Hollywood’s traditional media players are facing an unprecedented challenge to their business model as “cord-cutters” opt to cancel their expensive cable subscriptions in favor of on-demand streaming services.
While pay-TV providers continue to charge well in excess of US$50 per month for the top packages, Netflix Inc, Hulu.com and Amazon.com Inc are serving up an ever-growing menu of acclaimed original content for the price of a cheap bottle of wine.
Cable may still be king when it comes to the breadth of choice, but streaming on-demand video (SVOD) hits like House of Cards and Orange is the New Black, with 49 Emmy nominations between them, are competing on quality.
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Earlier this month, California-based payment service provider Vindicia Inc published the results of a survey of 1,000 US adults who had at least one paid subscription service.
Forty-five percent of respondents cited “over-the-top” (OTT) video services such as HBO Now, Netflix and Hulu as most important to them.
Crucially, more than half of the key “millennial” generation — those in their 20s and 30s ardently courted by the advertisers — said they used SVOD.
Research by global media consultancy LEK published in January showed a similar pattern in Britain, where the majority of millennials expecting to get OTT in the next year were planning to cancel or reduce their pay-TV spending.
“In this increasingly on-demand world, the quality of content will be more important than ever before,” said Martin Pilkington, head of LEK’s European media, entertainment and technology division. “The race is already on, a good illustration of the new dynamic being the very high level of investment in original content by Netflix and Amazon.”
While Netflix remains the largest SVOD service, Amazon is staking its own claim, with Transparent and Mozart in the Jungle picking up multiple Emmys and Golden Globes.
Hulu has been slower to roll out original content, but recently premiered 11.22.63, a time-travel series produced by J.J. Abrams, with religious cult drama The Path due out on March 30 and already creating buzz.
“I could tell on the page there was no way we could do this on one of the networks,” said Jessica Goldberg, creator of The Path, which stars Aaron Paul of Breaking Bad fame. “Hulu came to the table in such a passionate way. They saw what we wanted to make, they let us push the envelope, they let us take time and breathe with stories. So it has been an amazing marriage.”
Streaming has emerged as a threat to cinemas, too, in the guise of the controversial start-up “Screening Room,” which is planning to offer movies in people’s homes on the date of their theatrical release.
At US$50 per rental plus US$150 for a set-top box, it remains to be seen whether the idea, led by social media impresario Sean Parker, will be of interest to anyone who is not a film buff, or rich.
However, it already lists among its shareholders such Tinseltown royalty as Martin Scorsese, Steven Spielberg and Peter Jackson, who said in a statement to Variety magazine he was satisfied the service was “very carefully designed to capture an audience that does not currently go to the cinema.”
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