We are at peak streaming wars. As someone who’s been in the business since 2007, it is fantastic to see current media focus on OTT streaming services. Disney+, Apple TV Plus, HBO Max, NBC’s Peacock et al are in market or will be in the next six months, giving audiences more choice, better UX, and I believe deeper engagement with the content than we’ve seen to date. For example, releasing the Disney+ catalog dating all the way back to Steamboat Willie (1928) is a brilliant way to introduce a new generation to their classic IP.
The streaming cornucopia has also led to some confusion about where your favorite shows will live, and frustration about the cost of it all once you’ve subscribed to each service. Perhaps this is why we’re seeing the re-introduction of bundling, the evergreen TV industry business model.
Much has been written about potential winners and losers in this new era of video, the impact on “legacy” services like Netflix, how Prime is really about supporting your online shopping addiction, and what’s the deal with Baby Yoda? I wanted to step back and take a look at the macro-level battle for entertainment eyeballs, particularly on the most important content platform of the early 21st century: mobile.
One of the key planks in any streaming service’s strategy is original content. Original content means if you want to watch The Crown, For All Mankind, or Castle Rock, you have to subscribe to Netflix, Apple TV or Hulu. This is a sound strategy in practice, but an expensive one. It costs $15m to make one episode of The Morning Show, which is a decent budget for a high-end independent feature film. If this attracts and retains subscribers, and meets your strategic goals, then this is a winner (critics notwithstanding).
But what if the audience you want really isn’t that into slickly produced scripted dramas? What if the content that they like to watch doesn’t cost the platform anything at all to produce? I’m talking about the fast-growing, addictive social/mobile video platforms like TikTok. Bytedance, TikTok’s parent company, is the most valuable startup in the world ($78 billion at their last funding round). By comparison, Snapchat’s market cap today is around $20.4 billion. TikTok is valued so highly because it has a monthly active user base of 500m, mainly comprised of hard-to-get young people that advertisers love to reach. So what does this have to do with OTT streaming services? Can’t the kids watch both Apple TV and watch user-generated content on TikTok, Instagram, YouTube, Firework and Triller?
In theory, yes. But you aren’t just spending $4.99-$14.99 per month when you subscribe to these services, you’re spending valuable minutes of your day. And same goes for the social platforms. A minute spent on TikTok is a minute you’ll never get back to watch Handmaid’s Tale. Even with the growing number of minutes each day spend on mobile video, there are natural limits to how much can be consumed. So for mobile, and especially the 12-25 age group, it’s a battle for attention that might not be won with long-form dramas.
Into this battle will enter Quibi. Jeffrey Katzenberg and Meg Whitman’s $1 billion bet on the hearts and minds of young mobile video consumers will debut next April. I was skeptical at first, but the more I think about their strategy, the more it makes sense in context of where Millennials/Gen Z are actually spending their media consumption time.
Quibi, which is an abbreviation of “quick bites” is a blend of the best of the current mobile apps and OTT streaming services. This is the first big budget “mobile native” video platform. (I’m discounting Snap’s Discover platform here). With production budgets up to $6m an hour, and an average episode length of 7-10 minutes, Quibi is a genuinely new content category that attempts to cater to the appetites of short-attention spans and the limits of the mobile screen.
Pricing has been announced as $4.99/months with ads or $7.99 ad-free. The pre-roll duration will depend on the overall content length of content, i.e. ten seconds if the episode is under five minutes and 15 seconds if it’s over five minutes.
Quibi has me intrigued, and while I haven’t seen any of the content yet, the fact they’ve invested so much, signed on first-class talent (e.g. Antoine Fuqua, Sam Raimi) and have secured the backing of major studios, means they are going to make an impact regardless. For Quibi to pull the kids away from TikTok, they will need to be excellent value for the five bucks per month, and the opportunity-cost minutes besides. I’m looking forward to watching the next episode of Streaming Wars to see how it unfolds.
Picture credit: TikTok handout