Digital distributors of content are moving into original content creation and will likely beat cable companies. (I wrote about the topic here). However, there are two primary strategies for releasing their original content: binge and weekly. Which one is the best? This choice can affect the success and audience size of a show.
Before assessing which strategy is best, it makes sense to first examine the purpose of these original shows. Content creation takes away the dependence of distributors on content creators. A show can be judged on three metrics: (1) how happy are viewers with the show, (2) how fast is the viewer base growing and (3) does this show factor into the customer’s decision to subscribe to a specific service.
I think point 1 and point 2 are related to each other in two ways. The first way is, obviously, good content will make the audience happy and new customers will seek good content at a faster pace than bad content. Duh.
The second relationship is not obvious. I think there is tradeoff between the happiness of current viewers and the growth of viewers. Current users choose to binge as Netflix alludes to on page 4 of their earnings release when they discuss the way they recognize expenses for original content. Also, here is a study showing customer prefer to binge. Allowing users to binge makes them happy.
On the other hand, people are more likely to discuss a show that has a spread out release. They will discuss the show offline and through social media. In addition, traditional media and critics have a chance to call attention to the show. In short, there is more peer-to-peer marketing and more time for general buzz with a longer release schedule.
Unfortunately, I can’t know the exact tradeoff between these two forces. Amazon and Netflix will know soon, if they do not already. My guess is that there is an optimal point on the continuum of binge versus weekly releasing to optimize for audience happiness and buzz creation.
I think the optimum will be in releasing batches of shows. I think the viewer is still pretty happy getting 4 episodes at a time. At the same time, a bi-monthly (every other week) release schedule would probably allow the user base to grow faster through social marketing and traditional channels. I wish I had the data to actually conclude and not just hypothesize this.
As for point 3: “does this show factor into the customer’s decision to subscribe to us” – it is not important today, but it will be essential in the future. I know people who subscribe to HBO mainly for Game of Thrones. TV shows produce a few huge winners and if Hulu was the only distributor for Breaking Bad, I bet a lot of people would sign up for their premium service. That is an enormous strategic advantage.
Original shows that will drive subscriber decisions are not important today because these shows do not exist for digital distributors, yet. However, a runaway hit will one day produce new subscribers and lower customer churn in the future as competition becomes more fierce between distributors. One day, content will be optimized for hits that create competitive advantage between distributors. Whatever release schedule that is most likely to produce shows popular enough to affect subscription decisions will become the norm.
Today, distributors must balance viewers’ happiness with their ability to market their shows. I think the balancing point is in releasing batches of shows. Amazon, Netlfix, etc. have enough data that they should be able to figure out the right formula for batch size. However, the future will be choosing the release schedule most likely to produce shows that affect subscription decisions.