential threat to traditional TV, but they pose big questions that need addressing. YouTube chief business officer Robert Kyncl was the latest to proclaim the death of TV when he told the audience at CES in Las Vegas: “Digital video will displace TV by the end of the decade.”

SVoD is still a small part of TV consumption, so let’s not fight over figures but acknowledge that the big guys have the most to lose. After all, there’s a reason why elephants are scared of mice.

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