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Netflix steers clear of Apple TV: What does it really stand to gain?

Ahead of Apple’s launch of its television and video service on 25 March, Netflix chief executive Reed Hastings has declared that Netflix will not be part of the streaming service. Hastings said to reporters at Netflix’s offices in Hollywood, “We prefer to let our customers watch our content on our service.”

This comes amid rising competition in streaming services as Walt Disney and AT&T’s WarnerMedia also announced plans to offer subscriptions of their own. On the topic of new competitors, Hastings said that instead of getting distracted, Netflix will try to learn lessons from them. He added that the competition from “amazing, large, well-funded companies with very significant efforts” will make the industry better.

Closer to Asia, the importance of content creation has been widely felt with the likes of transport companies such as Grab seeing the importance of having entertainment on its platform. As such, it also jumped on board the streaming bandwagon by partnering video-on-demand service HOOQ to add video content on its ride hailing app. On the other hand, Channel NewsAsia inked a deal with iflix to make its news content accessible to iflix users across Asia. It also diversified its offering rolling out a premium sports linear channel, ZSPORTS, across Malaysia, Brunei, Indonesia, Thailand, Cambodia, Vietnam, and Myanmar.

Clearly the content streaming and distribution industry right now is in a flux where partnerships and tie-ups, and sometimes even separation, are prevalent.

In a conversation with Marketing, Amit Sutha, group managing director of UM Malaysia and Ensemble said that in large parts of Asia, Netflix has a higher number of users than the likes of Apple TV. As such, in this part of the region, the partnership would not serve to be beneficial for Netflix – unless the investment was in the form of a huge cash deal.

However, being on Apple TV would help it to penetrate the “browsing audience” as currently most of the viewers on Netflix are mostly “binge watchers” of movies or series. “Browsing is a human habit and in my personal opinion, if Netflix were to be on the Apple TV, it would have a way in for audiences to browse for new content across channels,” he said.

While traditional content creators, in the space of purely creating content, might find the Apple TV platform a way to magnify audience reach, for Netflix, Sutha questions if the ambition for Netflix should now move towards being a distributor and aggregator of the content.

Building more walled gardens?

Ampersand Advisory CEO Sandeep Joseph said that Netflix has good reasons for wanting to keep the eyeballs to itself given how much investment it has been putting into content.

“To me, its decision not to join Apple TV makes sense as companies are clearly building their own walled gardens and trying to corral in consumers. Will it work? It won’t be easy, but it is definitely a strategy I anticipate will become more common going forward. Each player will need to invest in marketing and to build audiences,” said Joseph.

Joseph added that given Netflix has spent about US$12 billion on content in 2018, and is expected to spend US$15 billion in 2019, and US$17 bill in 2020, for consumers this means there is going to be even more choice – and the possibility of even more apps to subscribe to.

But as consumer budgets are not unlimited, who will lose? In my view, cable and satellite TV companies will lose.

A need for aggregator platform

Meanwhile, Girish Menon, vice president, client development, [m]PLATFORM APAC, said currently, it’s a land grab from all the streaming services to try and get customers to subscribe to their services as the customer’s primary service.

“No one is going to give room to the other. In a year’s time, some of these platforms will have to ‘blink’ and agree to make their shows available elsewhere to survive,” Menon explained. He added that a strong library of content and pipeline of production will be the key to capture consumers’ hearts. But, the companies should take note that consumers’ minds are very fickle and they might lose interest quickly once the content falls short.

He also added that streaming services should be wary they are not “repeating the same mistakes” that cable once did.

“Streaming services were supposed to be the answer to the over bundling of channels on cable channels, where customers were getting 200 channels when they only wanted 10. Now the streaming services are forcing their entire platform onto the customer, whereas the customer may be interested only in one show from Netflix, another show from Amazon, and a third show from Disney+,” he said.  As such, a possible solution could be, according to Menon, to have a streaming aggregator to help pick and choose what they want from each platform and then have it all available in a “single sign-on” type of interface.

Meanwhile, sources familiar with the matter have told Reuters that Apple’s new service may resell subscriptions from CBS Corp, Viacom Inc and Lions Gate Entertainment Corp’s Starz among others, as well as Apple’s own original content.

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