The streaming video on demand (SVOD) market is exploding across the world. Disney+, Apple TV+ and new entrants in HBO Max and Peacock pose a significant threat to Netflix’s domestic dominance. However local competition in markets across the world is heating up as domestic players like Britbox (UK), TV Now (Germany), Canal+ (France), HOOQ (Singapore), and Stan (Australia) are expanding their offerings.
These new services are being driven by massive tech corporations with colossal spending power, consolidated media empires that already have deep and globally loved catalogues, as well as smaller providers with rich catalogues from local broadcasters. Emerging platforms like Quibi show that there is also room for innovation in the SVOD space, although the future success of new entrants is still highly uncertain.
In response to this, Netflix is set to create even more content than ever and is estimated to be spending over $17 billion on original programming in 2020. Naturally, films and TV shows are going to require sound and music, which means there are going to be increasing opportunities for artists, composers, music supervisors, publishers, record labels and plenty of other stakeholders in the music industry.
However, not everyone is guaranteed to get a piece of Netflix’s budget. If we take a more precise look at the factors that are determining Netflix’s strategy then we can see who can carve out the best position to take advantage of the current landscape.
The European Music Industry
In 2018, the European Commission introduced legislation that would enforce a local content quota for platforms like Netflix. This quota, due to come into effect towards the end of this year, will ensure that 30% of SVOD platforms’ offerings consist of European content. As a result, Netflix and the other SVOD platforms have been pushing to create more local content across France, Germany, Spain and the rest of Europe.
This is obviously good news for the film and TV industries in respective countries across the EU. Whilst the 30% will be a regulated minimum requirement, there’s a chance that Netflix could eventually smash past this quota. This is because the opening of new offices and investment in European productions are as much a part of meeting consumer demand as it is a part of the quota.
This boost to local European productions could provide more opportunities to sync music from European artists. Meeting the demand for local content will also require authenticity and music can play a vital role in the feel of a show or film. This could also provide a global platform for emerging artists across the continent. It’s now completely normal for an artist like Rosalía to take a traditional Spanish style of music and evolve it to become a global superstar. Sync departments may be wise to start turning to artists and songs in European languages to capitalise on this.
“Meeting the demand for local content will also require authenticity and music can play a vital role in the feel of a show or film. This could also provide a global platform for emerging artists across the continent.”
Netflix’s growing presence across Europe isn’t just a boost for productions, artists and songwriters. This is an opportunity to repair Netflix’s strained relationships with local film industries. Whilst consumers have a lot of love for Netflix, film industries across the world have not felt the same way.
Netflix’s ban from the Cannes film festival is one example of this. However, the backlash from other local institutions could be viewed as a symptom of a broader push back against globalisation that is being seen across the world. The EU’s quota is seemingly designed to address this by protecting local industries from the cultural hegemony of American SVOD platforms. This could also set a precedent that other countries across the world may look to follow.
Australia is a good example of a country whose film industry has been frustrated with Netflix’s lack of investment in the local industry. Local quotas are currently in place for broadcast television in the country but an SVOD quota is yet to be implemented in Australia. Although there are some mild rumblings to bring about discussions for this, the simplest solution is for Netflix to spend more on Australian productions. Its new Sydney HQ might be the statement it needs to help it avoid an EU style quota becoming a reality.
This has plenty of implications for companies across the music industry. Creative industries aren’t exempt from nationalism and that doesn’t have to be a bad thing. Power is moving away from Hollywood to more localised productions across the world. Countries in Europe are the most immediate example here but others across the world could follow. Local artists, songwriters and music industries could be the ones to reap the rewards and films and TV shows can also benefit from more localised music supervision.
“Local artists, songwriters and music industries could be the ones to reap the rewards and films and TV shows can also benefit from more localised music supervision.”
Netflix isn’t renowned for making acquisitions. However, the company made a move in 2019 to acquire Storybots, a children’s animation and education brand. Whilst it’s easy to get caught up in the glamour of pop superstars or the allure of independent and underground cult icons, we shouldn’t forget the impact the kids market has on this industry.
In a world where an 8-year-old is the highest-earning YouTuber and a brand like Kidz Bop can produce superstars like Zendaya, it amazes me that the children’s market isn’t a more explicit focus for companies across the music industry. Looking into some numbers behind the child entertainment market shows why Netflix was more than happy to go out of their way to acquire Storybots.
Children’s entertainment is a relatively big industry in itself with PwC forecasting it to be worth $1.7 billion globally by the end of next year. For better or worse, technology is a big factor behind the growth of this industry. The idea of children operating complex functions on a computer before they start school would have seemed ridiculous 20 years ago. Right now, we’re already in a position where this is becoming increasingly normalised.
Children are operating mobile devices at an unprecedented scale and two-thirds of 3-4 years olds watch content on SVOD platforms. This percentage increases to almost 90% by the time they are 15. One can only expect that today’s children are also consuming other forms of entertainment and media on mobile devices at a rate unlike any other previous generation in history.
Compared to adults, children have very few obligations and responsibilities outside of waking up and going to bed on time. This leaves a lot of time for entertainment. The competition for their attention is going to become increasingly cutthroat as they are already saturated with options across video, music and gaming. We can expect Netflix’s big content budget to include children’s entertainment, which means that there could be more sync and partnership opportunities to help engage this audience.
“We can expect Netflix’s big content budget to include children’s entertainment, which means that there could be more sync and partnership opportunities to help engage this audience.”
Tech companies have their own ethical issues to deal with regarding children’s use of devices. The music industry also shouldn’t shy away from their duty to look out for this generation. We can’t be naive and assume young children won’t naturally experience or gravitate towards music and videos about drugs and violence. Time is yet to tell what effect the mass consumption of media will have on younger generations in the long term.
Spotify’s launch of a kid’s app last year shows that the music industry might be waking up to children’s unique experience of the world through media and entertainment. However, children are still consuming and experiencing more hateful content than ever before. It remains to be seen how the music industry will respond to growing ethical concerns associated with this demographic’s increasing media consumption.
Taking on Bollywood
Netflix’s long term strategy isn’t complete without mentioning India as a crucial factor. Netflix needs to grow its subscriber base to offset the domestic decline. The company has been rather vocal in its ambitions here, especially with its declaration that India is the home of it’s next 100 million subscribers. But what does this mean for stakeholders in the music industry?
Whilst the Indian music market deserves an entire article in itself, it doesn’t take much for those in the West to understand that this is a market like no other. The enormous population, 600 million of which are under the age of 25, sets up incredible potential to capitalise on youth-driven cultural movements, as well as exporting cultural products across the world in a similar manner to K Pop.
“The enormous population, 600 million of which are under the age of 25, sets up incredible potential to capitalise on youth-driven cultural movements, as well as exporting cultural products across the world in a similar manner to K Pop.”
However, Netflix, like music organisations in the West, faces unprecedented challenges to establish a dominant position here. The Indian film industry is tied incredibly closely to its music. The dominance of T Series as an integrated audiovisual production house/label clearly demonstrates what success looks like here. There is also a massive diversity in languages across the country as well with films and music in Hindi, Tamil, Telegu, Punjabi, Gujarati, Bengali and Urdu, just to name a few.
Let’s not overlook the institutional factors that also make this market a challenge. Government regulations on foreign investment were introduced last year, with plenty of uncertainty as to how a company like Netflix would be affected. Furthermore, cultural considerations need to be taken into account as Netflix has already faced censorship calls for content that was deemed offensive to Hindus. India is a large, complex and diverse nation and establishing a leading position here is going to be a monumental challenge.
This shouldn’t be seen as a closed-door, however, as the growth of Hollywood films in the country has shown India still welcomes cultural imports. The fact that this growth has been fueled by superhero films is no coincidence. Disney has established a firm position through its ownership of Hotstar, giving it a channel to market its content and compete with other existing SVOD platforms like Eros Now, Ditto Zee TV, and Spuul. If Hollywood films continue to grow in India then this could be the most efficient entry route for artists to establish a presence in this massive market.
Overall, India may not currently be the most ideal place for many organisations in the West looking to market their music through films. However, this is the worlds largest youth audience with a deeply entrenched cultural relationship between music and film. In the long term, Netflix needs music, and labels and publishers need films to be competitive in a Bollywood dominated India.
Finally, it is worth noting that India has the world’s largest diaspora with a population of around 30 million. A significant amount of this population is located in the US and UK, especially in London and California. Labels and publishers might not need to go to India to find talent that could appeal to this market. The audience they are looking for could possibly already be on their doorstep.
The streaming wars are ushering in an explosion in global spending on content, which is being led by Netflix. The stakes are high for the company as it battles tech companies with drastically different business models on one front and consolidated media giants with deep catalogues on another. The rising voice of local platforms and industries are also forcing Netflix to adapt as it looks to solidify its long term future as the world’s dominant SVOD platform.
Netflix’s huge budget is going to need music, and local industries and artists in Europe especially are in a prime position to capitalise on the organisation’s growing focus on localisation. Unsigned independent artists haven’t been mentioned here but it will be interesting to see how many sync opportunities will go their way.
“Netflix’s huge budget is going to need music, and local industries and artists in Europe especially are in a prime position to capitalise on the organisation’s growing focus on localisation.”
As more and more mobile devices find their way into the hands of children, the kids’ entertainment market is going to become an increasingly important segment for Netflix. If under 16s become one of the biggest consumers of media, how will music and video streaming platforms reflect this? This doesn’t seem to be a deeply explored sector of the sync industry but we may yet see more opportunities as children’s entertainment grows.
Companies in the music industry are increasingly looking eastwards for the future of the global music industry. I’ve previously written about China’s potential but India definitely holds just as much, if not more opportunity. Whilst there are considerable obstacles, forming alliances to create audiovisual content may be the best way to compete with the behemoth that is Bollywood. Those that can do this successfully are surely in a position to lay foundations in what could grow into one of the worlds biggest music markets.