HBO is delighting fans of the hit series Friends with a one-off unscripted episode on its HBO Max streaming service. Actor Matthew Perry, who plays Chandler Bing on the show, posted a photo of the cast on Instagram with the caption "It's happening". Subsequently, Jennifer Aniston, Courteney Cox, Lisa Kudrow, and David Schwimmer also posted the same image. The Wall Street Journal previously reported that each star is paid between US$2.25 million and US$2.5 million for the reunion.
Kevin Reilly, chief content officer, HBO Max and president, TBS, TNT, and truTV, said the reunion special will united original and new fans by capturing the era when friends and audiences gathered together in real time. The TV series ran from 1994 to 2004 and multiple media outlets including The New York Times and BBC reported that the last episode had 52.5 million viewers in the US. Despite ending its run about 15 years ago, Friends became available on Netflix, allowing the show to draw in younger fans. However in July last year, WarnerMedia announced it has acquired streaming rights to launch all 236 episodes of Friends for US$400 million. The news of Friends leaving the Netflix platform caused a stir online and came at the same time as HBO Max was unveiled.
To be launched in May this year, WarnerMedia previously said HBO Max is focused on providing direct-to-consumer experience for consumers ranging from families with young children to adults of all ages. Nonetheless, it is no doubt that the recent news will create excitement about HBO Max for. Ranga Somanathan, CEO of Singapore and Malaysia at Omnicom Media Group, told Marketing that Friends has a very strong fan base a "flagship reunion episode of Friends creates solid marketing buzz and attraction for the launch." The high reach of Friends across demographics and geographies will have a good momentum for HBO Max sign ups.
Besides having popular TV series on its platform, HBO Max will also feature original programming including Dune: The Sisterhood, Tokyo Vice, The Flight Attendant, and Station Eleven. The platform is said to feature about 10,000 hours of premium content. Meanwhile, Disney's streaming service Disney+ has nearly 500 films and 7,500 episodes of television from Disney, Pixar, Marvel, Star Wars, National Geographic. Currently available in the US, Canada, The Netherlands, Australia, and New Zealand, Disney+ is expected to be in most major markets within the first two years. Netflix, another major player in the streaming world, has about 1,200 titles on its platform, a quick check by Marketing found. It also took on an approximately US$2 billion debt for content acquisitions, production and development, as well as capital expenditures. The move came as Netflix had stated in its earlier shareholders’ letter, that it aims for an estimated US$8 billion of content expense (on a P&L basis) in 2018.
While content is an advantage that both Disney and Netflix hold over HBO Max for now, the competition from this new offering in the streaming space still puts pressure on the incumbents. "With content creators such as Disney and HBO launching their own streaming services and ring fencing their own content, we could see an escalation in Netflix’s content development costs," he explained. Moreover, at a primary level, taking away quality content from competition always puts pressure on operational costs.
Consumers, however, will benefit from the competition as this keeps subscription costs in check, and widens the choice of platforms to choose from. Besides developing quality content and innovating, broadcasters in the streaming space need to hone the data ecosystem to hyper personalise the viewing experiences. Somanathan added:
I believe enhanced experience from the user interface, curated content recommendation and pricing will be key ingredients in creating a winning formula.
The three fields of the streaming game
Remixes have proven to been a successful trend in the entertainment industry, said Amit Sutha, CEO of Universal McCann, UM Studios and Ensemble Worldwide said. Movies, for example, get modernised and remade often, as such it is natural for a TV show to follow the same formulae. According to him, reuniting the Friends cast for an exclusive HBO Max episode is will no doubt drum up excitement around the new streaming service but "acquiring and retaining customers, has many moving parts".
When it comes to playing the content streaming game, Sutha said it is played on three fields - content, marketing, and pricing. How media companies manage their investments across these three fields could very well define success or failure. In streaming specifically, Sutha explained that marketing is synonymous to acquisition.
As streaming happens on digital platforms, it is crucial for companies to understand triggers and predict viewership behaviours to serve the right content or offer content at the right time.
"Every streaming company invests in content. Pretty much everyone’s library, simplistically speaking, is made up of amazing content and filler content. Understanding what’s optimal will be critical," Sutha explained. However, the make or break element is pricing which is often also the most complicated piece of the puzzle given as there are so many models. These include pay-per-view, subscription, and ad funded, among others. This leads to a debate about which models works for which groups of consumers and whether it should be a combination of all.
Sutha added that data sciences, in this instance, will not only play a big role in helping brands navigate their investments between content, marketing and pricing, but also be critical in making decisions within each of these three themes.
How can broadcasters arm themselves in the streaming space?
Quality content aside, as the organic growth starts to plateau in subscription services and content costs continue to escalate, Omnicom Media Group's Somanathan said streaming solution providers will need to extend their reach to the price sensitive segment. He added that this will trigger the "freemium" model where access will be ad-supported, unlocking programmatic ad-buying on a wider scale.
As such, conventional broadcasters getting into the streaming war need to build their platforms with the ability to trade their ad-inventory via programmatic as well as make a mental shift towards CPM or CPV type pricing models, he added.
Also weighing in on the conversation is Partha Kabi, managing director at MediaCom Indonesia, who explained that marketing the content is as important as the content itself. With the OTT content marketplace being inundated with content, its shelf life is short and consumers will quickly move on to the next one. "Hence, these need high decibel but short marketing campaigns to attract viewers. Word of mouth plays a big role in generating positive reviews and driving viewership," he added.
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