Can niche streaming services coexist with the OTT giants?
Whether you’re obsessed with the anime, just watch slashers, or get your wrestling kicks in, chances are there is a streaming service that specializes in your particular peccadillo. And while it is unlikely to ever threaten the OTT giants, it is in these niche spaces that the ad-supported video-on-demand model could truly find its place. We take a look as part of The Drum’s deep dive into the future of television.
If you need proof of the strength of the biggest streaming platforms, look no further than your remote. Devices from the latest smart TVs to next-gen consoles have controllers with buttons dedicated to launching Netflix, Disney +, and other streaming services. It’s no wonder that with such penetration, Omdia predicts that all the growth in pay TV will come from streaming services over the next few years.
At the same time, it’s tough at the top – especially as the competition between the big players heats up. Netflix is spend around $ 17 billion on content during fiscal year 2021, in part to ward off this competition having missed their own follower acquisition goals. This has led to a wave of acquisitions as these services seek to produce exclusive in-house content stand out from peers.
Despite this, Netflix founder and co-chief Reed Hastings believes his competition remains primarily linear TV and YouTube, which suggests the company believes there is still wiggle room for those. The giants of SVOD (video on demand by subscription) will continue to develop, in particular around television content.
Among these giants, however, are a few smaller SVOD and AVOD (ad-based video on demand) services. While Netflix, Disney + and Prime offer a buffet of in-house produced TV content of all genres and formats, these small streaming services go out of their way to attract niche audiences. Whether it’s licensing independent TV content for otherwise overlooked demographics or specializing in a particular genre, these services are betting that specialization will reduce subscriber churn and provide a more secure future.
And as notorious YouTube failures Red and Quibi demonstrated, even players with the deepest pockets aren’t.not guaranteed to be successful in streaming television.
Nice and niche
Streaming services such as Crunchyroll and Funimation have specialized in bringing previously unavailable content to new shores. Building on the popularity of anime in Japan and the success of linear TV blocks such as Adult Swim, these services have acquired the international distribution rights for popular series such as Attack On Titan and Demon Slayer. Crunchyroll has also started producing its own anime series in-house.
KweliLive (slogan: “our culture, curated”) instead focuses on producing a variety of television content that caters to its predominantly black audience. True to this mission, it also boasts that 60% of subscription revenue goes to supporting content creators.
Some services duplicate the entertainment content that exists to some extent on large platforms or linear television. NextUp is a UK-based streaming service devoted entirely to stand-up comedy, with a handful of documentaries presented by stand-ups. WWE Network is – after a few swings – the streaming arm of the wrestling-based entertainment company and has 1.5 million paying members as of October of last year.
Even more niche, Nightflight Plus focuses on archiving and curating “ weird ” TV content that otherwise would not be viable on large platforms. Hope with services like Nightflight – and to some extent Shudder – will the public less interested in “safe” and more homogenized cinematographic television available on larger platforms turn to these ultra-niche services.
Considering the variety of streaming content, it’s no surprise that the ways to generate income are also diverse. Some smaller services, including Tubi, are exclusively focused on supporting advertising (AVOD) in part because they believe they cannot compete with the biggest players in terms of billing recurring charges.
Farhad Massoudi, Founder and CEO of Tubi, says: “AVOD is the unmistakable future for content creators, vendors and brands. With the saturation of subscription streaming services, AVOD will increasingly be used as a complementary service to consumers’ favorite SVODs to access more of their favorite content, without paying more.
Still others use hybrid models, with Crunchyroll offering early access to new episodes and other perks through its Premium plans in addition to its free basic plan. Others mimic Netflix and co’s subscription pricing plans, with fees equal to or slightly lower than the monthly prices of streaming giants.
However, the cost of acquiring content and operating these streaming services is considerable. Curiosity Stream, a U.S. documentary television service provider with a user base of 15 million users, reported a net loss of nearly $ 40 million for 2020, despite doubling its subscriber count during of the year.
Additionally, many of the issues that larger services face impact niche services as well. Discovery is a problem, as is the fact that many larger services often at least dip their toes into this niche content, prompting consumers to sign up instead. To some extent, despite their specialization advantages, niche services consistently run up against the expense of the giants.
It’s no surprise, then, that the appeal of existing as a separate channel within these larger services is attractive – and potentially mutually beneficial. Shudder, for example, has some of its content available as a separate service on Amazon Prime in the UK, as do Britbox and FunimationNow. This has the dual benefit of giving Prime Video a wider selection of exclusive content as it competes for consumer attention, while also helping to discover and promote Shudder’s broader content.
This is part of a larger trend of consolidation within the larger streaming ecosystem, which has seen many niche services acquired by larger broadcasters with an eye to their own future. For example, Fox bought Tubi, Sony Pictures bought the Christian-focused streaming service Pure Flix, and the WWE Network is now part of Peacock. Crunchyroll, too, is for sale, with a antitrust investigation into its acquisition by Sony in progress as of the posting of this article.
Ampere Analysis believes this means that non-specialized streaming will eventually become the dominant form. Its research director, Guy Bisson, says: “AVOD, the live studio streaming launches, the strengthening of local and broadcast-led streaming, and the turbo-boost that came out of nowhere in the form of Covid-19 have brought the industry to a pivotal point. In 2021, the composition is here to stay in every part of the streaming value chain. “
So while the public may still be able to search for and subscribe to niche services that interest them, the most influential players in the industry are still those whose names are written on TV remotes. It may be possible to survive as a niche streaming service, provided it is done in the shadow of one of the giants.
From late April through early May, The Drum takes a deep dive into what’s in store for the small screen as we launch our Future of TV hub.