Blog 6 - The Little Guy

When the Disney streaming service arrives it’s going to take up a huge portion of the market, and Netflix will have to rely on their original content more than the second hand content distribution that made them. However, beyond Netflix and Amazon there are streaming services that offer what those two and Disney won’t, something specialised and out of their reach. It’s this unique approach to the concept of streaming that may keep them safe when Disney comes along, the key one that this blog will look at is AMC’s Shudder.

In the summer of 2015, AMC launched an invite-only BETA test of a new SVOD service (subscription video-on-demand), a service called Shudder that was a service built for the exclusive niche of streaming Horror movies. Although initially their content base was minimal they had something to work with as Horror as a genre thrives off of low-budget content. In this day and age independent filmmakers are looking for cheaper and cheaper methods of distribution. By going online there is little to no distribution costs. Shudder provides and outlet for these movies. 

This is one way in which the service differentiates itself from the larger services that are trying to reach as many people as possible, it simply doesn’t do that. Most will have a dedicated horror section of their service but not a whole site dedicated only to it. So by presenting a section of the market that isn’t represented they have found a USP and a way to differentiate themselves from the larger services. They also manage to do this in their price, and although the service is American I’m going to analyse these with British statistics. In a breakdown of market segments by genre and the audience, in 2011 the BFI uncovered that audience class C2 enjoy horror the most when compared to the other classes. C2 are the skilled working class. This matches up with a study from the book Film cultures by Janet Harbord who claims "The most popular films at the cinema for the lower social classes were the comedies/spoof horror" this link over nine year would imply that the same is still relevant in 2017.  With knowledge similar to this, Shudder likely adjusted their prices to a low £4.99 a month, separating them from large services such as Netflix charging £9.99 a month. This fits their target demographic which have a lower income. They can likely afford this lower cost in a different way to Disney’s predatory pricing. Even though AMC own Shudder it’s unlikely they can afford to purposefully lose money, what it likely comes down to is cheaper products to distribute meaning they require less income, but also high demand. As can be seen in the below demand and supply diagram, if the products price is low it means a high demand for the product, allowing them to use economies of scale and charge a lower price due to a high number of consumers. This demand can be seen by the companies recent expansion to Canada, Germany and Austria.

Demand and Supply Diagram

AMC claimed in their Q3 report of 2017 that across their new ventures they’d gained ’15 million’ subscribers in the past year, which shows tremendous growth not just for Shudder but other services such as SundanceNow, which showcases documentaries. The same principles that have been shown here with Shudder can be applied to other services such as SundanceNow or even MUBI, that by differentiating the service they are offering something niche and filling a gap in the market, something Disney and Netflix can’t do due to needing to appeal to a wide audience for the greatest chance of success.