Hal Crawford, former MediaWorks head of news, takes a look at the global trend for mega-mergers, what media is becoming, and how New Zealand can lead the world in video streaming.
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The primeval goop of global media is drawing its shuddering mass into a few enormous blobs, and the blobs are coming for your eyeballs.
This is the era of the great consolidation, and along with ever-bigger media companies comes a bumper crop of high quality content and a once-in-a-generation opportunity for New Zealand.
That opportunity arises because the government happens to be seriously looking at public media now, just when it all comes down to one thing: video streaming platforms.
Excuse me, what happened?
Last month it was announced that WarnerMedia and Discovery would be merging to form Warner Bros Media, a media titan with an expected worth of about NZ$210 billion. If you don’t know these companies, you know their products: Harry Potter, Batman and Bilbo Baggins just teamed up with Bear Grylls. And considering Newshub is a Discovery brand now, you can throw in Mike McRoberts as well. Let’s call them Team Bros.
In the same month Amazon, a big player in video streaming on account of its Prime Video service, gobbled up MGM. James Bond joined forces with the world’s biggest shop.
Disney already owns much of the fictional universe through its takeovers of 21st Century Fox, Marvel, Pixar, and LucasFilm. There is speculation about a tie up between NBCUniversal (Comcast) and ViacomCBS.
The moves are all about getting a critical mass and winning what are being called “the streaming wars”. The entertainment industry is convinced that only a few will survive.
Why? Look at Google in search and Facebook in social media. In a networked, global market having the best product doesn’t mean you just win. You lay waste.
The biggest media companies in the world
Everyone used to know what media was. Familiar companies like Time Warner, Disney, and News Corporation made the stuff that everyone watched, read, or otherwise paid attention to.
It’s no longer clear who should be on the list of the world’s great media companies. Does Apple, for example, qualify? It happens to have a large music and video streaming business. And Amazon reaches 175 million people with a video service it developed as a shopping value-add.
Traditional media like News Corporation, often portrayed as a global colossus, are minnows in comparison. If the big guys get seriously involved in content creation and distribution, even Team Bros’ chances don’t look good. Consider this graph of the share market valuation of some relevant companies:
This all explains why old-school media companies are feeling exposed. At several hundred billion-worth, they may be too small to win the streaming wars.
Why it’s worth caring
Cut scene to New Zealand on a quiet afternoon. It’s peaceful, but we know what’s coming. Sheriff Ardern and Preacher Faafoi have a chance to bring the townsfolk together before the assault begins.
The message of the global consolidation is clear. Everything comes down to who owns streaming platforms, and there won’t be too many left standing.
But New Zealand has one massive ace up its sleeve. The Kiwi audience loves Kiwi content, and there’s not yet much of that on Netflix, Prime Video, or Disney+. While the big guys fight it out globally, there is room for a homegrown video platform.
The question is, who owns that platform?
This is the big opportunity. At the moment, TVNZ is the de facto local boss, but I don’t think that’s thinking big enough.
As an aside, Sky has read the situation and is now focussed on doing distribution deals with the likes of Disney+. Effectively, it becomes a reseller of the global services in the New Zealand market. This makes a lot of short-term sense for a small market where it already owns many customers.
The player proliferation
Back in the old days, every New Zealand media company imagined it could create its own streaming video platform. We still have Play Stuff, 3Now, Neon, FreeviewPlus and probably a whole lot of others I have missed. I’m mixing up catch-up, subscription and industry body services there, but the fact remains that the cost of maintaining and marketing any video player for any individual New Zealand company is high. Like a car, a video destination costs money to keep on the road. Little players are not viable.
Several years ago TVNZ correctly identified its streaming service as its vehicle for growth, and it’s been developing the product and building audience since. But TVNZ is a commercial company and is naturally not offering to house other people’s content. Even if they did, other media know they would get a raw deal on sales, revenue share and content exposure. How can TVNZ OnDemand be the answer if most of the townsfolk are left out?
Really strong public media
The government is currently considering the future of RNZ and TVNZ, with the possibility they are dissolved and a new public media entity created. A working group is pondering the best solution while the government also mulls the problem over: there is a great deal of long-term potential in a merged public media company at the cost of considerable short-term pain.
On this question, it’s time to get our heads out of the past. New Zealand does not have to saddle itself with the equivalent of a “broadcasting corporation” because the age of broadcast is over. As the streaming wars attest, today it is all about a critical mass of content and tech. According to one US exec: “IP [intellectual property] is the new prime time.”
The prize here is “Platform New Zealand”, a home for all Kiwi content.
Didn’t we try that already?
Freeview NZ was a nice idea – a video platform for the combined output of all traditional broadcasters – that now forms a good example of why industry-led approaches to NZ platform solidarity won’t work. Freeview was scuppered by a lack of cash and a surfeit of self-interest: much-needed development and marketing stalled despite high aspirations and hardware devices. TVNZ pulled its on-demand content from the service at the beginning of this month.
The starting point of Platform NZ has to be TVNZ OnDemand, but should include all government owned and funded content. The platform should be open to all NZ-produced content and would have to be able to carry ads. Crucially, an entity independent of the commercial success of any producer would have to administer the platform.
At any other moment in history, this bold move would be impossible. But with the very future of TVNZ and RNZ under consideration, why not contemplate something that would put New Zealand at the forefront of public media innovation globally? A government-funded public video platform may not sound like anything else in the world, but then New Zealand has always been willing to go it alone when innovation made good sense.
Postscript: The world’s most popular streaming services
Netflix is clearly winning the streaming wars at the moment. The leader may seem to be only a nose in front of Amazon in the table below, but Netflix’s subscribers actually pay money every month expressly for video. Amazon Prime members, who pay (usually annual) fees for free delivery and deals, get Prime Video as a value add. Similarly, the Apple TV+ number below includes all those people who have free access to Apple’s premium video service through buying new Apple devices, which come with a year’s free subscription. The other numbers below all represent paying subscribers. Note: Youtube Premium includes music subscribers.