Ready to hear more insights from TVREV’s Alan Wolk? Don’t miss out on the TVREV Pre-Game Workshop: The Future of Streamonomics at The StreamTV Show in Denver on June 11. Check out the lineup and register here to be in the know on the latest and what’s up next across FAST, local TV, TVOS, and contextual advertising.
1. N Is For Netflix
Once upon a time there was a peaceful urban neighborhood called Sesame Street, where humans, monsters, birds, dogs, cats and vampires all lived in delightful harmony.
But then an ill orange wind began to blow from the East and HBO, long the neighborhood’s benefactor, decided to withdraw its troops and sunset its distribution deal.
This left the Sesamites with just PBS, which was no match for the red-hatted hordes looking to overrun the charming neighborhood and turn it into an upscale mixed-use development and paean to the letter “T”.
All was looking lost when one day a messenger spotted a knight upon a white horse, riding in from the West. The knight held a banner aloft upon which all could see a giant red letter “N”.
The people and the monsters and the birds and the vampires all roared with delight. (Which starts with “D.”)
Netflix would enter into a distribution deal for Sesame Street. Which would ensure the neighborhood’s survival. And possibly bring it a few much-needed updates.
Why It Matters
Netflix, which has managed to dominate most of television’s other genres, has long struggled with both sports and children’s programming.
Both are important because they bring very loyal fans who will watch the same content for hours upon end. And who will make their ability to watch this content the base of any streaming package they’re putting together.
Kids programming is tricky because of COPPA, the Children’s Online Privacy Protection Act, which limits the types of advertisers and advertisements that can appear on children’s programming, and Netflix, if you recall, is pushing hard on growing their ad-supported user base in the US.
So there’s that, which may explain why Netflix wasn’t going all in on kids just yet, and then there’s the fact that even more than European soccer teams, kids programming is dominated by a few giant brands—Bluey and Peppa Pig (which Netflix now has rights to) being the current favorites.
And then there is Sesame Street.
First launched in 1969, the series has been entertaining the parents and grandparents of today’s toddlers for over 50 years. It’s perceived—in most circles anyway—to be entertaining and educational, with its focus on teaching letters and numbers.
I mean seriously, who among us has not looked at an Oreo or Nilla wafer and begun humming “C is for Cookie”?
So there’s that and that creates a wonderful set of optics for Netflix. Both as the savior of PBS, a network most adults think of as the home of educational kids shows and Masterpiece Theatre rather than woke agitprop, and as the new home for their beloved Sesame Street.
Which is not to say that Netflix isn’t demanding some droits de seigneur. They’re going to roll out a bunch of episodes all at once while continuing the daily broadcasts on PBS. They’re going to bring back fan favorites such as Elmo’s World and center each episode around a single 11-minute narrative story. The latter hopefully being an antidote to the frenetic short attention span pace of TikTok and Instagram.
The greater point being that the changes all seem as if they will be popular and more like a push to keep the show updated and fresh.
So well played, Netflix.
What You Need To Do About It
If you are Netflix, your next step is to use Sesame Street as the cornerstone of a new kids strategy, one geared towards helping to obtain and retain new parents as subscribers, while creating a lifelong loyalty to Netflix in their offspring.
It’s definitely something you should promote, both via the usual channels—merchandise and the like—and PR. The fact that you are sharing rights with PBS is a big deal and makes you look even more noble, so make sure that doesn’t get lost.
It’s also said you’re looking to expand into gaming and what parent doesn’t love a good educational game? Especially one built around an adorable red Muppet.
Finally, don’t thumb your nose at all of the popular kids’ programming coming out of YouTube. Sure it may not have the same production values you’re used to. But it does have a very loyal fan base. A very loyal global fan base, for that matter. And that is no small thing as you continue your quest towards Total World Domination.
Something to think about.
2. Ad-Supported Amazon’s Amazing Amount Of Adoption
Some new numbers from online research firm Antenna show that around 11 million households, or around 8% of all Amazon Prime subscribers have spent the $36/year necessary to do away with ad breaks.
Meaning that 130 million—as per Amazon—still see ads.
That’s just in the US.
Compare that number to the most recent stats from Netflix, which boasts of having 94 million ad-supported subscribers. Globally. Meaning that many of them are in places like Mexico and Brazil. Plus, as I’ve noted before, if their U.S. number was anything remotely worth bragging about, well, we’d have heard about it already.
Why It Matters
It’s worth looking at why Amazon was able to pull off this switch.
Because, to be fair, if Netflix had suddenly told their subscribers they’d need to pay $3/month more to avoid ads, the reaction would have been more akin to massive rebellion than massive shrug.
One key reason is that few people—myself included—could tell you whether they have Prime because of the free two-day shipping or because of the video content. So there’s less of a sense that you are paying for video than for free delivery.
Then there’s the “what.”
Amazon has done a bang-up job of getting live sporting events like Thursday Night NFL Football. And those live sporting events all come with ads regardless of which plan you are on. Because your other option is listening to the announcers blather on during the entire time out.
So if you’re mostly watching Amazon for sports, ad-free is of no benefit to you.
Then there are movies—Amazon is most people’s primary source for online movie rentals. And those won’t have ads, so no reason to pay to avoid them.
Finally, there’s all the Freevee content on Amazon, the stuff that was ad-supported before the great switchover and the folding of Freevee into Prime, and it seems most people don’t deem that sort of library content worth paying to see without ads in it.
So you have all that, and then you have Amazon’s always confusing pricing structure—some shows were free, some were free with ads, some only available as rentals—and it’s no wonder people may be questioning whether “ad free” really means “ad free.”
What You Need To Do About It
If you are Amazon, take a bow. You pulled that switch off with barely a peep from consumers or journalists. Now you need to capitalize on it—your move to bring in small and medium sized businesses with self-serve ads is definitely a step in the right direction. Maybe look into partnering with someone like LinkedIn to plus up your B2B offering.
Because no other medium is ever going to be able to replicate that sight, sound and motion.
No other streaming service is ever going to have all that first party data.
If you are not Amazon… realize you never will be. The free two-day shipping value prop means many, possibly even most consumers put them in a different bucket, one where any content they get is a lucky strike extra, not the main reason they subscribe.
But watch and learn from them. Because whatever Amazon is doing to harness the power of streaming for advertising, whether it’s shoppable ads, better attribution or something else—that should be exactly what you’re doing.
And since you’re coming in later, you have the chance to do it even better.
Ready to hear more insights from TVREV’s Alan Wolk? Don’t miss out on the TVREV Pre-Game Workshop: The Future of Streamonomics at The StreamTV Show in Denver on June 11. Check out the lineup and register here to be in the know on the latest and what’s up next across FAST, local TV, TVOS, and contextual advertising.
Alan Wolk is co-founder and lead analyst at the consulting firm TV[R]EV. He is the author of the best-selling industry primer, Over The Top: How The Internet Is (Slowly But Surely) Changing The Television Industry. Wolk frequently speaks about changes in the television industry, both at conferences and to anyone who’ll listen.