I enjoyed watching two rather different TV programmes last night.
One was the final episode of season one of The Crown, Netflix’s lavish and beautifully-made biopic of Queen Elizabeth II and the shenanigans of the UK royal family.
The second was a four-minute YouTube video by a guy called Techmoan who reviews dashcams and buys obscure bits of old hifi equipment from eBay and takes them apart. His piece on a Star Wars hologram vinyl LP has notched up 433,421 views in its five-month life, a number that would be a very respectable audience for a non-peak linear TV show.
The crucial difference between these two shows is that one cost £100 million for the first two seasons (roughly £5 million per hour), while the other cost close to zero, yet still helps to make its creator a useful income from YouTube ads and product affiliate fees.
The launch last week of Amazon’s The Grand Tour shows how the OTT players are able to invest significantly higher budgets in making shows: because they have deep pockets (Netflix has a $5 billion content budget, about 5x that of a large European broadcaster like ITV or ProSiebenSat.1), and also because they can exploit that content on a global scale with none of the troublesome need to manage complex deficit finance, rights sales and distribution operations.
That budget was clearly visible on screen compared with its previous incarnation as the BBC’s Top Gear, and it delivered results (exactly what ratings we have to guess, but it is Amazon’s top show), and earned critical and fan acclaim (becoming the top-rated TV show on IMDB with a 9.6 rating).
Meanwhile the traditional UK broadcasters seem determined to discourage me from using their OTT services.
Last night I also tried to watch a programme on Channel4’s More4 on my Amazon Fire TV box but got stuck in an endless loop of mid-roll commercials (several of which had no audio). On restarting the playback I was told I would have to sit through a further seven ads. No thank you. On the ITV Hub it seems to be pot luck as to whether the latest episode will appear or not, especially for live shows like X-Factor. And recent changes to the UK TV licence fee mean I can no longer legally watch BBC iPlayer on a fixed TV away from my main home. That’s as ludicrous as Netflix demanding a separate subscription for each location I watch from.
Traditional TV businesses may take comfort in the latest figures showing how broadcasters’ own OTT platforms are doing well in the UK, France and Germany (ahead of Netflix, behind YouTube). But the comparison isn’t fair, as these platforms are free-to-view and the business model assumes the content was already paid for by linear. They are not (currently) viable standalone OTT services.
Traditional broadcasters now risk being stuck in the middle – between the lavish investment and long-form cinematic content of Netflix and Amazon, and the short-form, zero-budget, but infinitely varied, YouTube fare. And being stuck in the middle is a dangerous place to be for any business.
These broadcasters need a new approach – or they face a chronic decline in audiences as older TV-native viewer die out. Exactly what has happened to the print newspaper business.
This means building services around the needs of the audience – not artificial constraints imposed by outdated rights windows and archaic TV licence legislation. And it almost certainly means making less content overall, and investing that money in more high-quality, big-budget statement shows and live events.