Ambition And The Slicing Machine

Michael Hedges January 25, 2016 Follow on Twitter

Ambition is the trait most rewarded by investors and customers, the difference only slightly nuanced. Technology companies have entered the media sphere - Netflix and Amazon, not forgetting Apple’s venture into music streaming - with the gleeful admiration from investors. Media companies have been on the back-foot trying to catch up with the techies. Consumers, of course, just want what they want right now, preference given to brands they know.

Some people believe Netflix is the greatest thing since sliced bread. Nearly 75 million worldwide had subscribed by the end of 2015, said the company just recently, increasing by 30 million in just one year. The company also announced it would be rolling out its streaming video service in 130 more countries, leaving only Chinese viewers to wait patiently. North Koreans are also out of luck, along with folks living in Syria or the Crimean Peninsula seized two years ago from Ukraine by the Russian Federation. Subscriber growth over the past year has been driven by markets outside of North America.

“We’ve just scratched the surface,” said CEO Reed Hastings to investors, quoted by Bloomberg (January 19). “Netflix is a tiny percentage of all video viewing today. We have tremendous growth ahead. You are witnessing the birth of a global TV network.”

There are, indeed, a plethora of streaming video services. Among the most visible international subscription video on demand (SVOD) brands Amazon Prime Video, HBO Go, Hulu and Sky Now are pointed at the same potential customer as Netflix. And there is considerable - and considerably well-funded - national and regional competition, many coming on-line as these international brands entered their turf.

Streaming media is extremely popular in Scandinavia; highly advanced internet communication technologies (ICTs) and robust disposable household incomes. Streaming music service Spotify, now being chased by Apple Music, was developed in Sweden eight years ago. Netflix entered Scandinavia in 2012.

The Netflix service is used weekly by 28% of Danes, reported DR Media Research in a report on 2015 Danish media development. Competitors Viaplay, from Modern Times Group (MTG), and HBO Nordic are used by 9% and 5%, respectively. Overall, 38% of Danish households use a streaming video service weekly, 59% using traditional TV.

"Netflix is the only company on the market that managed to solve the technical issues,” said media analyst Claus Bülow Christensen to nordjyske.dk (January 21), “so you can use the service even with a relatively slow internet connection and they provide very high quality images. Originally they delivered mostly old movies and television series, while now they are producing their own original content or offering exclusive content. It is a completely different Netflix we have today.”

The Italian market is different, of course. Netflix entered southern Europe only last autumn and streaming video users more than tripled in Italy between September and January, to about 700,000, suggested La Repubblica (January 21), citing “reliable sources.” Netflix has about 280,000 users, “however, only about 110,000 have subscribed.”

Italians also have streaming video choices; Mediaset’s Infinity, Sky Online, TIM Vision from Telecom Italia in addition to Netflix. Italians are impatient for crime-thriller series Suburra, expected in May, after which it will be offered by co-producer public broadcaster RAI. “The arrival of Netflix has forced the others to take measures to improve their offerings and promote them more forcefully,” observed La Repubblica. “The effect is already glaring.”

New market entries for Netflix have been rather cautious, at least until the recent addition of 130 countries. There are competitive issues and there are cultural issues, sometimes all at once. French Culture Minister Fleur Pellerin, the doyenne of cultural awareness, ordered a special 2% tax on foreign streaming video services and warned of “netflixisation.” Mr Hastings promised adherence to French content quotas, more or less, and put high-budget French drama series Marseille into production.

It was US comedian Red Skelton, famous on radio, who in 1952 urged critics “not to worry about television. It’s the greatest thing since sliced bread.” It’s a concept still lost on the French.

Poland is one of those newly Netflix-enabled markets. Critics, in a country where everybody is a critic, grumbled about payment plans only in euros and limited information in Polish on the local homepage. The newly installed chief of newly reorganized state television broadcaster TVP, Jacek Kurski, announced plans to fight all streaming video services with a new service and will pull TVP content from YouTube and every other streaming video platform, reported dziennik.pl (January 21). Polish media watchers also complained about Netflix sealing off access through virtual private networks (VPNs), effectively preventing access to non-Polish Netflix domaines. Nasty.

Also new to Netflix is the Islamic Republic of Iran, though the government immediately filtered access. The Revolutionary Guard called Netflix “a dangerous threat.” Iranians love TV shows and are quite adept at various means of bypassing government imposed filtering.

“I approached (government agencies) with sincerity and told them that Netflix… was in the process of purchasing films dubbed into Persian and will start providing a service to Iranians soon,” wrote Iranian online movie channel operator Mohammad Javad Shakouri in a blog post (January 7). “Their response was that they would filter it. I laughed and told them that filters are no longer a cement wall.” Netflix acquired international rights to Iranian film Under The Shadow, produced in Farsi, which premiered at the 2016 Sundance Film Festival.

China is, of course, the most significant market still closed to Netflix, though some estimate (zachs.com January 19) 30% of total Netflix users are in China thanks to a robust knowledge of VPN and other proxies. Blocking VPN routers, some suspect, is about Netflix applying pressure on the Chinese government for an operating license. “It may be soon that we have a license in China, or it may take a couple years,” said Mr. Hastings, “but we’re going to be very patient.”

See also in ftm Knowledge

Digital Transitions

Media's transition from analogue to digital has opened opportunities and unleashed challenges beyond the imagination. Media is connected and mobile yet fettered by old rules and new economics. Broadcasters and publishers borrow from the past while inventing whole new services. This ftm Knowledge file explores the changes. 88 pages PDF (March 2012)

Order here

Media in Spain - Diverse and Challenged – new

Media in Spain is steeped in tradition. yet challenged by diversity. Publishers hold great influence, broadcasters competing. New media has been slow to rise and business models for all are under stress. Rich in language and culture, Spain's media is reaching into the future and finding more than expected. 123 pages, PDF. January 2018

Order here

The Campaign Is On - Elections and Media

Elections campaigns are big media events. Candidates and issues are presented, analyzed and criticized in broadcast and print. Media is now more of a participant in elections than ever. This ftm Knowledge file reports on news coverage, advertising, endorsements and their effect on democracy at work. 84 pages. PDF (September 2017)

Order here

Fake News, Hate Speech and Propaganda

The institutional threat of fake news, hate speech and propaganda is testing the mettle of those who toil in news media. Those three related evils are not new, by any means, but taken together have put the truth and those reporting it on the back foot. Words matter. This ftm Knowledge file explores that light. 48 pages, PDF (March 2017)

Order here

More ftm Knowledge files here

Become an ftm Individual or Corporate Member to order Knowledge Files at no charge. JOIN HERE!