The Rise of Streaming Media and Its Profit Model
In the 94th Academy Awards ceremony, CODA, a movie produced by Apple TV, won historic Oscar for the Best Picture, which shed light on the rising streaming media. Streaming refers to a new delivery method of content. By compressing data, streaming enables multimedia to be transmitted through internet in a continuous manner with no or little intermediate storage before watching or listening to the content. In contrast to the traditional media delivery systems, such as TV broadcasts and CDs, streaming media, either through real-time streaming or recording, ensures faster access to various content. While efficiency is much emphasized by most people in this rapidly developing era, faster access caters to the demand of taking full use of the fragmented time. In addition, subscribers of streaming platforms have a wide range of choices, including short tutorial videos, home-made reality shows, TV series, documentaries and feature films, the majority of which are not eligible in TV channels.
In terms of suppliers, how do they generate revenues?
Subscription, in other words, the payouts for content and services in the platform, is the main source of money. For instance, Netflix, which pioneered the streaming media market, gains profits mostly from global-paid streaming memberships and DVD rentals. Subscribers pay $9.99 per month for the basic suit or $19.99 for the premium. According to the analysis from Investopedia, “in the three years encompassing Q1 FY 2019 through Q4 FY 2021, Netflix’s memberships climbed from 148.9 million to 221.8 million, an increase of 49.0%. But these strong numbers fail to show that the rate of subscriber growth slowed sharply in 2021. That year, subscriber growth decelerated from 13.6% in Q1 to 8.9% in Q4. In Q1 FY 2022, analysts expect the rate to slow to 8.1%.” However, on April 20, Netflix announced to have a net loss of 200,000 subscribers globally, and “expected to lose a further two million over the next three months”, according to the Guardian. “Its share price slid more than 35% in early trading following the announcement, wiping around $55bn (£42bn) off its value.” The sluggish growth and even losses owe to many factors. Sharp price increase with a relatively narrow slice of programmmes makes it less attractive compared with other platforms that offer not only original films and TV shows, but also sports, news and light entertainment, as what Amazon, Apple and Disney has already explored. Though on one hand, the package of original programmes is the unique selling point of Netflix, on the other hand, sharing of logins massively increased as the limited content updated on a weekly basis may not be worthwhile when taking the time value into account.
Advertising is another gateway to wealth. Platforms release places for ads, asking advertisers to outbid, and get paid according to how much of an advertisement is viewed or whether the advertisement has been clicked. Take Youtube as an example, two kinds of ads are embedded in the website, including the in-stream ads, which users watch at the beginning of a video, and the on-page ads listed along with other content. Recently, some platforms have combined subscription with advertising, such as promoting packages with non-ads and content of higher quality in both definition and soundtrack, which is not available to free users.
