nScreenMedia OTT multiscreen media analysis

Netflix, NBCU International, Channel Master focus OTT content strategy

Netflix library size

OTT content strategy is becoming more refined and targeted online. Three announcements involving Netflix, NBCUniversal, and Channel Master illustrate the trend.

AdvancedMedia reports that there has been a dramatic reduction in the Netflix catalog over the last year. At the beginning of 2014, Netflix offered US based customers a selection of 6,494 movies and 1,609 TV shows. As of this month, the number of movies has declined by a third, to 4,335, and the number of TV shows has fallen by a quarter, to 1,197.

Why the big decline? Advanced Media speculates that increased competition for content rights from companies like Amazon and Hulu is driving up the cost of movies and TV shows. This reduces the number of shows that SVOD providers can afford to buy. The increase in price certainly is a factor. However, a more likely reason is that Netflix is using the huge amount of data it gets on content usage by members to cull the shows and movies people simply don’t watch.

Netflix is also using that data to go after the individual shows and movies it believes will be a better match for its customers. This approach started in 2013, when Netflix did not renew its deal with Viacom. The SVOD giant wanted to buy specific, more popular Viacom shows while Viacom wanted to license the whole catalog. Clearly, Netflix has decided paying more for fewer better quality shows in the winning strategy.

In Europe and Australia, NBCUniversal has launched a new SVOD service, called Hayu, dedicated to reality TV. According to Kevin MacLellan, chairman of NBCU International:

We know that reality content is a primary driver of social interaction and that fans of reality TV significantly over-index in online viewing. We set out to build a service that elegantly combines the best high-end reality shows with the most popular social media and digital news platforms. Uniquely in Hayu, fans can find it all in one place.”

The service will deliver shows like Keeping Up with the Kardashians, The Real Housewives, and Made in Chelsea and will cost £3.99 ($5.77) in the U.K., €4.99 ($5.64) in Ireland and A$5.99 ($4.22) in Australia.

Meanwhile, in the U.S. SVOD audiences are apparently cooling to the charms of reality TV. Amazon announced it will be dropping several Viacom reality shows including Teen Mom and Mob Wives. Earlier in the year it dropped A+E Networks Storage Wars and Pawn Stars. Ironically, some of the shows Amazon is now dropping from Viacom came to it when the company snapped up all the Viacom content that Netflix declined to renew in 2013. It could be that it too is now using customer viewing data to weed out the poor performing shows.

Channel Master is looking to online video to expand the offerings through its free-to-air DVR+ product, and increase its appeal to millennials. It has added Newsy, an online video news channel that features young announcers detailing current stories from around the country. Newsy advertises itself as a free alternative to 24 hour cable news channels, and should be a nice compliment to the free-to-air content already available.

Users of DVR+ can also rent movies from Vudu, listen to music via Pandora, and watch videos on YouTube through the platform. A user can also access their Sling TV subscription through DVR+. Interestingly, Newsy can also be watched through Sling TV, although you’ll need to subscribe to the basic package of 23 channels for $20 a month.

Why it matters

OTT providers are becoming more sophisticated in their approach to content acquisition and delivery.

Netflix is shrinking its catalog of content, using data to weed out the content that consumers do not watch.

NBCU International is targeting reality TV fans with Hayu, taking advantage of the fact that they are online more than non-reality viewers.

Channel Master is leveraging online providers in its DVR+ to expand beyond free-to-air content and become more appealing to millennials.

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