Vimeo Surrenders to Netflix: Why the Subscription Video Plan Was Never Going to Work
Vimeo has decided it can’t compete with Netflix, Amazon and Hulu. The company will not be launching the subscription video-on-demand service it had been touting since last year and had planned to roll out in 2018, Vimeo said on Monday.
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“Vimeo has confirmed that it has decided not to proceed in offering a subscription based original program service scheduled to begin in ’18,” a spokesperson said in a statement. The company has more than 760,000 paying subscribers who use its filmmaker tools, and roughly 240 million monthly viewers of its videos, and was determined to create a service that would attract millions of customers willing to pay for exclusive original content.
So why is Vimeo, which last November said it would invest “tens of millions” to compete with newcomers like YouTube Red, now changing course? Here are three reasons the site faced daunting challenges.
Vimeo was late to the SVOD game.
Vimeo has been around since 2004, but the company established itself as an online platform for filmmakers to share their work and discover other artists, not a streaming site for feature films and TV shows. It was only in March of 2017 that the company hired veteran development and acquisition executives Alana Mayo from Paramount, Kesila Childers from Bunim-Murray and Kelly Miller from Hulu. Trying to claim a piece of the $500 billion film and TV market so late in the game would require an enormous investment in original content that could have sunken the company’s fortunes before paying off.
Customer numbers are not on the Netflix level.
Vimeo On Demand has acquired more than 1 million paying customers since launching in 2013. While the site offers its “creators” an attractive proposition, selling their videos ad-free through the site and keeping 90 percent of the revenue, the number of people paying for this content is dwarfed by Netflix’s more than 100 million subscribers. Vimeo has carved out an interesting niche for itself in the on-demand world, but building enough of a critical mass to compete with the major SVOD players is a different story.
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Converting viewers to customers is just plain difficult.
Last fall, Vimeo interim CEO Joey Levin (also the CEO of parent company IAC) wrote in a letter to IAC shareholders that — unlike other new entrants in the OTT market — Vimeo already had more than 1 billion monthly video views, 115 million available videos and more than 240 million monthly viewers. Leveraging what he referred to as the company’s “existing marketplace” to launch the SVOD service would have been a herculean task, however, as the site’s visitors were not necessarily ready to see at Vimeo as a competitor to Netlfix, Amazon and Hulu.
Now, Vimeo is expected to focus on its creators, who upload tens of millions of videos to the site on a yearly basis. As more and more members of the Vimeo community get their work noticed — filmmakers like the Daniels (“Swiss Army Man”) and Jordan Vogt-Roberts (“Kong: Skull Island”) attracted crucial attention through their Vimeo videos — the site will continue to build on its reputation for showcasing tomorrow’s brightest filmmaking talent. This is an area in which the company has strength in numbers.
