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How to Make Money with Niche SVOD Content

Niche SVOD services are well capable of making money and they may even be more resilient against churn than major platforms. What are some of the unique factors which make niche content perform so well over the long run?

“I want you to talk about niche content, because I find that to be an interesting way for SVOD to maybe scale and move another direction,” Chris Pfaff, CEO, Chris Pfaff Tech Media, Producers Guild of America (PGA), VR AR Association (VRARA), says to Jennifer Kent, VP, Research, Parks Associates.

“You can have a niche service that's perfectly profitable,” Kent says. “The goal isn't necessarily to eat the world, right? Your goal is to serve your customers well. And I think that there are some services that are really doing a phenomenal job of building community and understanding what's important to their particular segment. We recently had a speaker from kweliTV which specializes in the Black and African American community. And they have actual live in-person community events. They have engagement panels that people can come on to and talk to some of their lead stars and personalities. There are a couple of LGBTQ-focused [platforms] that are doing a really phenomenal job connecting.” This more personalized approach is what encourages people to add these niche services to their already existing stack of “foundational services.”

The big push for hits on major streamers in recent years may no longer be a sustainable model for maintaining subscriptions in any case, Pfaff notes, because hits are now popping up on many major platforms that keep subscribers watching primarily for the show but may not keep them maintaining their subscriptions for longer periods. Pfaff says that while he subscribes to a wide variety of more niche services such as Acorn or the Criterion Channel, “Then somebody comes up and says, ‘Hey, you're watching Hulu.’ Well no, not really, there’s this show, The Bear.” Pfaff says that breakout hits like The Bear may draw subscribers to Hulu for a time, but the days when megahits like Stranger Things can sustain subscriptions over long periods may now be over once the hype has cooled. “Maybe we've shrunk the window for some of these hits,” he says.

The move towards ad-supported tiers and slower programming rollouts is also another factor in changing the dynamics of the OTT industry as a whole. Evan Shapiro, CEO, ESHAP, focuses on Netflix in particular with their sudden reversal on creating ad tiers while also rolling out programming in segmented ways in hopes of keeping users subscribed longer. “They're reversing every decision,” Shapiro says. While Netflix once declared it would never include ads or roll programming out, the efficacy of this approach has already been well proven by other top platforms. “It's really working incredibly well for HBO Max and Hulu, Apple and all these others,” he says. “You know, it keeps people subscribed longer. And so [Netflix] dropped two different halves of the Stranger Things season, which is basically them admitting that we need to start rolling things out one week at a time.”

With niche SVOD in particular, Shapiro says, “I've seen data that shows that the niche services actually churn at a lower rate than the premium services. I think cults are better businesses than passive viewership.” He highlights Crunchyroll. “Amazing product that has a very consistent user base because it's day in, day out anime with stuff that's landing in Japan," he says. "Those users will not quit! They're just not going anywhere and they're young.” Even with a very specialized audience, niche providers may still be appealing to the big industry players for their staying power and loyal audience. Shapiro notes that Sony bought Crunchyroll, and more acquisitions of this type will likely follow. “I think you're going to see things like Shudder and BritBox get swallowed up by these more mass death stars because they're just good anti-churn mechanisms,” he says.

Learn more about niche SVOD content at Streaming Media West 2022.

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