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Streaming Wars Accelerate: What’s Working and Why

We won’t know the true impact of Apple, Disney and Walmart’s entrance into the booming subscription video streaming market for at least a year. And we may never be able to fully pinpoint the role of cable cord-cutting in driving the market’s growth. But we can more confidently assess what is working now and why.

We tackled those questions in advance of Variety’s Entertainment and Technology Summit Sept. 6 at the Four Seasons Beverly Hills. The event will address the dynamic over-the-top sector — the catchall term for video delivered outside traditional linear, cable and satellite TV — from numerous angles, along with topics such as augmented reality.

Hollywood has its eye on the OTT business for a simple reason: The financial stakes are huge. The Boston Consulting Group recently forecast that $30 billion in profits could shift away from the traditional TV business over a five-year period ending in 2022, with OTT services poised to pocket some of the spoils. With this much at stake, showbiz players are now making big plays for OTT.

“We’re in a phase of accelerating growth,” says Tony Goncalves, a speaker at the summit and CEO of AT&T-owned Otter Media, home to subscription OTT services such as anime-centric Crunchyroll. Beyond existing direct-to-consumer businesses, emerging services like Disney are on pace for scale, he adds. “New ideas pop up every day.”

Parks Associates, a Dallas-area research outfit, is tracking more than 200 OTT services and there are plenty more beyond those, points out analyst Hunter Sappington. “With so many services it is hard for some to gain an audience,” he says. “Even niche services can get lost.”

By far the best way to stand out, experts agree, is through exclusive content. And the bigger the competition, the more services are willing to pay to produce it. That’s why Netflix, Hulu and company have been spending billions on content, and players-in-waiting such as Apple have been developing marquee projects with the likes of Reese Witherspoon, Jennifer Aniston and Steven Spielberg.

CBS is building new programming out of it its broadcast TV and library offerings for its All Access service. It spun “The Good Fight” off from Emmy-winning “The Good Wife” as its debut original programming some 18 months ago, and followed that with a new “Star Trek” series; more “Star Trek” programming and Jordan Peele’s reboot of “The Twilight Zone” are in the works. Its latest, “One Dollar,” tracks a dollar bill in connection to a Rust Belt murder and employs a storytelling style more in keeping with a premium cable show than one on the Eye net, according to Marc DeBevoise, president and COO of CBS Interactive. “We’re playing a different game here,” he says. “We’re taking a No. 1 network and building a premium service on top of it.”

CBS All Access now has 2.5 million subscribers, and by year’s end, will boast seven original productions. According to DeBevoise, the service is on track to double its subscriber base this year, having already upped its original projections to forecast 8 million subscribers by 2022.

“We’re feeling very competitive,” he says. “This isn’t a winner-take-all market.”

Indeed, while Netflix is the clear subscription leader in this market with 56 million in the U.S., consumers are proving to be increasingly willing to pay for multiple OTT services. According to Parks Associates, more than a quarter of all millennials subscribe to three or more OTT services and more than half subscribe to at least two; overall, 17% of U.S. broadband subscribers have three or more OTT subscriptions and 69% have at least one.

There’s room for niche players — as long as they don’t target too broad a genre, as NBCUniversal did with its now-shuttered Seeso comedy service. Otter Media has 2 million paying subscribers for its game, fantasy anime fan-centric services, which include VRV, Crunchyroll and Rooster Teeth, building a sense of community through events and merchandise. “We’ve defined a really interesting swim lane,” Goncalves says. “We want to be everything to somebody.”

And Viacom has found great synergy between its Nickelodeon cable TV brand and Noggin, a streaming service targeting preschoolers. “It’s doing incredibly well,” says Tom Gorke, Viacom exec VP of distribution and business development, also a speaker at the summit. Parents, he says, want both offerings for their kids: “They are not mutually exclusive.” He believes established brands will continue to resonate across delivery platforms as business models proliferate. “One of the reasons I am excited about the emerging OTT space is it provides choice to consumers not only in content but how they want to consume it.”

Summit Highlights

9 a.m. Keynote Roundtable: The Future of the Media Company with speakers including Fox Network Group’s Brian Sullivan, Skydance Entertainment’s Jesse Sisgold and Reddit’s Jen Wong

9:55 a.m. Conversation with Otter Media’s Tony Goncalves

11:20 a.m. Breakthrough Content in Today’s Attention Economy panel with speakers including BuzzFeed’s Melinda Lee, Facebook Watch’s Mina Lefevre and Viacom’s Kelly Day

12 p.m. Keynote conversation with FX’s John Landgraf

2:40 p.m. Building a Better Mousetrap panel with speakers including Viacom’s Tom Gorke, ABC News’ Colby Smith and Discovery’s Michael Bishara

3:20 p.m. Conversation with Girlboss founder Sophia Amoruso

Tipsheet

What: Variety’s Entertainment and Technology Summit

When: 8 a.m. to 6 p.m., Sept. 6

Where: Four Seasons, Beverly Hills

Web: events.variety.com

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