Everywhere you look in media the middle is getting squeezed.
At one end of the streaming wars are the major services like Netflix, Disney+ and HBO Max. At the other end are niche, genre-based streamers like Crunchyroll and Acorn TV. In the middle are the cable TV networks; free, ad-supported streaming TV services; and digital video publishers that can struggle to stand out on their own enough to attract audiences’ attentions and advertisers’ dollars. This trend will accelerate in 2020.
“It’s the middle that gets lost,” said a TV network exec of the streaming wars.
These middle-class companies struggle to vie for subscription dollars. They do not have the money to produce and license — not to mention promote — the loads of shows and movies necessary to compete with the likes of Netflix and Disney. And unlike the genre-centric streamers, their programming is not concentrated enough to serve as an add-on to satisfy subscribers looking to augment their HBO Max or Apple TV+ subscriptions. “To be successful you have to be either really, really big or really, really niche,” said a digital entertainment exec.
That reverse-Goldilocks dilemma will push the members of streaming’s middle class to bundle together within ad-supported aggregators. “For today’s market, you’ll see a lot more bundling happening and move to a free, ad-based model,” said Eunice Shin, who has consulted for companies including Disney, Warner Bros. and NBCUniversal and is a partner at consulting firm Prophet.
Many have already made the move. Instead of standing up their own connected TV apps, mid-sized media companies are creating 24/7 streaming channels on services like Pluto TV and Xumo, licensing programming to aggregators like Roku and producing shows for platforms like YouTube. These companies have opted to be aggregated because the alternative is to be buried on connected TV platforms loaded with hundreds of apps. “We’re not going to survive on a UI with 150 to 200 choices if you’re not part of the first six [apps on the screen],” said the TV network exec.
While bundling can give these companies some cover by giving them easier access to audiences and ad dollars, that aggregation becomes a microcosm of the crunch. The more media companies that are distributing programming on an aggregator, the more difficult it is for those companies’ content to garner attention.
Moreover, the aggregators may feel the squeeze in their own ways. Services like Viacom’s Pluto TV, Amazon’s IMDb TV and Roku’s Roku Channel carry similar shows and movies and have struggled to differentiate themselves in order to establish loyal audiences and lure recurring revenue from advertisers.
“The truth of the matter is they all claim to have really high monthly active users and uniques, but if you do a campaign, you see different levels of impressions on a monthly basis,” said an agency exec.
With these mid-sized companies squeezed into ad-supported-streaming, what will ultimately determine who survives the middle-class crunch will be whether a company can produce programs that can attract a unique enough audience to convince advertisers they have to buy ads against those shows to reach people who are hard to find elsewhere, according to industry execs.
“If you don’t have a young audience, you’re fucked. You’ve got to have the young audience and the IP or product or brand that people want to grow with. If you don’t, then you’ve already set an expiration mark for your business. That’s what we’ve seen in some instances in the cable TV world,” said another TV network exec.