How TV Streaming Services Are Changing The Entertainment Industry

  • Article by Amy Bradney-George
  • March 27, 2015 at 12:34 PM

Streaming services are not only the hot topic of conversation in the entertainment industry in 2015, but also the catalyst for a wide range of changes in how we access entertainment and engage with companies.

With Netflix finally launching an Australian version, Foxtel and Seven promoting Presto, and Fairfax and Nine collaborating on Stan, it’s clear streaming services are now a huge investment for broadcasters and consumers alike.

Even internet providers (ISPs) are getting on board, with iiNet and Optus offering unmetered streaming for Netflix, and Telstra and Foxtel Broadband doing the same for Presto. For the streaming services, this means that people with a particular broadband plan could be more inclined to sign up to a service based on whether or not it is unmetered, while for ISPs, it could lead to more customers depending on the subscriptions people want to get for these services.

When it comes to audiences, these unmetered streaming offers are a huge boon. The amount of data consumed through streaming depends on the resolution quality and length, but could be anywhere from 380 megabytes for a 21 minute episode or 5 gigabytes for a three-hour movie. If you streamed through a service that is metered, that could seriously limit how much you can use it every month, while the unmetered options mean unlimited entertainment options.

Streaming services also promise to offer more flexibility and control over how and when we watch things – whether it’s movies, television shows or miniseries. For instance, the days when we would have to wait a week between episodes are long gone – binge-watching is becoming the new norm, with services like Netflix commissioning series and uploading entire seasons in one go.

But while the benefits and convenience of streaming services has driven the hype around them, it has also made it easy to overlook the ongoing impact these entertainment options could have on the entire industry.

How will subscription services like Stan, Presto and Netflix, for example, affect illegal downloading? What about new Australian content? And where does advertising go if it is not shoved into breaks in each episode?

These kinds of questions are just as important as considering which new service/s to sign up for, so here we take a look at how streaming services could change these three entertainment trends in the future.

Illegal downloads

Australia has one of the highest rates of illegal downloading in the world, and actually led the world in illegal downloads of hit HBO series Game of Thrones, which is only currently available in Australia through Foxtel. The situation with piracy in Australia is so serious that the government has given ISPs a deadline: they have until September 2015 to implement an anti-piracy code or risk suspension and other severe consequences.

While ISPs are currently considering different anti-piracy code drafts, many people hope that the rise of entertainment streaming services will organically reduce illegal downloading and streaming of shows and movies. After all, if you have instant, legal access to something, it’s a lot less tempting to break the law.

Netflix CEO and founder, Reed Hastings, has actually told Australian media that the service hopes to end piracy here altogether.

“We’re really focused on heading off piracy,” he says in an interview with AAP.

“There’s big piracy in Australia, and part of that is because there is not an easy, affordable service.”

He says Netflix has already seen significant changes in illegal downloading in other countries where the service has launched, citing Canada as a prime example.

“What we have seen in Canada is as we grew, the amount of piracy declined, so that would be the hope here,” he says.

A report from The Sydney Morning Herald has highlighted similar sentiments from Foxtel. The company’s corporate affairs spokesman Bruce Meagher says he hopes that consumers will seek out new legal alternatives such as Presto, Stan, Netflix and the more established Quickflix.

“Hopefully consumers will look for legitimate alternatives,” Meagher says.

“Our general view is the more people get used to the idea that there are affordable and easy ways to pay for TV and services, the better it is for everyone. We encourage people to take up any of those services, but obviously Presto.”

Hit shows like House of Cards, Breaking Bad, Girls, Orange is the New Black, Modern Family and The Walking Dead are among the many available through streaming services, and with subscriptions starting from as little as $8.99 per month (Netflix), there’s a good chance piracy in Australia will drop in the months to come.

The rise of local and niche content

Netflix and other streaming services in the US have led to a television renaissance, with more and more directors and actors known for their film work moving on to do TV series. Leonardo DiCaprio, for example, has just partnered with Netflix for a series of documentary projects. The streaming service also has deals with the Wachowski brothers (of The Matrix fame) and Adam Sandler, as well as David Fincher and Kevin Spacey for House of Cards.

In a rare interview with The Hollywood Reporter, Netflix’s Original Content VP Cindy Holland says the service gives show creators and talent a chance to really flesh the stories, worlds and characters out for audiences.

“I think you can take the time to really develop characters and storylines, and you can go on some pretty interesting tangents and not be too concerned because the viewer will be right back with you in that story in the next hour to two hours,” she says.

One of the outcomes of this approach is that there is more room for niche and genre programming. Rather than trying to reach as many people as possible – which is arguably the aim of traditional television – subscription services are better suited to reaching a specific demographic of subscribers.

As Holland puts it: “our business model is about subscriptions, not profits from TV shows” – an approach that has helped Netflix develop a variety of original content and licensed content, as well as inspiring the revival of classic storylines and series, such as Arrested Development.

This approach is, to some extent, being adopted by all subscription-based streaming services, which also means there is more scope for genre programming and region-specific series.

At this stage, there has been little word on whether or not the development of new series will lead to more local content production, but people are hopeful. Foxtel has already invested a significant amount of time and money into local productions such as Wentworth, Cloudstreet and Tangled, with hints that there are more to come.

Netflix, on the other hand, has been hot-and-cold about developing Australian content. In some media interviews, execs have said local content is not really a priority at this stage, while in others, they have said they are open to developing local content if they can find “the right stories”.

So far, the only Australian-based production Netflix is involved in is a kid’s series called Mako Mermaids, an adventure comedy series shot on the Gold Coast and co-financed by Netflix and Network Ten.

Still, the hope is that some or all of these local streaming services will not just be open to commissioning Australian content, but also to actively developing it as part of original content programming.

Advertising strategies

The subscriber model employed by the main streaming services in Australia makes up the majority of their profits, which means ad-free entertainment in many cases. Meanwhile, traditional television is ruled by it’s advertising model, where the bulk of profits come from which companies pay for ads to be screens in between and during broadcast shows.

While the latter model has been around for so long that most audiences are used to ad breaks, the newer, highly-affordable and accessibly streaming services have given people a taste of what it’s like to skip ad breaks and continue enjoying a show. As a result, many people have called Netflix and co the biggest threat to traditional, commercial television broadcasting – which is already changing rapidly.

As LifeHacker explains in an article prior to the launch of Netflix Australia, free-to-air TV audiences have been steadily declining, leaving network executives and advertisers at a loss as to what to do next.

“In 2015, it’s not uncommon for no show on free-to-air TV to attract more than a million viewers on a given night — and many dramas do less than half that,” contributor Angus Kidman writes.

“That’s really bad news if your business is built on selling advertising to a mass audience. TV might be the biggest viewing audience there is, but individual shows are less popular than they have ever been in the colour TV era.”

Meanwhile, shows on subscription services, including Foxtel, are more popular than ever before. So it is not necessarily the content, as much as it is the medium, that is causing a shift in audience preferences.

The cause, however, is only part of the problem for advertisers, who have typically invested billions of dollars in broadcasting to reach their target demographics. With more people switching to streaming services, there is no doubt advertising has to adapt.

As audience focus shifts from single screen to split-screen experiences, internet advertising will play a much bigger role. Over the past few years we have already seen the introduction of YouTube advertising, Facebook newsfeed advertising (including auto-play videos), popup video ads and a wide range of other marketing strategies that range from effective to annoying for consumers.

Advertising agencies will also get more creative about the way they set up campaigns. Online video marketing is one of the fastest growing focuses for ad agencies around the world, and reports from myriad industry analysts show this trend is set to continue.

But there’s scope beyond blatant video and in-browser advertisements. Product placement and “shop the show”-style services such as Spylight, for example, have had a bit of buzz around them lately.

Spylight screenshot

It’s likely we will see more inclusion of brands and cross-industry marketing in series and movies as advertisers adapt to fit in with our entertainment consumption habits. There’s a chance brands could even go directly to the source and co-finance productions as a way of getting more creative control and public awareness of their products and services.

So even though our viewing may not be as interrupted by advertisements, we’ll still be exposed to marketing messages across a range of platforms and entertainment options.

What’s next?

At this stage, there is still a lot of uncertainty over how much of an impact streaming services will have in Australia. With the exception of Quickflix, these services are all new to the Australian market, which means it could be a while before consumers jump on board with subscriptions to Netflix, Stan and Presto.

For now, the biggest question on people’s minds is which service to choose. But it is clear that a whole lot of elements will be affected as we change the way we watch shows and movies.

Images (top to bottom): Netflix for tablet, credit: Netflix Australia; Spylight screenshot, source: supplied; Stan screenshot, source: supplied.

Stan screenshot

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