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Why Netflix cannot afford to chill

Why Netflix cannot afford to chill

The streaming game resembles a knife fight in terms of competition.
05 Apr, 2021

It’s September in the year 2000, and two guys in Hawaiian shirts and flip-flops are seated in a grand corporate boardroom, in awe of their grand surroundings. In the meeting to follow, they would try to sell the future of content to a clutch of sceptical executives of a company by the name of Blockbuster — a video rental company as ubiquitous as Coca Cola or Starbucks in America at that time.

At the end of the meeting, there would be muffled laughter by the amused audience of Blockbuster executives when the duo offer to do a digital streaming service for all of Blockbuster’s catalogue for 50 million dollars. Needless to say, the meeting ends in a failure.

As history would unravel, that same Blockbuster, where one could throw a boomerang on any street in America and hit at least three of its stores, would be reduced to just one store, and that too as a mere tourist attraction. Meanwhile, the flip-flop-wearing team of Marc Randoplh and Reed Hastings would go on to turn the global media industry on its head with their company named Netflix, valued at 231 billion dollars in 2021. The good-humoured folk at Blockbuster still bang their heads against a wall for walking away from the deal of the century.

In the years following the meeting, the laughter died down as the old media elite scrambled to bring their own streaming apps for the throne now being held by Netflix. The media barons at HBO, Disney and NBC, who scoffed or laughed off the prospect of streaming content on the internet on mobile devices, are now betting the farm on their own streaming apps.

The streaming game resembles a knife fight in terms of competition. It’s a race to the bottom when it comes to price, even when content is what drives viewership. Icon looks at how the current options stack up

The reason for this gold rush has to do with the logic of capitalism, and partly to do with the economics of the web. Capital lusts for growth and profits. The online audience segment has been the fastest growing component of the entertainment industry in the last decade. Money goes where the eyeballs go. Secondly, the winner-takes-all approach of internet markets forces everyone to bring their maximum firepower very early on in the game. Case in point: Facebook, Amazon and Google rule their domains with very little competition. The same logic, people think, persists in online streaming.

Netflix and Pakistan: some startling facts and figures

For added perspective, let’s compare some stats with Pakistan. By 2019, the combined content spending of Netflix, Disney and Time Warner (parent company of HBO Max) had spent close to 250 billion dollars; the whole size of the economy of Pakistan in that very year was 278 billion dollars!

Or let’s take the subscriber base. Netflix has surpassed 203 million subscribers; Pakistan, with 216 million citizens, is the fifth most populous nation in the world. In other words, if Netflix were a country, it would have the economy and population almost the size of Pakistan.

Speaking of Pakistan, online streaming is starting to make its dent here too. By 2020, Netflix made 1.2 billion rupees (7.1 million dollars) in revenue from Pakistani subscribers in its sixth operating year here; in comparison Hum TV, the biggest entertainment house of Pakistan, makes four billion rupees (29.2 million dollars) after 15 years of operations, and owns four channels and a movie studio.

Despite almost everyone logging on via borrowed passwords from friends and family, the fact remains that streaming has arrived in Pakistan. Till now, Amazon Prime and Netflix have ruled the roost in premium streaming content, with the recent entry of Spotify in the audio streaming app space here. The more resourceful of media-hungry users are already using VPNs — software used to access content forbidden in Pakistan — to log in to streaming apps such as HBO Max, Disney+ and Hulu, among others.

Aside from the usual paying by credit card, there is a whole grey market on the Pakistan internet, of people selling cut-price subscriptions for just about every streaming app that matters. If there is a will, there is always a hill for us Pakistanis.

The different streaming apps and how to get them in Pakistan

So how do the streaming apps stack up against each other? Lets have a closer look.

Netflix

Design by Saad Arifi
Design by Saad Arifi

The reigning king of the streaming world, one of the most impossible success stories is defining the future of our global entertainment future. House Of Cards, starring Kevin Spacey, was one of its breakthrough hits, landing all episodes at the same time to be consumed on any internet-connected device, be it a mobile, tablet or laptop anytime. Suddenly, waiting every week or season for a show seemed outdated.

Despite being on top globally, it still has 12 billion dollars of long-term debt on its books, making for a very precarious crown. But quite recently, it turned over its first profit.

Notable original content: The Queen’s Gambit, Money Heist, Stranger Things, Narcos, Roma, The Crown.

Availability in Pakistan: Yes. Regular electronic payments are available.

Disney+

Perhaps the biggest contender for Netflix’s top spot. With the sheer size of its financial muscle and ownership of valuable content, Disney+ might just give Netflix a run for its money. Besides owning all rights to Disney and Pixar content, it also owns the Star Wars franchise, and Marvel Studios’ content. It’s greenlighting content at a breakneck speed alongside its existing impressive catalogue. It’s currently not available in Pakistan but that hasn’t stopped users in Pakistan from climbing the VPN fence and buying subscriptions off the grey market.

Notable original content: The Mandalorian, Wanda Vision, Soul.

Availability in Pakistan: Not available. A good VPN and a working account is required, as well as a sideloaded app.

Amazon Prime

The everything store also wants to sell you shows and movies. The current catalogue leaves a lot to be desired, but Amazon Prime Video has dropped notable shows that have been well received by audiences. It also pioneered audience democracy, where it left viewers to decide which pilot episodes of shows would go into production as full-seasoned shows. It has scrapped the feature recently though. Jeff Bezos, besides launching rockets, delivering parcels and cloud computing, has revealed he has big plans for the service in the coming years. One can easily subscribe to the service in Pakistan without hopping on to a VPN.

Notable original content: Fleabag, Mirzapur, Homecoming.

Availability in Pakistan: Yes. Regular electronic payments are available.

HBO Max

Home Box Office is to mature audiences what Disney is to the younger lot. From the house that gave us The Sopranos, Game Of Thrones and The Wire, it has consistently set the gold standard of what TV show storytelling can achieve. As an old media giant wanting in on the action, it does resemble Disney+ a lot. Besides having a sizable catalogue of Warner Brothers (HBO’s parent company), HBO also has its own prized content.

The app also has streaming rights of the DC Universe, pitting it directly against Marvel Studios for pop culture supremacy. It recently angered half of Hollywood by announcing that it would be streaming all of its 2021 slate of cinematic releases on the app and cinemas, simultaneously. Producers and cinema chains hate the service after the decision, and for that very reason HBO hopes that the audiences will love it.

It is mostly geared towards Western audiences, viewers in Pakistan expecting desi content will be dismayed. But the sizable HBO fan base here has still managed to climb the VPN fence and view content on the app.

Notable original content: Game Of Thrones, The Sopranos, Deadwood, The Wire, LoveCraft Country.

Availability in Pakistan: Not available. A good VPN and a working account is required, as well as a sideloaded app.

Apple TV+

At two trillion dollars in valuation, and perhaps the most successful consumer brand of our age, one would expect Apple TV+ to bulldoze through the competition. But the truth of the matter is that Apple is a minnow in the shark-infested waters of the streaming world. To give credit where

it’s due, with iTunes and the App Store, it opened up a legal revenue source for copyrighted content at a time when internet piracy was rampant. It had a big role in paving the path for the Netflixs and Spotfiys of later years. As of now, it still lacks the wow factor that would make the audiences making a beeline for its content, like consumers make for its iPhones.

Notable original content: Wolfwalkers, The Morning Show.

Availability in Pakistan: The short answer is a ‘no’. The long answer is: you will have to change your Apple ID’s region on the App Store with a valid US/UK address. After that, to work around the issue of not being able to add a viable payment method to subscribe, one can buy Apple gift cards from local apps such as Daraz and Shophive, and use them on the Apple App Store to gain access.

Hulu

A relatively lesser-known service, although it was one of the first to develop the premium content streaming market alongside Netflix. Its current status is a little ambiguous, considering its parent company, Disney, among others, also offers its content on Dinsey+. It has, time and again, punched above its weight, giving critically acclaimed shows to its loyal fanbase.

Notable original content: The Handmaid’s Tale, Baskets.

Availability in Pakistan: A good VPN and a working account is required, as well as a sideloaded app.

BBC IPlayer

BBC is better known for its news channels more than its huge entertainment catalogue here in Pakistan and, quite frankly, that’s a shame. Classics such as Monty Python’s Flying Circus, Faulty Towers and Doctor Who, among many others, have a fan base across the world. BBC has its own stand-alone streaming app, replete with its own dizzying array of documentaries, shows, movies, live television and radio feeds.

But there are two major hoops one has to jump through: first, you have to be a British national with a valid British address and, second, if you are based in Pakistan, you would need a good VPN to access it. But if one can manage to enter the walled garden of BBC content, the choice is more diversified than any streaming app on offer.

Notable original content (recent): Normal People, The Serpent, BBC Earth.

Availability in Pakistan: BBC Iplayer is strictly for UK nationals only. If you have a valid UK physical address and a VPN, one could get access. You will also need to sideload the app.

Peacock

Arguably the laggard in the streaming game, Peacock is the digital subsidiary of the American network television giant NBC. If you are in for nostalgia, then you would be spoilt for choice, as whole seasons of iconic shows such as Frasier, 30 Rock and The Office, among others, are available for the viewers to feast on. On the movies front, a sizable catalogue of pictures produced by Universal Studios is also on offer. And from March 2021, wrestling fans can also view WWE content. With that said, the service still lacks the grit for greenlighting new content and the visibility of other streaming services.

Notable original content (recent): Yellowstone, Brave New World.

Availability in Pakistan: A good VPN and a working account is required, as well as a sideloaded app.

YouTube Premium (formerly known as YouTube Red)

Unbeknownst to many, the planet’s favourite free streaming app has a paid streaming option as well. Aside from live feeds of TV channels, it’s an ad-free version of the service, with premium content from YouTube creators, and also a dedicated music service in which you can play songs in the background. Google, however, hasn’t gone all in producing big-budget TV shows or movies that the other apps offer. Considering the firepower Google has on its balance sheets, that could easily change as the competition heats up. Till now, the mass audiences have steered clear of it, in favour of the regular YouTube, because... well, nothing beats free.

Notable original content: Impulse, Liza On Demand, Mind Field.

Availability in Pakistan: A good VPN and a working account is required, as well as a sideloaded app.

Beyond these heavyweights, the streaming universe collapses into many smaller apps, too numerous to mention in this space, that cater to different tastes. For independent cinema, one can head to Mubi, if someone is a documentary buff then Curiositystream is their port of call. Magellan TV tailors content for history buffs, and the list goes on. On top of that, there is a constellation of pirate streaming apps such as Streamio and Terrarium.

A peek nextdoor in India

Bollywood is a giant cultural machine that rivals Hollywood in global clout. Netflix isn’t even in the top five apps in terms of users in our nextdoor neighbour. That crown goes to Hotstar Disney+, which is a partnership service between Star Television and Disney. A close second is Jio TV, owned by Mukesh Ambani. Then there is a whole clutch of other rival services, such as Zee5, ALT Balaji and Eros Now, among many others that are heavily subscribed.

The streaming game resembles a knife fight in terms of competition. It’s a race to the bottom when it comes to price, with some of the services virtually free. The likes of Netflix or Amazon Prime may compete on content, but they can’t compete on pricing.

This actually reveals a deep truth about investing in India. Many a Western firm has starry-eyed projections on growth and profits upon entering India, but eventually they get muddled into fierce competition by homegrown rivals, or heavy government regulation. A lot of people log in from Pakistan as well to these services, courtesy of the aforementioned dealers selling these accounts on the internet, alongside sideloaded apps and, of course, VPNs.

Are we there yet? The local streaming app scene

When it comes to streaming local Pakistani content on the web, YouTube is the king. Watching dramas or live feeds of cricket matches are a mainstream activity. Homegrown apps for premium content are still in their infancy. Starzplay with Cinepax (a local cinemas chain) and Urduflix by EmaxMedia are recent entrants who find themselves in a very crowded space.

To compel Pakistanis to open up their wallets (by no means an easy task), they would have to think long and hard on what niche they can fill. Cutting deals with major entertainment studios for exclusive content, and getting their library off YouTube, could be a first step. But producing or streaming exclusive content (think: the next Humsafar or Mere Paas Tum Ho) could really get the fickle local audiences to start subscribing.

In the 1920s, network executives scoffed at the idea of sound on film, saying films were essentially a visual-only medium. Well, we all know how that ended. Similarly, if someone had told you 15 years ago that there would be a time when we would stream all our content on the internet anywhere, anytime and on any device, s/he would have been laughed off, as was the case with Netflix.

What was inconceivable is now the norm. A raging coronavirus pandemic will only accelerate the shift to streaming. And while the rest of us can Netflix and chill in a sea of content, Netlfix can’t afford to do the same. As the tale of the snickering Blockbuster bosses shows, the stakes are just too high. And the failure to comprehend the future is no laughing matter.

The writer has worked as a producer in news media, an analyst in the NGO sector and is currently a faculty in Media Sciences at Szabist University

Originally published in Dawn, ICON, April 4th, 2021

Comments

Browngirl Apr 05, 2021 12:12pm
Most Netflix viewers are women. Especially their new original content is mostly aimed at them.
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