While streamers continue to upend all and any traditional entertainment industry business models, they are now facing the power of the user over which services to choose and then potentially lose. Indeed, the challenge for all competing streamers is not just attracting new subscribers, but keeping existing ones — a phenomenon known in business speak as capturing long-term customer value, and right now that seems to be an elusive holy grail.
“‘Field of Dreams’ is over. It’s no longer a case of ‘build it and they will come.’ Once they arrive, your job as a competitive streamer is to keep them there for life. That’s where the business model needs to focus on in the long run,” says a former senior Disney executive who asked not to be named.
Firefighting in the place of strategizing to achieve long-term value appears rife. The rising fear across the top platforms is “churn,” namely viewers paying for a service for a short period to see something specific (or take a browse), but then opting out and switching to a different platform. In response to viewer’s fickle habits, Netflix has scrapped the 30-day free trials so loved by bingers, while Disney Plus, HBO Max and Amazon Prime are releasing episodes of longer-running series on a weekly basis to extend the life of content and try to halt subscription churn. Yet still-huge streaming hits seem to flash past fast: “‘Squid Game?’ That’s so last year. ‘The Witcher’? Done on New Year’s Eve. The decay rate on streaming content is incredibly rapid,” says Wall Street analyst Michael Nathanson of MoffetNathanson.
The 10 or so streamers currently at the top of the value chain are understandably focused on how to make the fast-evolving streaming business more profitable. And while prices — both around rising costs and subscription price hikes — have a big part to play in that challenge, they are not the only critical factors. Smart players and observers are starting to question the overall “offer” that streaming platforms and their interfaces are presenting to the public. There’s too much SVOD choice and clutter, too much confusion and not enough guidance, goes the argument. The industry consensus is that the mainstream streamers require a shakeout in terms of how and what is being presented to the viewer, or some notable contenders will fail in their bid to survive, let alone thrive.
Breaking that critique down further, the key challenge facing the streamers are two counter-opposing but important tools to consider in more depth. First up: the ever-contentious algorithm, built around a digital data kit bag and pushing forecasting and predicative recommendations based on previous viewing data, as preferred most notably by Netflix. Of course, other leading streaming platforms also use tailored algorithms, including Amazon Prime, Hulu and Disney Plus. But some, such as HBO Max, are drifting away from an over-dependence on an algorithm.
The other critical, but oft-forgotten tool around the corridors of entertainment corporations, is the art of curation. “On a much wider scale than just online platforms, it’s important to acknowledge that the film industry itself is a huge curation machine. We have mainstream awards, competitive festivals, funding filters and a range of gatekeepers and critics everywhere. There’s a large amount of curation that’s already happened before the audience even has access. We make data-led decisions … but introducing audiences to new forms of cinemas is the guiding principle,” says Curzon Cinema’s Jake Garriock, currently releasing Sundance winner “Flee” in the U.K.
Sandra Hebron, former artistic director of the BFI’s London Film Festival and now head of Screen Arts at the U.K.’s National Film and Television School, points out that people “are very promiscuous today in their viewing habits. But there is a clear demarcation between the mainstream streamers, such as Netflix, Amazon, et al, where content is ‘organized,’ and sites like MUBI, Shudder, Filmin and Grasshopper in the U.S., all of which are clearly ‘curated.’ ”
Garriock goes further, suggesting “there are essentially two types of streaming services on offer: those aimed at customers who follow their own behavior model, and are promoted more of what they already watch; and those that try to leverage their expertise and knowledge to help people navigate films, TV series and documentaries from around the world.”
Tom Quinn, topper of distributor Neon, says: “The studios have long suffered from tunnel vision — that one size fits all: ‘It’s a wide release’, ‘it’s a mid-release’ and the indie sector has also been stuck in the ‘it’s a platform release’ prism. And now the problem is that streamers don’t treat each film differently. The big streamers place their brand first and it’s offensive to me not to serve the movie first. Neon is dedicated to curating the best cinema in the world and sits precisely on the opposite side of algorithmic-driven industry.”
Algorithms are not static — they are constantly evolving, but they are essentially reductive and omit one vital factor: common sense. Yet most of us can’t use the internet without them. On the plus side, “it’s arguable that algorithms have stripped out bias and racism compared to the way we did things before,” says XYZ’s Todd Brown. “Audiences have moved and to some extent Netflix found that out by accident.” In researching “The International Film Business: A Market Guide Beyond Hollywood,” I dug a little deeper to see how Netflix uses data in its search to connect audiences to its content:
What occurs in practice is that each title on Netflix is tagged and cross-referenced with a huge range of global viewing data, including, of course, what each viewer watched, but also, critically, how exactly they watched the said program. How long did they last? Did they complete the show? Did they binge watch all 10 episodes? Did they fast-forward or rewatch segments of the program? Did they repeat watch the entire film or series?
Data are used for “audience prediction,” which involves multiple factors, including cast, director, genre, prequels and prior screening information.
Data mining also plays a critical role, where each individual’s Netflix page(s) are designed to reflect their viewing tastes, trends and likes. Within that, more information has been structured to lead the customer around that first page, with top 10s per terri-tory, top 10 pick lists, “popular on Netflix” lists, along with the rise of not just one-off documentaries, but documentary series’ that have proved highly popular.
Netflix also introduced new upcoming content so that viewers could see what to potentially look forward to (and, of course, thereby ensuring customer engagement and loyalty). Mining also uses a viewer’s Netflix “doppelgänger” — a person who could be anywhere where the platform is available, who binges on “The Queen’s Gambit,” watches “The Witcher,” but also views a David Attenborough documentary nature series. Netflix reviews the pro-grams that the “doppelgänger” has watched (while their similar viewer has not yet got to those programs) and recommends them to the primary subscriber.
The missing “common sense” factor that sits outside data-driven equations could best be termed the “human factor.” And that’s where the curatorial approach comes into play. As Hebron says, “the process is about selection, a gathering together and about contextualization. Good curation always thinks about the audience and is honest — it never hides who is doing the choosing. It also often speaks to communities of interest. For example, young audiences are more likely to trust and rely on Letterboxd user reviews from like-minded viewers as they are to turn to traditional critics when choosing what to view.”
“Often the audience doesn’t know what it wants until it sees it on the carousel,” says Paul Brett, executive producer of “The King’s Speech.” Elements of surprise, discovery and deeper engagement — through hard-earned trust — are all linked to the art of curation in his view. “The only part of Amazon that generates vast sums of cash is the cloud service. Prime Video is a loss leader. It is vast and tricky to navigate. There’s a risk of alienating viewers and generating churn if the audience can’t find what they are looking for.”
At the heart of curation is the audience’s experience that stretches far beyond just the act of watching the film. “A key aspect around film presentation is the conversational aspect, the before and after,” says Nico Marzanno, head of film at London’s ICA. “The way a filmmaker presents to other artists, with discussion, references and a multi-layered exchange is all part of the ex-perience that allows for the work not to come to an end with the credits but to continue to reverberate beyond that.”
The notion that such a holistic experience only sits in the physical world and not the virtual platform is being challenged by some of the most interesting streaming sites on the rise. While many consulted for this report noted MUBI’s authoritative revolving carrousel; Criterion’s fine collection that encourages audiences to watch, not browse; and Hulu — which is also the home of Searchlight Pictures — and its enthusiasm to team up with specialized U.S. distributors such as Neon (“Parasite,” “Portrait of a Lady on Fire,” “The Worst Person in the World”) to throw its weight behind arthouse fare; AMC’s Shudder, the home of genre fare offers an approach that market leaders would do well to heed.
“Right from the start, when Shudder was launched in 2015, we asked what it would mean for a service to be curated, and for audiences to be excited by the offering, but also for new viewers to still feel invited,” says Samuel Zimmerman, VP of programing. “It’s a balancing act: the service needs to offer both the depth and breadth of horror.”
The approach enshrined by Zimmerman and his colleague Emily Gotto, VP of acquisitions and co-productions, is clearly informed by conceptual factors, including themes, locations and the filmmakers, which all play a role in the scope and ambition of the content offered. Shudder feels more than the sum of its parts, in part because its ethos stretches far beyond the obvious and expected.
Gotto points to what she terms “horror adjacent,” meaning films and series that deal with deeply disturbing issues but are not firmly in the “dark” horror category. “We ask a lot of questions, such as: ‘What’s the film saying? How do we feel about what it does? Is it a conversation starter?’ ” Gotto says.
“We also try to build an event around a new film and various pathways. Our podcasts expand the Shudder experience and act as a companion, allowing people to dive into more depth.”
The service started fully financing films in 2020 with Rob Savage’s “Host,” and is acquiring, licensing, co-financing in a collaborative manner. Around 80% of added premium material is now originals — with a new offer every Thursday — emanating from screenplays, promos and packages initially.
“There’s a lot of re-engagement with talent that Shudder has already embraced, and we see curation as much about support and backing talent, especially for their first and second features,” Gotto says.
And what about an algorithm? Gotto and Zimmerman laugh. “You’re looking at the algorithm! We’re not an aggregator, we are the curators. And filmmakers know that they are not going to get lost in the algorithmic world,” says Zimmerman.
To that point, streamers that put such inherent faith in their algorithm’s ability to correctly serve their members are also arguably using data as an excuse not to engage with presentations and wider curatorial work.
“That position is going to be challenged, if not already, by content makers as the competition heats up,” says a former Netflix executive.
Others worry about emerging filmmakers coming under its spell: “You can’t chase the algorithm,” says XYZ’s Brown. “Netflix knows what it wants now, not later. If you’re three to six months away from being ready to pass go, then Netflix will have already moved on.”
Admirers of Disney Plus have pointed to its skill at treating its franchises organically, curating, for example, Marvel and Star Wars offerings through narrative chronologies in line with their universes rather than by production date.
“References are abundant across the Disney franchises, and characters are suddenly turning up and creating noise. Younger and older generations all love those references and that drives the wider conversation,” says cultural blogger James K. Wight.
Indeed, those younger audiences are precisely the demographic arguably most underserved by a majority of the mainstream streamers, to their long-term peril. “There’s no scarcity and no ownership. Kids find things organically and then they chat and click, and yet we’re not understanding the generational change in behavior in younger people,” Brown says.
Perhaps those young generations, surrounded by an ongoing global pandemic and now a potential world war, are searching for meaningful storytelling rather than spaghetti-like content thrown hard against the platform wall, to see if it sticks or not.
Angus Finney’s book is “The International Film Business: A Market Guide Beyond Hollywood” (3rd edition).