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INSIGHTS

  • Kirby Grines

The Streaming Wars: The 3 C'S: Cannibalization, Customer Relationships, and Competition

Updated: Aug 20, 2019

Over the next few years Disney, who takes full control of Hulu, plans to cannibalize itself in exchange for establishing a more direct relationship with consumers.

This strategy is very different than networks including Showtime which are selling themselves across affiliate partner and OTT aggregator platforms such as Amazon, Roku, and Apple TV “Channels”, which just became publicly available through the updated TV app, providing access to over subscription services including HBO, CBS, Showtime, and STARZ.

Having all your streaming TV subscriptions in one place is a great idea in theory, but it’s becoming a well-intentioned mess.

At The Pay TV Show last week, Showtime COO Tom Christie said Showtime and other networks need to stay attached to traditional operators and MVPDs, which although are losing pay TV subs right and left, aren’t going away anytime soon. He also reiterated the importance of networks forging affiliate deals with new vMVPDs and OTT aggregators.

The fact is, TV Networks still make a very large percentage of their money from these carriage deals. The challenge has become how to honor existing partners and contacts while capitalizing on the opportunities that can grow value and tackle the challenges that threaten existing business models.

At 43Twenty, we are bullish on companies embracing direct customer relationships (the long game) over catch-all subscriber numbers (the short game). But we also realize every company is different and what works for Disney may not work for WarnerMedia. By the way, WarnerMedia will partner with MVPDs for its upcoming streaming video service launching in Q4, but also release new episodes of existing popular shows on the new service before anywhere else.

But if you’re Showtime, it must concern you that Amazon, who has 100 million Prime subscribers, 26 million U.S video viewers, and now 34 million active Fire TV users (which is more than Roku) can easily market HBO, Starz, or EPIX directly to your subscribers? Or worse, Amazon creates an original series that competes with Homeland and can market it to every Prime Video member that has, or ever had a subscription to Showtime.

This could be why Turner CEO John Martin says his biggest competitors are no longer other networks, but rather companies like Apple and Amazon.

CEO of The New York Times, Mark Thompson warned publishers about this threat and a year ago, I did too.

However, as major media companies prep their own direct-to-consumer services, companies need to figure out how to value their own content. Do they keep it exclusive to their own platforms and forego meaningful licensing revenue?



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