Netflix dominates streaming media in a lot of ways. It has 50 million subscribers, some well-regarded original series, enough clout to go toe-to-toe with the likes of Comcast and Verizon and it accounts for a jaw-dropping 34 percent of web traffic.
Netflix may have a virtual monopoly, but there are plenty of competitors lining up. Amazon, Hulu, Playstation Network, Xbox, Yahoo and others are all throwing around a lot of money to break in to original programming.
“The problem is, at a certain point, there’s going to be too many of these services and they’re not going to be able to sustain themselves,” television critic Alan Sepinwall says.
An expensive cable bundle helps all channels subsidize each other, he says, but “There’s no equivalent of that for streaming, and I don’t think there will be.”
Here’s the recipe Netflix’s competitors are following to try to break in to this hot new market.
Step 1: Don’t wait for the audience to find to you
How can people watch your shiny, new original content if they don’t know about your service? That’s not really a problem for streaming-centric companies like Netflix and Hulu, but for other established brands it’s a surprisingly tough nut to crack.
“Most of the time when I go to Amazon it’s just listing ‘Here are items you’ve viewed, maybe you should order those!'” Sepinwall says. “So you don’t inherently think of Amazon as a streaming business. Whereas with Netflix, that’s the only reason you go.”
In fact, a study from earlier this year showed about a third of Amazon Prime customers have never used the video streaming service included in their membership.
Yahoo’s Screen service has faced similar problems. At TechCrunch Disrupt, CEO Marissa Mayer noted that Yahoo had produced 86 different series over the past year, “none of whom you’ve ever heard about because it was sort of a failed branding exercise.”
Only “Burning Love” — a “Bachelor” parody with literally dozens of big names attached — got any traction, and Yahoo Screen kept lagging behind until it suddenly made headlines in July.
Step 2: Buy yourself some credibility
Cult hit “Community” had barely hung on at NBC over five seasons of firings, re-hirings, behind-the-scenes drama, cast changes and sinking ratings before finally being canceled. But “Community” was exactly what Yahoo needed.
“The more players there are, the more you need to do something big to sort of stand out and seem like you belong on that same playing field,” says Vox culture editor Todd Vanderwerff. “I think a lot of this is just purchasing credibility.”
It’s the same reason Netflix resurrected Fox’s “Arrested Development” last year. A niche flop on traditional TV could be a huge hit for a new company if the audience is willing to follow.
There are a few other ways to close the credibility gap, too. Amazon paid through the nose this spring for the right to stream old HBO shows, and Hulu has built up a respectable catalog of foreign shows along with a just-announced Stephen King adaptation.
Even the mighty Netflix is still buying credibility, especially as it changes strategy. The service brought back three canceled shows this year, and Netflix is set to release its first original feature film — a sequel to “Crouching Tiger, Hidden Dragon” — the same day it’s released in IMAX theaters.
Step 3: Make a word-of-mouth hit (and stack the deck with a good gimmick)
It’s tough to make a hit from scratch, but there are a couple of ways to tip the odds.
Sepinwall points to “House of Cards.” The show isn’t that good, he says, but gets by because it looks like a so-called prestige cable drama — the way it’s shot, the antihero, the high-profile cast — and people like binge-watching it.
“I remember when ‘House of Cards’ season one was released … I would watch my Twitter feed and it turned into a race,” he says. “Even if [the show] is not that great, but it has some sense of forward momentum, it becomes easy to go forward and you feel like [you’re] on the ground floor of something special.”
When the show’s second season debuted on Netflix all at once, the explosion of social media conversation seemed to prove the show’s success. Netflix doesn’t make its streaming numbers public, Sepinwall notes, so it’s impossible to know how many people actually watched.
Amazon has turned to crowd-sourcing, letting subscribers see user-submitted pilots and vote on their favorites. The process has its flaws, both critics said, but after a few tries Amazon may have its first big hit in “Transparent,” which debuted over the weekend to rapturous reviews.
Step 4: Wait for the industry to shake out
Vanderwerff compared streaming to the early days of home video, predicting we’ll see a lot of media companies come and go or change hands as the industry adjusts.
“I really think we’re on the precipice of everyone in Hollywood trying to get in this game, and it’s going to come down to the same companies you’ve always heard of.”
The player to watch is HBO. Their streaming service is still bundled with cable, but when they break from that model and embrace streaming, Vanderwerff says, many more companies will follow.
Streaming services are still tied to traditional TV in other ways. They have no restrictions on time or content, but they don’t stray far from what the networks are offering.
“There’s no reason an episode has to be 30 or 60 minutes,” Vanderwerff says. “That is an artificial constraint placed on us by the early gods of television that we have now evolved past, we just haven’t realized it yet.”
The full possibilities of streaming TV — the niche ideas, the crowd-sourcing, the binging and more — might not come to fruition until the format has become more standardized, and that could take some mergers and acquisitions.