Big media disruptors are moving into new territory, trying to replace their content partners with their own properties—how will consumers react?
Some of the biggest media companies made their names and fortunes by disrupting one layer of the markets they entered. Netflix completely obliterated Blockbuster and all other video rental stores by becoming the one stop aggregator between movie studios and viewers.
Music downloads in general, then Napster and then Apple almost completely replaced music stores by becoming aggregators of music and listeners. Spotify did the same with the added twist of monthly streaming “all you can eat” pricing instead of digital purchases and downloads.
For the past few years, Netflix, then Amazon, Google, and now Apple (who just signed Oprah) started producing their own content, going up the chain and disrupting movie studios and TV networks by making them partially unnecessary. Now it’s Spotify’s turn to try this move—this second wave of disruption—by dealing directly with artists: “The company will not control the copyrights or ‘sign’ artists like a record label does; instead it is licensing music from artists who own their rights.” Risk then lies in trying to find a balance between new revenue and not annoying the music labels too much. In the meantime, Disney is making the opposite play by starting it’s own streaming service, which will be the exclusive place for their many brands and franchises.
Each of these companies (Spotify perhaps to a lesser degree) is not just competing with someone new but moving into completely different businesses. Netflix has been excellent at producing content, while the others are just starting or are less impressive so far. How will Disney fare with the technical side of their streaming service? More interestingly perhaps, where the first wave of disruption was largely a change in technology (brick and mortar vs. internet), this one will be very much about brands, the content producers, the platforms, and the big names they manage to attract. Consumers have shown they are willing to pay for a streaming service, but what happens when walls get higher, when some of their favourite stars, brands, and franchises are across two or three services? Will they switch? Pay for both? The battle for their allegiance should be fascinating to see.
Originally written for CloudRaker Thoughts.