A content arms race started on February 01, 2013. A case study.

content arms race

An all-out content arms race began on February 01, 2013.

That was the day Netflix launched a bold new series called House of Cards. It was a big-budget risk that put the story and the writing front and center. Netflix had one goal — create a serialized show that was so un-missable that people would have to subscribe to the streaming service.

The channel was transforming from a curator of content to a creator of content with its first original series.

It worked — Netflix attracted more than a million new subscribers. And it also began a content arms race that changed the industry … and may destroy the company.

There’s a big lesson here for you and your content, too.

Gearing up for a content arms race

This news item caught my eye last week …

As Disney, AT&T’s WarnerMedia and Apple prepare to enter a crowded streaming market dominated by Netflix, HBO and Hulu, they are seeking to stand out with eye-catching shows that cost as much as $15 million an episode to accommodate massive casts, exotic filming locations and copious special effects.

To provide some context, an average episode of Game of Thrones cost $10 million. I’m wondering what these producers could possibly stuff into these new shows that would make them cost $15 million per episode, but that’s a story for another day.

Netflix created something remarkable to stand out. New competitors followed suit, trying to out-remarkable Netflix. And so the content arms race began.

There is a lesson here other than television viewing is about to get amazing. That lesson is about content competition.

Content shock before our eyes

What’s happening in this streaming content space? The economics are rather simple:

  1. As the TV space becomes more crowded with streaming options, studios have to find bold new ways to compete for viewers who will pay to subscribe to the channel.
  2. Last year, it cost $10 million per episode to be a top show. Next year, it will be $15 million per show, apparently. And there is no option but for that number to go up year after year.
  3. As the cost of competition goes up, some companies are going to drop out. The biggest companies with the deepest pockets will survive.

That is an example of Content Shock happening right before our eyes. As a niche becomes filled with content, the economics of content and content marketing change.

The irony is not lost on me that House of Cards literally created a house of cards.

The company that started the arms race, Netflix, may be one of the first companies that fails since it has a much smaller content war chest than companies like Disney and Apple.

A strategic view

This lesson is not just about big television studios. It’s also for you and the content you produce.

In this case, the studio strategy is clear — create content so great that it forces the lesser competitors out. In essence, the strategy is to create Content Shock for competitors and win.

This is an absolutely essential lesson. The first step in any content marketing strategy is not to create content (this is what 95% of you are doing by the way!)

The first step is to assess the information density in your niche and figure out where it is possible to maneuver and compete. What are your strategic options?

What does this content arms race mean to you?

When I do a strategy analysis for my customers, this is almost always the problem I find — The client is creating random acts of content with no perspective on where they fit in the content eco-system. They have no strategic view of how they will use content to actually accomplish any rational business objective.

There is so much hype in the content marketing world. We’re at a point where many companies are creating content because they’re afraid not to. But that’s not sustainable.

It would be like making a decision right now to enter the streaming TV business without looking at the state of the industry. That would be foolhardy because IT’S NOT GOING TO WORK!

How do you maneuver?

The most important word in marketing is “maneuver.” Marketing strategy is about assessing the state of your industry and finding a niche you can own and dominate.

Even in the most crowded spaces, there are creative ways to maneuver.

Hollywood exec Jeffery Katzenberg just started a new streaming content service called Quibi. In a sense he is going up against Netflix, HBO and Disney. Is he insane?

No. He’s maneuvering in an un-saturated niche — high-quality short-form content with big-name actors and directors. Nothing like that currently exists. If he scales quickly and rapidly dominates the niche, he’ll create content shock for competitors by owning the space and raising the entry barriers.

That’s one of the ways that you win with content, too.

Find some angle that does not currently exist. Rapidly dominate the niche to make it hard on competitors. Create content shock for your competition.

Used wisely, Content Shock is your friend.

Keynote speaker Mark SchaeferMark Schaefer is the chief blogger for this site, executive director of Schaefer Marketing Solutions, and the author of several best-selling digital marketing books. He is an acclaimed keynote speaker, college educator, and business consultant.  The Marketing Companion podcast is among the top business podcasts in the world. Contact Mark to have him speak to your company event or conference soon.

Illustration courtesy of Unsplash.com

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