With Disney’s streaming service about to launch, and other platforms either already in the streaming game or about to enter it, how much of a threat is this to Netflix, and what does it means for users of online streaming services?
Will the likes of the video game crash of the 80’s, and the music wars that saw Napster disappear under the onslaught of Apple, Spotify, and more be repeated with online video streaming? Or is there enough room for everyone at the table?
In this week’s episode of Marketing on Tap, we look at how online streaming is adapting, and ask can it continue the way it is, or is there a “winner takes all” scenario looming?
Settle back and enjoy this week’s topic, brought to you in the usual unscripted manner that you’ve come to expect when Sam and Danny take the mic.
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This week’s beer is La Cloche Belgian Blonde from Stack Brewing.
Intro: Join marketers, authors, and craft beer enthusiasts Sam Fiorella and Danny Brown for a hoppy discussion for all things digital over a cheeky pint or two. Topics on the menu include influence marketing, social media, brand advocacy, and a taste testing of real world, digital marketing campaigns. Some are smooth, others don’t sit so well. Don’t forget to stick around for last call where the boys will serve you up one final marketing takeaway that you can go out and apply in the real world. It’s a great primer before the weekend.
Sam Fiorella: Welcome back everybody to another episode of Marketing On Tap. My name is Sam Fiorella. This is my mate Danny Brown. Danny, today we’re going to talk a little bit about Netflix. I want to talk about Netflix and Chill.
Danny Brown: Chill?
Sam Fiorella: That may not be the … Not with you, no. But, I’ve been reading … I’ve been actually fascinated. This is something that I’ve been wanting to talk about for a while, and I just never thought it was … I don’t know if it was just because it wasn’t appropriate for this podcast, or what it was, but Netflix and Chill has basically become an orgy of media content. One that will probably leave everybody feeling burned at the end of this.
Sam Fiorella: Hulu, Amazon Prime have now started to compete with them. Now we’ve got Disney that’s got their own streaming service. AT&T is coming out with theirs. DC Comics even has their own now. Facebook and Apple are rumored to be coming out with their own streaming services. It’s only a matter of time before YouTube jumps on the bandwagon when they realize how much streaming services-
Danny Brown: Well, they have YouTube TV, right?
Sam Fiorella: They got YouTube TV, you’re right.
Danny Brown: Premium.
Sam Fiorella: But we’ve also got CBS, CBC All Access, NBC Universal, HBO Now. They’re all launching their own streaming, digital-only packages. Today that’s what we’re going to be talking about. Where is this all going? Is there a breaking point? what does this mean to the rest of content consumption and content distribution like news, and music, and social media? What are the trend currents here, or is it all just gonna fall apart and we should be ignoring it? That’s what we’re gonna talk about today. I think it’s a great topic. But we want to talk about beer for a minute.
Danny Brown: Yeah, it’s been a while since we’ve had a Belgian, and it’s been a while since [crosstalk 00:02:22]-
Sam Fiorella: Well, maybe awhile since you’ve had Belgian.
Danny Brown: Well, and I’ve had a Belgian another week, another night even.
Sam Fiorella: Speaking of Netflix and Chill.
Danny Brown: And a Belgian Blonde. So this is from-
Sam Fiorella: So many jokes.
Danny Brown: This is from Stack Brewing who are up in Sudbury Ontario. This is a light golden. As you can see … Here you go … Really light golden beer here.
Sam Fiorella: She is.
Danny Brown: She’s got coriander coming through. It’s medium-bodied and well balanced. It’s got a long, dry finish with some nectarine and a pear coming through. It’s 6.9% ABV, so it’s a nice, good start.
Sam Fiorella: She’s experienced is what you’re saying.
Danny Brown: This is such a sexist start of the show.
Sam Fiorella: [Jackie 00:03:04], we’re talking about the beer, not an actual Belgian woman.
Danny Brown: … not my wife. It’s IBU 20, so it’s pretty easy to drink it. It should be easy to drink it.
Sam Fiorella: That’d be nice. [crosstalk 00:03:13]-
Danny Brown: Anna, Karen, ready?
Sam Fiorella: Anna doesn’t like hoppy beers, so this one I think she’ll probably really like.
Danny Brown: This should be good, I think, for Anna.
Sam Fiorella: All right, Anna.
Danny Brown: Cheers, guys.
Sam Fiorella: Cheers, everybody.
Danny Brown: Cheers.
Sam Fiorella: Cheers, mate … Very much a wheat beer.
Speaker 4: Yeah.
Danny Brown: Yep.
Speaker 4: [inaudible 00:03:33].
Sam Fiorella: That’s a good one for you? Okay. That means I’m not getting her beer at the end of this.
Danny Brown: When I was pouring it, though … I don’t know if it’s just because of the flavors in, obviously … But when I was pouring it, it actually smelled like champagne.
Sam Fiorella: Yeah. It actually has the effervescence of a champagne, too.
Danny Brown: Yeah. So it’s a … I like it though.
Sam Fiorella: [crosstalk 00:03:51] This is a maybe a good New Year’s drink instead of the champagne.
Danny Brown: So yeah. Sudbury Brewing, sorry Stack Brewing up in Sudbury. Stackbrewing.ca, if you want to check them out. Check their beers. This is really nice. Good job.
Sam Fiorella: Very interesting, I like it. Okay. So back to Netflix, where is this going to go? So Danny, by way of background, Netflix just like iTunes grew to challenge businesses like Blockbuster. Right? We talking about this in a previous episode. They understood the trend currents. They understood that people didn’t want to consume videos and movies the way that they used to.
Danny Brown: Right.
Sam Fiorella: So they basically killed Blockbuster. They spawned an entire new industry. One of the things that made them successful at the beginning … Again, this is just for background for the purpose of this conversation. They were making money by taking content that was sitting on the shelf of television networks and producers, like the re-runs of Friends and M*A*S*H, which is my favorite all time show, by the way, M*A*S*H. I grew up on that.
Danny Brown: You were 20 when that came out. Right?
Sam Fiorella: Yeah. I was old. I was old. I am old sadly, but I’m still better looking than you are. So we’ll just put that up there.
Sam Fiorella: They were making some good money for the networks, and it was a happy partnership. Just case in point, Netflix just paid $100 million to renew Friends, the ’90s sitcom, for one year.
Danny Brown: Right.
Sam Fiorella: I mean so that’s obviously these guys are really happy with Netflix, but Netflix has become too big. They’re now creating their own shows competing for Emmys and all of those awards because they don’t want to rely on third-party content producers anymore. They realize that they’re gunning for them. It’s creating an environment now where everybody and their mother has a streaming service.
Sam Fiorella: Here’s the question to you. Is it too big? Are there too many? Is this industry going to just collapse under the weight of so many people trying to charge us 5 to 10 to 20 bucks a month? How many can we possibly have?
Danny Brown: Yeah. No, I think it’s definitely coming to … There will be a saturation point at some stage. I mean, I’m an old school video gamer. I remember back in ’80s-
Sam Fiorella: The operative word is old school.
Danny Brown: Or just old.
Sam Fiorella: No.
Danny Brown: Old school video gamer, so I remember back in the ’80s when it was a big video game crash. You had far too many platform developers. Originally, two or three, so Sega, Nintendo, Atari was there, Neo Geo, 3DO-
Sam Fiorella: Neo Geo? How old are you?
Danny Brown: Neo Geo. Super old. A proper geek. So all these platforms, they’ve got competition because the big guys, like the Sony’s, were to get involved. At some stage it just got too big, and it just crashed. Now, jump forward 30 years or so, you only have three main developers. Sony’s still around. Nintendo’s still around, and it’s Microsoft, no more Sega.
Danny Brown: So I do believe that at some point, much like the video game crash, there is gonna be a streaming crash of some description.
Sam Fiorella: Yeah. You know what? I’m thinking that you might be right. It sounds like last man standing narrative here. I doubt that streaming services will die. I actually think, if anything, television may end up dying under the weight of growing popularity with streaming services, especially if their original content is good.
Sam Fiorella: What’s really interesting to me is … We talked about this often. We included this is our book. We’re always looking at the trend that currents. Right? Let’s not focus on what’s happening today. What does what’s happening today mean or indicate about the changing demand of consumers and their behaviors?
Danny Brown: All right.
Sam Fiorella: Right? SO we know that people are increasingly spending money on streaming services. I know like myself for example, I have Netflix. I will most likely buy the DC streaming service because I gotta get my fix of the great DC Comics shows that they’re coming out with, custom movies and things like that. I’m probably gonna end up with CBC’s all-access because I want the new Star Trek Discovery series because I can’t live without my Star Trek. I’d be prepared to go, but then I’d end up trying to get rid of whatever television cable packages I have.
Sam Fiorella: Then now I’m looking at 30, 40, 50 bucks a month, but I love the niche of it.
Danny Brown: Right.
Sam Fiorella: Right, because I know that, like so many of us, there’s things that we love. I know you’re a big Star Wars fan. I wouldn’t be surprised if Disney comes out with a … Well, their streaming service, if they got new Star Wars movies that are only streamed, you would-
Danny Brown: You’d have to. Yeah, exactly.
Sam Fiorella: I mean you would have to-
Danny Brown: I don’t want to because I think Disney’s a big, nasty corporation-
Sam Fiorella: But you would do it.
Danny Brown: I would do it because-
Sam Fiorella: Because you’re so in love with that genre and that franchise. I’m thinking that niche is really what we should be pulling out from here. Not just sitting here bitching about the fact that we’re probably gonna probably end up paying more for all these streaming services.
Danny Brown: Right, yeah.
Sam Fiorella: Right, but it’s this niche. That gets me thinking. What does this mean for niche content elsewhere? Online books, content, newspapers, how we consume news.
Danny Brown: Right.
Sam Fiorella: Like if you take a look at network news right now, it’s becoming very split. You know what I mean? There’s clearly there’s left-leaning news. There’s right-leaning. There’s maybe one or two left right in the middle that might not actually be considered true journalism. Otherwise, everything else is skewed. What do you think this is gonna mean for, if we are really paying attention to these trend currents … What’s this gonna mean for other media sources like that? Is this gonna all go niche? Is news gonna go niche?
Danny Brown: Well, I think news is already getting niche because like you mentioned you’ve got a divide of left and right now. [inaudible 00:09:44] all in the middle. So if you’re a left-leaning news fan, you’ll swing that way. If you’re right, you’ll go to Alex Jones and his InfoWars YouTube site, whatever, and get your news from that. SO I think it’s already getting niche for what you believe and what you actually pay your money to.
Danny Brown: Newspapers, online publications are laying people off left, right, and center. We just saw it last month. Vice laid people off.
Sam Fiorella: That’s a great news program.
Danny Brown: That’s real good … Yeah. So Vice is excellent. The big one, Buzzfeed laid people off, so-
Sam Fiorella: [crosstalk 00:10:17] That one probably deserves a little bit of a-
Danny Brown: They were improving though. Some of their political stuff was pretty good. If you look at the-
Sam Fiorella: Yeah. I mean, I would never sort of criticize Buzzfeed for the quality of some of their content. I just can’t take the click-bait-
Danny Brown: Titles-
Sam Fiorella: … titles and the way they try and gamify you. They have to. Good for them. It’s a business. They have to try and get you to come on and stay on in a competitive world where there’s not a lot of money to be made.
Danny Brown: Right.
Sam Fiorella: Right. I think that’s maybe one of these things here. There’s not a lot of money to be made in news anymore. Online publications are not making very much money, and every report that I’ve read over the last few months about streaming services says there’s no money to be made in streaming services either. The margins are very, very low.
Danny Brown: Well especially when you’re paying $100 million-
Sam Fiorella: … for one show. You know what I mean? It is your top show, but still for one show. How many do you have? You gotta constantly have new content coming in. I just don’t know that consumers … I think this is maybe the question. Will consumers get to a point where they’ve said, “You know what, enough is enough. This is too niche. This is too one-sided. I need more of a mix.” Then force some new entity to come out, a new Netflix to come out and sort of grab everybody. Grab their shows into one place again, or are you just gonna continue to live in these separate worlds?
Danny Brown: I think it’s gonna be separate. I don’t think … I know consumers have the power because they’ve got the spending dollars. Consumers have that money that decides who wins, who loses, but at the same time, I don’t think the networks, especially the giants like Disney, Netflix, they aren’t gonna want to get everybody under the same roof. Netflix isn’t going to want to go under Disney’s roof, visa versa.
Danny Brown: It might come to the stage where you only have two or three left, but there will still be some where it’s exclusive. You have to still have access to all different channels. Look at the sports. I got a Dazn subscription because I had to, to watch Champions League.
Sam Fiorella: I know.
Danny Brown: I couldn’t get that anywhere else. I’ve already got a subscription for [MLS 00:12:22] and everything with that.
Sam Fiorella: Actually that just reminded me that I’m gonna have to subscribe to Dazn next year because Premier League-
Danny Brown: Premier League’s gonna be on Dazn.
Sam Fiorella: It’s coming off of network television-
Danny Brown: [crosstalk 00:12:33] Right-
Sam Fiorella: … on Dazn. Like I have a choice, unless I hit the pub every game.
Danny Brown: [inaudible 00:12:38].
Sam Fiorella: You know maybe that’s what I’ll do. It might actually be cheaper for me to pay for the beers at the pub instead of subscribing to Dazn. That is how you pronounce it, right? Dazn.
Danny Brown: [Da-zen 00:12:47]
Sam Fiorella: Dazn.
Danny Brown: Okay, whatever. Who cares?
Sam Fiorella: [Da-zone 00:12:49]?
Danny Brown: Da-zone.
Sam Fiorella: Da-zone.
Danny Brown: It’s Da-zone.
Sam Fiorella: That’s what it is.
Danny Brown: Sort of off topic.
Sam Fiorella: Whew, whew.
Danny Brown: Here’s an interesting thing about the trend topics. If you look at Netflix’s audience. Imagine 50% is in the US. Interestingly enough, most teens in the US have a Netflix account.
Sam Fiorella: Or they’re stealing it from somebody.
Danny Brown: Ah, they’re stealing it, or they’ve got their parents or whatever. Most teens, there’s a really nice report in Ad Week that show … They did a survey of teens over the age of 16, eight and a half thousand teens, from 48 states. It was a good number. Of that, 38% of the daily video consumption is on Netflix compared to the next one which is YouTube at 33%. Hulu is only %5. Amazon Prime is 3%. All the other services together made up the other five.
Danny Brown: That’s a tease. That’s your next audience, right? That’s your audience for the next 10, 20 years. To a point, has Netflix already won some of the war because they’ve got such a huge teen audience that are already loyal to this company and aren’t really-
Sam Fiorella: [crosstalk 00:13:54] Are they though?
Danny Brown: Well, at the moment-
Sam Fiorella: Today, because there’s no viable competitor.
Danny Brown: Well, correct. There’s no viable competitor at the minute. I guess. It depends on what they’re watching and what they’re going after. [inaudible 00:14:06] pulling in the teen market. I mean they’re pulling me in anyway because I love comic books, and I know you do. Again, because Netflix-
Sam Fiorella: We’re cool.
Danny Brown: Well, yeah. Has Netflix already sort of see that and now they’re thinking ahead to saying, “Okay, you know what, we’re losing these shows, but we’re gonna create these shows for this audience.”
Sam Fiorella: Yeah. That’s actually interesting. I’m wondering if Netflix too, with all of this competition coming up … I had an investor report that a lot of investors have been predicting that their stock price is not gonna be sustainable. Whatever it is now, that it’s going to drop considerable because of all this competition. Now that they’ve hiked their prices, they’ve got the largest price hike in their history-
Danny Brown: A big jump. Yeah.
Sam Fiorella: … just recently. So I’m wondering if they’re gonna get to the point where they realize that if we don’t change something about the way we do our business that an upstart is gonna come up and beat us to it.
Danny Brown: Right.
Sam Fiorella: Somebody with maybe more money, [inaudible 00:15:06]. You get an NBC or Universal or something who has access to potentially the same amount, if not more, money than … or Disney. Right? Maybe they need to start looking at … Well, okay we need to maybe charge differently, come up with a different pricing model. Maybe not pay more and then … I don’t know what the answer is. Right? I guess I’m talking myself in circles.
Danny Brown: Well, maybe-
Sam Fiorella: I don’t know what that answer would be. How do they maintain their dominance?
Danny Brown: Maybe it goes back to what’s happened with the cable companies this year in Canada. I don’t know if it’s the same in the US and the UK or whatever, but they’re not offering packages where you pick and choose what you what to watch. You’re actually going in … It’s almost like an a la carte menu. You see that, that, that, that, that, that, and I will pay this.
Danny Brown: Does Netflix or Disney or whatever start to do that? Say, Okay, for the teens you’ve got these five shows or these five categories, and you’ll only pay this. For the middle-aged folks, you’ve got these and you’ll pay this-
Sam Fiorella: So in other words, they’re gonna become Verizon, Comcast and all of the other-
Danny Brown: Pretty much. Yeah.
Sam Fiorella: So here’s like 20 packages that you can subscribe to, starting with as low as $5. In other words, Netflix is gonna become what they were fighting against or what they were the alternative of.
Danny Brown: Maybe that’s the way to do it. [crosstalk 00:16:15] Just comes full circle. Who knows?
Sam Fiorella: That’s probably the case. You know what would be really cool? If once all of these net streaming services come up, if there would be one place … Maybe a physical square box in mall someplace that has all of these shows from all of these producers maybe on a cassette of some kind or maybe on a DVR, like a modern version of a cassette, that you can just go and buy what you want. I wonder what they would call that kind of a store? Hmm.
Sam Fiorella: Maybe we should bring Blockbuster back. Because I’m thinking if you think about it, this is the trend or the pattern is very similar to what happened with television programs and movies. Right? When Blockbuster came out, let’s just put them all into one store. People can come in just on demand what they want. Right? Or maybe that’s the solution. Maybe instead of waiting for that to happen, people start making single shows available so that you don’t have to subscribe to an entire network, like a Netflix. Or break it up into small groups, like you were suggesting, like shows for kids at like $5.95 a month. If you want movies, it’s another $10.95 a month.
Sam Fiorella: Maybe it’s just one-offs. The iTunes, just rent one show for $1.99 or something.
Danny Brown: Yeah, but that’s what I do on my Microsoft movies and TV. On my Xbox, I get season passes for just the TV shows that I wanna watch.
Sam Fiorella: Right.
Danny Brown: Like I’m a big fan of This is Us. Yes, I’m a tissue waving This is Us fan.
Sam Fiorella: I can just see you wrapped up in your snuggie on your couch and a box of tissues watching that-
Danny Brown: … and a hot chocolate.
Sam Fiorella: All right, so we’re getting the signal. Thank you for our bell, Steven.
Sam Fiorella: Takeaways, what’s our takeaway here? Is there a trend current that we should be paying attention to here, and how is it going to change media production or media consumption of all kinds?
Danny Brown: Yeah. I think you have to look at historically what’s happened with other platforms. So the music one, the video games one, the news, print, et cetera. Look what happened. Who came out victors? Why they came out victors. What the audience participation, if you like, was. Like I say, are teen the ones you’re gonna go after? Then you have to do X, Y, Z.
Sam Fiorella: Yeah. For me, I think it’s definitely looking at … If you’re gonna look at trend currents, for me it’s niche because it happened with music. It’s happening with news. I think that there is a growing demand in the foreseeable future for niche products. Niche networks that people want to have their little corner of the world where they feel safe and comfortable, and they’re getting exactly what they want. They don’t have to have to go through 100 channels on the television-
Danny Brown: Right.
Sam Fiorella: … to try and find something that they like. They know what they like. They want to create a playlist of what they like, and they want that to show off without thinking. I think that in terms of other content, and even when it comes to brand marketing and the content production that we do for them, I think that’s what we’ve got to look at. What’s that niche that they’re after? Then feed that niche and maximize it and solidify the ownership of that audience or their attention.
Danny Brown: Niche Flix, then?
Sam Fiorella: Niche Flix, Niche Flix.
Danny Brown: [crosstalk 00:19:31] platform.
Sam Fiorella: Yeah. Yeah. Don’t do that. That’s a horrible name. Anyway guys, thank you very much for watching yet again another episode of Marketing on Tap. Whether you’re watching on YouTube or whether you are listening on our podcast, we appreciate it.
Danny Brown: Yep, and if you’re on YouTube, make sure you hit the little like, subscribe part ends up here. The comments, drop us a comment. Let us know what you think is gonna happen with streaming services and similar. If you’re on podcast, then by all means recommend us to your friends.
Sam Fiorella: Cool. All right guys. Thank you very much. Cheers, everyone.
Danny Brown: Have a good one.
Sam Fiorella: Til next week.
Danny Brown: Cheers.
Outro: You’ve been listening to Marketing on Tap with Sam Fiorella and Danny Brown. If you enjoyed this episode, make sure to subscribe so you don’t miss the next one. Please, feel free to leave a show review. That’s always worth a cheers.