Marketing Profile: Netflix vs. the FAST Crowd
The long telegraphed password sharing crackdown is here
Netflix has been struggling lately. It’s worried that its perpetual growth machine may be out of gas. Worldwide subscriber growth has slowed, and in the US, the total subscriber count has started to fall. In response, Netflix introduced a low cost pricing plan with ads in November ’22 and right now is rolling out its new “paid sharing” plan in the US. Paid sharing is where customers pay even more so family members not under the same roof can share passwords.
Netflix is clearly nervous about the impact of these changes. So much so that they have been talking about it forever and in February started testing it on the Canadians. Like every big company with a bad idea, momentum has prevailed. Since the US subscriber count was already going down, it will be difficult to know the true effect of these policy changes.
In an adjacent universe, the explosive growth of FAST channels may be instructive.
Free, ad supported, streaming TV (FAST) channels are on fire. YouTube is the most widely recognized and used free streaming service and offers both live and on demand content. Often the content is uploaded to YouTube by broadcast TV networks as a way to promote their shows (think SNL or The Late Show). Similar video content is also consumed on the social media platforms. But in the last few years, an entirely new category of FAST has emerged.
No one knows how big the FAST business is right now because these new channels are coming from everywhere all at once. The consensus seems to be that there are about 20 brands and maybe 1,000 channels right now. The brands range from NBC’s Peacock (which isn’t actually free) to Chicken Soup for the Soul TV. The channels could be as straightforward as a streamed version of a local broadcast station, or something niche like gameshow reruns, or even more niche like MOB TV – that streams all things gangster – 24 hours a day.
Some services work like Netflix, where the movie or TV show is streamed on demand. But in a strange, I must have hit my head and woke up in the ‘70s kind of way, a surprising amount of the FAST content is on a schedule (in the TV biz they call this “linear”). Pick the surfing channel and some surfing is on. Or pick the 911 channel and crime is on. Or pick the church channel and church is on. These new services are very easy to sign up for and with a few exceptions are free and paid for by advertising. But even the advertising is different than we are used to. The ads are shorter (15 – 30 seconds), and fewer (about 5 mins per hour).
Soprano’s writer and producer Terence Winter created MOB TV because: “America’s fascination with gangsters and mob figures goes back over a hundred years, to early motion pictures with fast-talking gangsters doling out bullets and beatings to anyone who crossed them.”
Keith Valory, CEO of Plex, the service that carries MOB TV, explains that: “The unit economics of a $5 to $10 subscription doesn't make much sense if, on average, you are paying $50 to $75 to acquire a subscriber and they churn out in six to nine months.” Valory also reports that FAST content made up 6% of Plex consumption in 2020 and 30% in 2022.
The proliferation of layers upon layers of innovation and specialization can impede our understanding of the FAST phenomenon. The most common profile of a FAST brand is an online offering mixing on demand movies and TV shows and scheduled TV stations and specialized content. Some of the names in this group are Plex, Tubi, Pluto, Freevee, and Xumo. More specialized is LocalNow, that offers local TV stations from all over the country on a scheduled basis. Crackle is all on demand content – essentially Netflix with ads. Vevo is just music videos – essentially the MTV of the 80s, and Chicken Soup for the Soul TV describes itself as “a free entertainment destination for women featuring inspiring lifestyle content.”
Occasionally, I try to make a list of the many streaming services I subscribe to and purge the ones I don’t watch. Sometimes I cancel a dozen or more – just to see how long it will take to notice and re-subscribe. To date I have never purged Netflix. Netflix has been sticky because I have had it since the DVDs came in the mail, and I am pretty sure my grown kids are using my log in. When I log in Netflix keeps asking if I want to continue watching the Gilmore Girls! But my bill has gone from $11 per month to $22 per month and it is unlikely I am going to increase my bill even further.
Last month in my profile about Netflix I said: “As the transition from the cable bundle to streaming services continues, I think Reed Hastings and Ted Sarandos are going to continue to make great long term strategic decisions and keep Netflix on the rise.”
I think we all are going to be watching with great interest to see how these latest changes at Netflix will impact subscribers — and who will defect to the FAST crowd.
Links and Resources
Marketing Profile about Netflix:
More about Netflix Pricing: https://www.cinemablend.com/streaming-news/netflix-subscription-the-plans-the-price-and-whats-included
More about Netflix Password Sharing: https://www.hollywoodreporter.com/business/business-news/netflix-password-sharing-crackdown-1235391105/
More about how FAST works: https://www.thefreetvproject.org/what-are-fast-channels/
More about MOB TV: https://cordcuttersnews.com/new-fast-channel-mob-tv-launches-on-plex/
More about Plex: https://www.forbes.com/sites/forbestechcouncil/2023/01/03/the-rise-of-fast-channels-and-their-impact-on-entertainment/?sh=5481d56e1c72
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