Will OTT platforms have to pivot to a pay-per-view model?

In the not-so-distant past, streaming television was the golden goose of the entertainment world. Netflix was practically printing money, while Disney and Amazon Prime Video strutted around as if they owned the future. However, as any beleaguered millennial will tell you, good things never last. Today, the streaming landscape looks more like a blood-strewn House Of The Dragon battlefield than a utopia of endless entertainment. What happened, and why does it feel like we’re on the brink of a seismic shift from the beloved subscription model to a potentially grim pay-per-view (PPV) future?

First, let’s talk about the glut. Once upon a time you could count the number of streaming services on one hand. Now, you need a spreadsheet to keep track. Netflix, Amazon Prime Video, Disney+, Sony Liv, Zee 5, Apple TV+, Mubi… Each platform demands a monthly/annual fee, leaving the average viewer to handle more subscriptions than a hedge-fund manager. The fragmentation of content has not only diluted the appeal of each service, but also turned the consumer experience into a nightmare of juggling passwords and billing cycles. Consumers are rightly wary of where their money goes, and multiple streaming services now feel less like a luxury and more like a burden. 

The financial strain isn’t just on consumers. Streaming services are burning cash like there’s no tomorrow, trying to create the next must-see hit. With so many options, viewers have become less loyal, more fickle. The days of a Game Of Thrones or Breaking Bad single-handedly dominating the cultural conversation appear behind us. New shows show have a few weeks to click before being replaced by the next big thing. This relentless churn leads to increased production costs without the guarantee of long-term subscriber growth.

As of early 2024, Netflix’s subscriber growth has plateaued in its most saturated markets, including North America and Europe. The company added a modest 2.5 million subscribers globally in the first quarter of 2024, a stark contrast to the explosive growth seen in previous years. Disney+ has also seen similar trends, with a slowdown in new sign-ups and a slight increase in churn rates. Even Amazon Prime Video, often bundled with other Amazon services, is facing the heat, with more subscribers opting out as they reassess their spending priorities.

Amid this subscription stagnation, there’s an interesting trend in the rise of online movie rentals and purchases. According to a report by the Motion Picture Association, digital rentals and purchases grew by 15% in 2023, driven by a desire for more flexible viewing options. Platforms like Google Play, and iTunes have seen a resurgence as viewers prefer paying for individual titles rather than committing to multiple subscriptions. The shift indicates that consumers are increasingly valuing control over their viewing habits, a preference that the subscription model fails to address fully.

Enter the PPV model—a concept that once seemed archaic, reserved for boxing matches and concert events. As streaming platforms scramble to find a sustainable business model, PPV is starting to look appealing. Instead of betting the farm on subscription renewals, platforms can charge viewers for specific content they actually want to watch. It’s like the difference between a buffet and à la carte dining; you only pay for what you consume.
When faced with an overwhelming number of subscriptions, each with its own growing library, the idea of paying only for what you watch can seem liberating. It’s the digital equivalent of cutting the cord—choosing flexibility and control over an all-you-can-eat commitment.

Take, for instance, Amazon’s model, which already incorporates elements of PPV. Prime subscribers get a wealth of content included, but they can also rent or buy newer movies and special events. Apple TV+ also dabbles in this approach, blending its original content with a marketplace for other movies and shows. This hybrid model offers a glimpse into a possible future where subscriptions might include basic access, with premium content available for an additional fee.

The move towards PPV could also be driven by the industry’s need to adapt to shifting viewing habits. Younger audiences, particularly Gen Z, are less likely to sit through entire seasons of a show and more likely to cherry-pick episodes or specific series. This cohort values immediacy and relevance, and the PPV model caters directly to these preferences.

The PPV model, however, has severe downsides. It could exacerbate the digital divide, making premium content less accessible to lower-income households. There’s also the risk of viewer fatigue from constant micro-transactions, where the thrill of à la carte choices wears off under the weight of frequent payments.
 
As for creativity, artistic vision may be jettisoned in favour of saleability. Creators might feel compelled to produce formulaic or sensational content to ensure financial viability, rather than pursuing projects that align with their artistic goals or values. Content that doesn’t perform well immediately in a PPV model is at risk of being quickly discarded, and long-term storytelling vision may be compromised in a constant bid to attract new viewers instead of rewarding older ones.

Ultimately, the streaming industry is in a state of flux, searching for a sustainable path. While the PPV model isn’t a perfect solution, it represents a pragmatic shift in response to economic realities and changing consumer behaviour. Whether this will reinvigorate the industry or alienate its audience remains to be seen. Content may be king, but kings have to pay their bills.

Streaming tip of the week:
We know about boybands — manufactured, over-processed and synthesised — that ruled the charts in the 1990s, but new Netflix series Dirty Pop shows how boybands were also an audacious financial scam cooked up by promoter Lou Perlman. It’s a compulsively watchable docuseries that makes the Zoolander plot feel suddenly plausible. LiveMint