Why FANG will win
December 21, 2017
The news from consultancy Ovum that the OTT players Facebook, Amazon, Netflix and Google (FANG) will take almost two-thirds all new TV and video revenue in 2018, at least as far as the US is concerned, comes as little surprise.
Amazon and Netflix will take 69 per cent of OTT subscription revenue, while Google and Facebook will corner 45 per cent of OTT in-stream video advertising (AVoD) spend, says Ovum.
In my view, and despite frequent local competition, FANG will also increase its influence in the UK, much of Europe and well beyond. A recent study from Mediavision says that Netflix is already winning in the Nordic video market, a region where public television is generally well appreciated.
The UK will benefit in terms of programme making because of its strong creative skills and its English language. Further afield there will also be benefits to local production communities as the likes of Netflix and Amazon invest in France (announced in June 2017), India (commitment in August 2017), Asia (July 2017) and other regional centres.
This lack of surprise extends to the shock that anyone is surprised! While local TV audiences might well be loyal to their national public broadcaster for their obvious localisation services, the appeal of Netflix, Amazon Video and the potential from the other OTT services is obvious.
Yes, they are OTT, but the fact that their programme is available on demand, in extraordinary high-quality video and without annoying advertising breaks, and all for the price of a couple of cups of coffee per month, makes a compelling overall offering.
Viewers are getting cutting edge programme that’s frequently quirky (Stranger Things, Mozart in the Jungle, Grace and Frankie, Narcos, Godless) and when added to mass-appeal shows such as The Crown and The Grand Tour where the investment is wholly reflected in impressive on-screen value. They make compelling services.
Local pay-TV rivals such as Sky, despite increasing their non-sport programming investment, cannot hope to compete. Brian Sullivan, recently promoted to COO at Fox Network, while speaking at September’s IBC, admitted: “Netflix is a spectacular service at a spectacular price. We, the studios, created it with our content.” He warned that this easy access to Hollywood’s back catalogue was likely to change – and almost certainly will once Disney mops up 21st Century Fox and puts its combined efforts behind Hulu.
The Ovum report suggests that Amazon will make greater revenues than Netflix in 2018 ($5.8 billion vs $5.3 billion for Netflix) although helped by the ‘free delivery’ Amazon Prime service.
But for this viewer it all comes down to watching ad-free, high-quality programming. That has always driven viewer loyalty and appreciation.