Media commentator Andrew Neil has suggested that SVoD services such as Netflix and Amazon Prime are now better placed to be major disruptors in the broadcasting industry, a scenario he had discounted a year previously.
Delivering an Industry Overview at the SES Satellite Monitor Conference in London, Neil admitted that at the 2016 event, he suggested that existing players were well placed to resist such disruption, but noted the large growth of subscribers to both services and the budgets available for content acquisition and origination. “We now live in a content arms race,” he declared.
Noting the success of Netflix drama, The Crown, he suggested that its production budgets and values were “the shape of drama to come”, with TV versions of movie franchises having production budgets of between £10 million (€11.5m) and £15 million per episode. “People now expect and are given cinematic quality,” he added. “You also get character development you can’t get in a two-hour movie. That’s a major challenge for traditional broadcasters,” he suggested, acknowledging that in the US, budgets were higher than for UK channels.
“Their traditional revenue streams such as licence fees and advertising are limited,” he said, pointing out that critically-acclaimed BBC drama The Night Manager was limited to an eight-episode run compared with much longer seasons for top US dramas. “That’s not enough anymore.
“The insurgents will eat your lunch,” he warned ‘traditional broadcasters, noting that Netflix had outbid Channel 4 to screen popular drama Black Mirror. “It may even bid for Bake Off in the future,” he added.
In terms of the wider pay-TV industry, he warned that “the age of paying for 1,000 channels is coming to an end. We’ve got away with it for so long.” He suggested that cord-cutting was a more established practice in the US compared with the UK.
He also warned of the growing threat to British ownership of broadcasters, with Sky likely to become part of 21st Century Fox, subject to regulatory clearance, with Channel 5 already American owned. “It’s different being a wholly-owned subsidiary, you can’t make your own decisions anymore.” As such, he suggested that Sky may not prove to be quite the challenger for the insurgents it once was.