Video: How to Compete as a Niche Publisher in the SVOD Marketplace
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Daniel Webster: You look at Netflix, it's barely, marginally making money. And it's investing a lot upfront in order to try and sort of gain that lead sort of position. So you've got a bunch of big players who can invest, and then you got a bunch of smaller players who I would like to believe have a good chance because they have great news content. But fundamentally, the new economic model for media still has to be found front and center in the advertising world. As you know, you've got an advertising model, you've got a subscription model, rarely the twain do meet. There are very few examples. If you put your crystal ball out there and hope that it doesn't fall and crash, what's your prediction of how this is going to play out?
Felix Gomez: I think we're on our way to repeating history, and what I mean by that is the first slide that you showed went back to 1959, where it talked about the Big Three and then eventually the Big Four. If you want to create your own Big Three or Big Four, you can put Netflix, Amazon, Hulu. Apple TV just announced that they're going to invest 7 billion in original content. Roku just announced that they're going to invest a lot in original content because 70% of their viewing comes from Netflix, Amazon, and Hulu, so they're not making money off of that.
But to your point, there is a need for those niche audiences, and that's when we're going to repeat history with cable. You have partners like Tubi TV or Pluto TV that are going out there and aggregating these niche channels for niche audiences where there is the need for those eyeballs. And so at the end of the day, we're still going to be battling the Big Four, Big Three, whatever you want to call them, but if we have the ability to go and scale and bring quality content to our end consumers, then there's going to be an opportunity for everybody.
To your point regarding subscription versus non-subscription-based, I think that Netflix has done a fantastic job. Right before Stranger Things 2 came out, they increased their monthly subscriptions and no one balked at it because they did it in a strategic manner where people wanted to watch Stranger Things 2.
But I think if you look at what we call the "mass reach" partners in this space that's going to give us those aggregated channels or whatever that may be, they're going to be able to make money from an ad-supported standpoint. They may not play in the subscription base, but where are their bread and butters going to be within those 15- and 30-second linear TV commercial pods?
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