How AMC Can Compete Against Netflix and Hulu
Quibi may have gone down in flames, but that doesn’t mean there isn’t room for streaming upstarts to find new audiences
Analysts began referring to the “streaming wars” a decade ago, but it’s now clear they were actually describing the precursor to the real thing. With tech and media titans like Netflix, Amazon, WarnerMedia, and Apple all fully leaning into the fray — their interest accelerated by the demand for streaming content during the pandemic — the streaming wars have officially arrived, featuring heated battles over quality IP and subscription pricing to capture new subscribers.
Going head-to-head with these companies seems like a fool’s errand. Amazon and Apple are trillion-dollar behemoths, and Netflix, with 195 million subscribers worldwide, uses its scale advantages to take tons of swings on original content as well as license popular titles like The Office and Seinfeld as filler to keep subscribers hooked. As a result, it’s hard to pull eyeballs away from the incumbents; Quibi’s fate is a brutal example, and it had $2 billion in funding to work with.
However, the recent success of Disney+ — now with over 73 million subscribers despite only launching a year ago — has proven that there is still room for new streaming platforms to find their niche in an industry crowded by giants. And though it never hurts to be a global media superpower like Disney and already own mega-hit properties like Star Wars and Marvel, much smaller entities have also been able to put their niche properties to use. AMC Networks (not to be confused with AMC Theaters) is one such company, skillfully leveraging low-cost, genre-specific streaming services for horror, British television, and indie films. In a world where heavyweight streaming services compete to offer wide-ranging content across formats and genres to as large a mainstream audience as possible, AMC has decided to take the opposite approach and go all-in on its niche appeal.
An embarrassment of niches
Rather than fighting to simply have the most subscribers possible by offering the biggest basket of shows and movies, AMC Networks has positioned itself to serve a smaller, targeted audience looking for content in a specific genre. While you may know AMC for developing prestige drama series like Breaking Bad, Mad Men, and The Walking Dead, its streaming platforms are paving the way to a bright future beyond cable. It owns a range of verticalized media entities, including BBC America, IFC, Sundance TV, WE TV, Acorn TV, and horror streaming-service Shudder, which recently hit one million subscribers. Like Netflix, the service combines licensed titles with original content to specifically serve horror fans.
Beyond Shudder, AMC offers four other streaming subscriptions: Acorn TV, which offers a selection of shows from U.K. television, UMC, focusing on Black TV and film, Sundance Now, for true crime, thrillers, and drama series, and IFC Films Unlimited for independent films. These streaming services operate very differently than the Netflix and Hulu content smorgasbords. Instead, Brett Sappington, VP at media and tech consultancy Interpret, draws a parallel to retail:
Services like Netflix, Amazon Prime, and Hulu’s primary objective is to include enough good content to satisfy everyone’s general needs. They need to own the big needs, they need to be the big-box stores. Shudder and other niche services survive in the same way specialty stores survive today: They need to be close to their audience, know their customers, and give them what they want.
There are also a couple key differences in how AMC and Netflix price and package their services. First, AMC’s niche subscriptions have a lower monthly cost:
Each service is priced significantly lower than Netflix’s three monthly streaming plans — $8.99 for Basic, $13.99 for Standard, or $17.99 for Premium — which clearly positions it as a complementary subscription. This has proved a successful strategy: AMC claims over 80% of its subscribers also subscribe to a mainstream streaming service like Netflix or Hulu.
The other big difference is AMC’s approach to free streaming. Netflix launched a Freemium model in August that offers non-subscribers access to select originals, such as the first episode of original series like Stranger Things. This strategy allows Netflix to get its premium original content in front of new viewers without cannibalizing revenue or devaluing its product like a free trial can. It seems like Netflix has been burned by the latter approach a few too many times: Last week it scrapped 30-day free trials across all locations, and eliminated free trials entirely in the United States. Given the maturity of Netflix’s U.S. market, this seems like a necessary step to prevent viewers from using a free trial to binge a series or new feature without subscribing.
In contrast, each of AMC’s streaming services uses a seven-day free trial as a way to get viewers familiar with the service. This is the correct strategy for a streaming platform its size. The shows that AMC offers customers — especially its original titles — generally aren’t as well known as Netflix’s. Prospective subscribers evaluating Shudder have good reason to be skeptical of shows and movies that they’ve never heard of. With a seven-day trial period, customers have enough time to check out some of the originals and scan the list of licensed titles they may never have known were available for streaming. AMC’s streaming platforms are also designed to serve a smaller, more passionate audience who are already interested in a specific genre. Given the natural selection bias of the people who would be exploring its streaming services in the first place, it makes sense to give them time to explore.
In theory, niche streaming services should have stronger retention than mainstream streaming services. Since the value proposition is more specific, subscribers have a better idea of what to expect upfront and are less likely to subscribe for a one-off feature or series. The free trial allows AMC to push prospective subscribers over the line, where they have a good chance of retaining them for the long haul.
Why niche streaming can work
Given the rampant competition in streaming, it’s hard to be bullish on new, smaller services. However, subscriber growth is trending in the right direction for AMC. In 2018, the company forecasted 4 million streaming subscriptions by 2022, but with recent growth, it’s on track to hit 4 million subscribers by the end of 2020.
Its strategy mirrors a key takeaway from the book Understanding Michael Porter by Joan Margetta. According to Margetta, Porter — a legendary Harvard Business School professor and economist — believes the most common error in competition is trying to be the best. He considers this mindset to be a self-destructive, zero-sum race to the bottom. Instead, he urges companies to compete to be unique.
As long as AMC continues serving subscribers with high-quality IP in unique genres that can’t be easily or cheaply accessed elsewhere, it can carve a path forward despite the ongoing streaming wars amongst giant competitors. While it’s unlikely AMC will see massive subscription volumes on a Netflix or Disney level for any of its individual streaming services, if it can serve each of its niche audiences with unique value, price itself as a complementary option, and invite new users in with plentiful free trials, it may just prove that there’s room in streaming for the little guys.
A version of this article originally appeared in Good Better Best.
