Matthew Ball @ballmatthew Venture investor, strategist, essayist, that guy on Twitter. Prev. Head of Strategy @AmazonStudios, ex-Otter Media, @MediaREDEF. 🇨🇦 May. 09, 2019 2 min read

Prime Video, Apple TV+, and Hulu SVOD all have the same business model and objective.

HBO, Showtime, Starz, CBS All Access have the same business model and objective.

Then there's Netflix, alone

Disney+, alone

Hulu SVOD is free if you get Live TV, $1/month for a year to new subs, free to Spotify subscribers, price down 25% in three years.

Why? It has a fixed cost basis and can be used to drive gross margin add-ons, Live TV, ESPN+, Disney+, and ad revenue

SVOD an anchor to rebundle

This is the same as Prime Video (drives EST, Amazon Channels, FireTV, Prime bundle) and Apple (EST, Apple Channels, Apple TV and devices)

The premium cable networks are trying to find a place in audience lives, primarily via the aforementioned bundles. Low volumes of content, priced at a premium because it focuses on the most valuable consumption (Sunday night) and content (prestige high budget TV)

Netflix is trying to be itself a bundle - as much TV as they can afford to offer, and as much TV time as they can steal. Logically assume that if it has the same style content as the premium nets, but much much more, can steal their time.

Simple. Max share, directly monetize.

Disney looks like hybrid. Hooks into bundle of ESPN+ and Hulu (plus it's bundle), EST rumored too. Facilitated by low price for scale

Also low volume of highly valued. But rapidly grows to Netflix-level spend

But Disney+ is about maximizing Disney ARPU and health, not SVOD.

Most interesting part is this means Netflix is mostly left alone, even though it's 12 years in to assumption everyone would exactly replicate it.

This has worked out pretty well so far. Will probably continue. NFLX internal bundle structurally cheaper
 https://redef.com/original/netflix-is-resilient-because-its-rarely-competing-netflix-misunderstandings-pt-7 

Disney leaves lots of money on the table by not maximizing Disney+ ARPU or licensing its content for 99% gross margins.

But Disney has always been an ecosystem play. Parks do 100% more revenue than studio, 60% more income. SVOD is the new core biz unit.

 https://redef.com/original/nine-reasons-why-disney-will-succeed-and-why-four-criticisms-are-overhyped 

In sum, we ended up in a far more diverse video world than one might have expected. And the major players have oddly different roles than anticipated.

For all its apparent differences, broadcast, basic cable and premium cable networks are remarkably alike.


You can follow @ballmatthew.



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