Disruption is Rewarded: Streaming Services Are Changing (And Winning) Everything

Feb 19, 2017

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By Scott Barsotti

Big data and streaming services have turned the entertainment industry on its head…and they have the statues to prove it

As relatively new fighters in the original programming arena, it is tempting to view streaming video on-demand (SVOD) channels like Netflix and Amazon as scrappy Davids hurling stones at the entertainment Goliaths. But if that’s the case, you should trade out David’s sling for a technologically advanced combat weapon with precision targeting and a proprietary dataset exposing Goliath’s weaknesses. Or if extended metaphors aren’t your thing, consider this:

The Amazon Studios feature Manchester by the Sea recently became the first film released by a streaming service to be nominated for the Academy Award for Best Picture.

“It’s seismic,” according to Dan Green, director of the Heinz College Master of Entertainment Industry Management (MEIM) program, a joint degree with Carnegie Mellon University’s College of Fine Arts. “This is a time of disruption.”

To get a sense of how big Manchester’s nomination is, we need to look at how we got here (and how quickly).

When it came to prestigious Hollywood awards, SVOD channels like Netflix and Amazon had no seat at the table as recently as 2012. It wasn’t until 2013 that the Netflix political epic House of Cards was nominated for nine Primetime Emmy Awards, including Best Drama Series. In 2014, House of Cards followed that up with more Emmy notices and added some Golden Globe nominations for good measure, including a Golden Globe win for lead actress Robin Wright. The Netflix favorite Orange is the New Black started making regular appearances at the award shows that year as well.

Traditional television and the movie business can learn a lot from looking at what happened to the record business. It became peer-to-peer driven, it became digital…it became personalized.

-- Kevin Stein --

Then the dam broke. In 2015, the streaming channels made more gains in nominations and wins, and Amazon’s Transparent won the Golden Globe for Best Musical or Comedy Series. In 2016, four out of six nominations in that same category went to Amazon, Netflix, or Hulu shows, with Amazon’s Mozart in the Jungle taking the top prize. Last month, Netflix’s The Crown won the Golden Globe for Best Drama Series, another first. SVOD titles have steadily gained traction at the Screen Actors Guild Awards as well.

“Getting awards lends credibility in terms of the business,” said Kevin Stein, a media marketing expert who is a veteran of HBO and CBS and an Adjunct Professor with the MEIM program. “They’re making creative choices that are adventurous, and similar to HBO’s model. By virtue of that, they’re attracting…filmmakers, screenwriters, and movie stars who generally don’t do television.”

With this rapidly mounting success, it was only a matter of time before one of the streaming giants elbowed its way into the front row at that most glamorous and insidery of glamorous insider affairs: The Oscars.

Netflix has garnered Academy Award nominations for its documentaries for several years running, but those don’t carry the same prestige as a nod for Best Picture. Manchester by the Sea also landed nominations for Best Actor, Best Director, Best Supporting Actress, Best Supporting Actor, and Best Original Screenplay. (For those keeping score, that’s all but one of the Oscars’ major categories.) Add a Best Foreign Language Film nomination for the Iranian drama The Salesman, and it’s a statement year for Amazon. And in entertainment, momentum is everything.

“Winning stars and winning studios make bank. Traditionally, awards resuscitate box office…and contribute to the bottom line of what stars can command in their future contracts,” said Stein, adding that awards attention is certain to turn heads among Hollywood creatives who are always on the lookout for future projects and partnerships. He adds that by promising creative freedom, bigger budgets, and now the potential of awards success, “[streaming channels] have attracted A-list film talent both on screen and above the line, and had enormous marketing success as a result. ”

Manchester’s Oscar splash has raised a lot of eyebrows, but considering the streaming channels’ success at disrupting television, should we be surprised? What’s different about this breakthrough in the film world?

Stein says that it proves the SVOD model can port to traditional platforms and distribution. Recently, Netflix’s Beasts of No Nation and Amazon’s Chi-Raq earned widespread critical acclaim, but failed to net the kind of major award nominations that drive sales. Manchester by the Sea may be the mark of a changing tide—and strategy.

Where the streaming services used tech to disrupt the television paradigm from the outside, the approach with Manchester has a decidedly more hybrid flavor, blending the old (nationwide release in theaters) and the new (exclusive, though delayed, release on Amazon Prime Video later in 2017).

“Not every film requires a brick-and-mortar distribution experience, but when it’s needed, they’re able to promise filmmakers a robust marketing campaign to rival any major studio,” said Green. “This push and pull between traditional theatrical distribution and streaming services will only get more complicated as Amazon and Netflix compete not only with each other, but with the expectations of an increasingly choosy customer.”

Green adds that Amazon and Netflix outspent traditional distributors at the Sundance Film Festival this year, underscoring the fact that they are focused not only on attracting more viewers, but also on adding award-caliber films to their arsenals.

Stein says that while there may be a sea change underway, there have been a lot of industry pros in denial, drawing a stark comparison to the music industry in the late 90s.

This push and pull between traditional theatrical distribution and streaming services will only get more complicated.

-- Dan Green --

“Traditional television and the movie business can learn a lot from looking at what happened to the record business. It became peer-to-peer driven, it became digital…it became personalized. There’s a lot of industry criticism about why Netflix and Amazon don’t share their ratings, but they are playing a different long tail game by emphasizing audience data in contrast to overnights.”

Rahul Telang, Heinz College professor and co-author of the book Streaming, Sharing, Stealing: Big Data and the Future of Entertainment, said in an interview with C-Span that whether or not traditional studios can embrace big data is going to play a significant role in how long they can sustain the advantages they still have.

It’s true that traditional players like Lionsgate, HBO, and CBS have created streaming channels of their own. What if more companies follow suit and stop selling their streaming rights to Netflix and Amazon, depriving the disruptors of popular titles? Telang suggests it might be too late for that. The top SVOD platforms realized years ago that they could not rely on big studios and networks to be their only sources of content and they took action, investing big money in original projects.

“Netflix said…‘I can hire similar talent. I have the customer base. And…I have the data and the ability…so why not me produce the content…rather than [the studios] dictating what sort of content can be and cannot be available,’” said Telang, adding that the major awards success of the streaming channels flies in the face of industry angst that big data threatened to crush creativity.

“When you have good information…creators are more likely to be successful because they’re working on projects that have a higher potential of being successful,” said Telang. In this sense, he says, big data is going to complement, not kill, the creative spirit.

Manchester by the Sea’s Best Picture nomination may be a watershed moment, certainly for Amazon but also for Netflix as well as other providers in the SVOD space, like Hulu, YouTube, and Facebook. Stein suggests that streaming channels’ awards surge is a proclamation of their relevance and legitimacy, if not a full-fledged shot across the bow.

“They’re part of the landscape now. They ain’t going away,” he said.

“They’re showing people that data is really important. Knowing your audience is really important.”

UPDATE: Manchester by the Sea won the Academy Awards for Best Actor (Casey Affleck) and Best Original Screenplay (Kenneth Lonergan), and The Salesman was awarded Best Foreign Language Film (Asghar Farhadi). The Netflix short documentary The White Helmets won in its category as well. These four awards comprise the first Oscars won by the streaming services. [2.27.17]

 

Read more about the MEIM program>>

Read more about Rahul Telang’s book Streaming, Sharing, Stealing>>

Watch Telang’s full interview on C-Span’s The Communicators>>

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