Streaming Wars Breakdown: The Contenders, The Economics, Who’s Got the Most to Lose, Areas of Opportunity and More
Image via Disney+
In what is becoming known as the Streaming Wars, big media and big tech are converging upon streaming video services as the new market for reaching consumers at scale. Four of the most valuable companies on the S&P 500 wil have launched new video streaming services by mid 2020 as billions of dollars are being spent to create original programming for new television shows and movies online.
The launch of Disney+ and Apple tv+ in November of this year has ushered in a new era for original content programming online, escalating competition with existing giants such as Netflix, the 800-pound gorilla in the room that has dominated online video streaming since its launch and garners over 158 million loyal subscriptions monthly; and Amazon Prime Video, HBO and Hulu. In addition, more players are also entering the increasingly crowded field — CBS All Access, NBC Universal and AT&T Warner Media’s new platform in beta that is expected to launch in 2020. In addition to these industry giants, there is a slew of smaller streaming services as well that serve niche audiences such as the Criterion Channel, Crunchyroll and Shudder. With so many consumer choices, it is no wonder that online video streaming is poised to overtake traditional TV by huge margins. In some respects, 2019 may be the last year of television as we know it, given the range of streaming video options now available at such scale, attracting A-list talent and original storytelling. With so many choices available, this period is now being called the “golden age of television.”
Let’s take a closer look at the streaming services now available, their technology and consumer costs and how the streaming wars are radically and permanently altering the way media is being delivered and consumed.
Image via Yahoo! Finance
The Contenders
Yahoo! Finance created this insightful infographic above. In addition to this, we have taken a closer look at some other streaming services in development and recently launched — CBS All Access, AT&T Warner Media and Peacock. Here’s our scorecard for video streaming services:
Apple tv+
Price: $4.99/month or 1 year free with the purchase of a new iPhone, iPad or Mac or upgrading to iPhone 11
Launch: Nov 1, Available now
Offer: A-list “The Morning Show” drama starring Jennifer Aniston and Reese Witherspoon kicked off the new service. Apple is also offering a slew of original programming that includes new works by Steven Spielberg, Oprah Winfrey and more. You can also use the Apple TV app to subscribe to other streaming services.Disney+:
Price: $6.99/month or $12.99/month when bundled with Hulu and ESPN+
Launch: Nov 12, Available now
Offer: Disney’s entire vault including Star Wars, Marvel’s Avengers, new Star Wars spin-offs such as “The Mandalorian,” Pixar, National Geographic, “The Simpsons.” With its treasure trove of childhood favorites, Disney+ is bound to win over parents, just to give their children access to Disney, Pixar, and LucasFilm movies. Disney also has a deal with Verizon where Verizon Wireless Unlimited data subscribers and new Fios subscribers have 1 year free access to Disney+.Netflix
Price: $8.99/month for the basic plan, $12.99/month for the standard plan and $15.99/month for the premium plan
Launch: Available nowOffer: First to arrive on the scene and boasting a massive international presence, Netflix is so ubiquitous that the company’s name serves as a verb for relaxation: “Netflix and chill.” Netflix has built a large, loyal subscriber base over the years by both licensing content from major industry players to creating its own. Popular original shows include “Stranger Things,” “The Crown” and “Orange is the New Black” to the Oscar-winning movie, “Roma.” More original shows than any other provider.
Amazon Prime
Price: Free with Amazon Prime membership paid monthly at $12.99/month or annually at $119/year
Launch: Available now
Offer: Deep content library, Amazon Originals such as “Jack Ryan,” “Bosch,” “The Man in the High Castle” and a new online version of “Lord of the Rings” in development for $500 million. Amazon also has exclusive access to certain shows not available elsewhere such as “The Americans,” “Mr. Robot” and “Downton Abbey.”Hulu
Price: $11.99/month without ads or $5.99/month with ads
Launch: Available already
Offer: “The Handmaid’s Tale,” classic and popular shows such as “ER,” “Buffy the Vampire Slayer” and “The X-Files” and new shows in development. Hulu has 28 million existing subscribers.CBS All Access
Price: $9.99/month ad-free or $5.99/month with ads
Launch: Available now
Offer: Exclusive home of “Star Trek” and a new show, “Star Trek: Picard,” with Jean Luc Picard for Trek fans.HBO Max
Price: $14.99/month
Launch: May 2020
Offer: “Sopranos,” “Looney Tunes,” “Sesame Street,” “Game of Thrones,” “Prince of Bel Air” and “Friends” returning from Netflix as well as new shows by JJ Abrams, Greg Berlanti of CW’s “The Arrow” and Reese WitherspoonAT&T Warner Media
Price: TBD though it can be free through an ad-supported model for cable subscribers
Launch: 2020
Offer: Harry Potter and new shows yet to be announcedPeacock by NBC Universal
Price: TBD though it can be free through an ad-supported model for cable subscribers
Launch: April 2020
Offer: "The Office,” "Parks and Recreation,” “30 Rock,” “Fast and Furious,” “SNL” and “Back to the Future” with new shows by DreamWorks Animation, Focus Features and Universal.
The Economics of Streaming
America has experienced tremendous investment periods from the early years of its founding such as the railroads and electricity to car manufacturing, the Industrial Revolution and the Internet. Today, that spectacular boom is happening in online video streaming with over $100 billion being invested in streaming services — similar to the oil industry two hundred years ago. In fact, the entertainment industry as a whole has invested over $650 billion in streaming services over the last few years — no small number! It’s evidence of a revolution underway in how people access and consume content in the 21st century. In many ways, this exponential growth has been building over years as numerous industries have been transformed, making digital sharing commonplace and required to appeal to the everyday consumer
For the Individual User and Family Household
The cost of access to a Disney+ subscription with its library of 7,500 titles at $6.99 a month is far less than the cost of a DVD. Streaming now offers access to large libraries of content at one flat monthly fee.
Access to so many streaming video subscriptions offers consumers many options today and will affect people differently depending upon their current lifestyle, set up and individual or family household needs.
The average monthly bill spent on video streaming in 2019 is around $73, of which $60 goes to cable service and $13 to streaming services, according to research by Cowen &Co. Projected consumer spending is expected to only grow to $76 by 2024. For family households that intend to keep their existing cable services, they may just to add on streaming services that they want such as Netflix and watching shows on YouTube. They may not add new streaming services.
To some degree, it depends upon how much the individual or family household is already paying, what type of access they have and what they like to watch. Roughly 70 percent of Americans today subscribe to at least one type of video streaming platform. A Wall Street Journal poll discovered that Americans surveyed would be willing to pay roughly $44 a month or for 3-4 streaming services.
Streaming services like Netflix with 158 million subscribers worldwide, have built cult followings for favorite shows such as “Stranger Things” that appeal to both cable TV subscribers and cordcutters. The platform’s popularity is not expected to disappear overnight as new streaming service platforms become available. Disney though is pulling its content from Netflix and bringing all of its entertainment home to its own mother ship, Disney+.
Ultimately, what an individual or family household chooses will be dependent upon a variety of costs such as a smart TV or Internet device, high-speed Internet plan and personal show favorites. One concern that streaming companies have about customers is shared passwords to reduce costs, thus eating into their margins. Apparently, there is some effort underway to prevent this, through regular password reset requirements and limiting how much access a person can have based on their physical locations.
Consumer Benefits:
Choice: Consumers have access to greater selection of content now through streaming video that may align more with their individual preferences and interests.
Higher quality: A lot of time and effort is being devoted to building out original programming for original shows on Netflix, Amazon Prime, Disney+, Apple tv+, HBO Go, Hulu and more. For any consumer frustrated with lackluster content on traditional TV channels or even cable networks, these new shows offer higher quality to some degree. Netflix offers original programming in multiple languages with voiceovers, which can introduce viewers to new stories and ideas.
On demand: Unlike the limitations of traditional TV shows where you need to tune in at a specific time to gain access to a show that was also available only for a limited period of time, streaming video subscriptions offer shows on demand when you want it, wherever you want it (portable) with prior episodes being accessible too.
Access to old favorites: Streaming video platforms such as Disney+ also offer content out of their vaults that consumers love but did not have access to online before as these shows were created prior to streaming services and available only on old DVDs and video cassette tapes. Disney and other content providers have remastered old favorites and brought them online. Popular TV reruns and classic shows have also reappeared and their value has only gone up over time as these platforms aim to keep their new subscribers engaged, according to the Wall Street Journal.
Who’s Got the Most To Lose?
Image via Yahoo! Finance
Without a doubt, Netflix (NASDAQ: NFLX), one of the most profitable tech stocks in the last decade and part of the FAANG series of stocks (Facebook, Apple, Amazon, Netflix and Google), has the most to lose as the company has built its empire riding and driving the popularity of streaming worldwide. Ironically, it is because of Netflix’s enduring success that content creators who were once scared of doing online video streaming, decided to join it. As Netflix’s stock rose, it became impossible for traditional media companies to ignore it or the changing viewing habits of audiences.
As Disney pulls its content from Netflix, followed by AT&T that is offering a new video streaming service with Warner Media, NBC Universal and others may follow suit as they each develop their own platforms. Since Netflix surged in popularity and scale due to its access to licensed content, the company also has the most to lose.
Nonetheless, Netflix is expected to continue to be a dominant player as shows like “The Crown” and movies like Martin Scorsese’s The Irishman attract huge audiences. Netflix reported that The Irishman raked in over 26 million viewers within the first week of its launch, according to Variety.
Cable subscriptions can also be expected to decline. AT&T lost over 1 million cable customers in the third quarter of 2019. Cable companies thus are positioning themselves as Internet providers and thus charge more for premium Internet data streaming.
What Area Has the Most Growth Opportunity?
With so many video streaming platforms and original content, viewers have many options for what to see. Where then is the biggest growth opportunity apart from new content creation? The area for the largest growth in the industry lies with the actual devices that stream the services. What devices can stream video from Disney+, Amazon Prime, Hulu and more?
Is there a device that can stream all the video platforms well? From smart TVs to devices like Roku, devices that are well equipped to stream multiple video platforms smoothly and well, will be in hot demand.
Questions that Remain
Which services will persist and flourish? Which platforms will close up shop? How many subscriptions will an average American household have? How many subscriptions will international audiences have? How will these streaming wars affect movie production, theater attendance, awards and the film industry?
These questions and more, still remain. There’s an ongoing debate and discussion about the streaming wars on Reddit, with predictions made about which streaming platforms will endure. Many expect Netflix to endure and continue to thrive, creating new content with ongoing equity investment while Disney and Amazon Prime continue to grow, building upon their existing arsenal of content and drawing from deep pockets.
Apple’s Bet
As a publicly traded stock, Apple (NASDAQ: AAPL) can continue to produce shows as long as the company’s leadership green lights it. The company has already committed to hundreds of millions in dollars in original content programming. Like Disney has a built-in audience with its long history of storytelling, popular favorites and theme parks, Apple also has a built-in advantage through its consumer products. The company has offered Apple tv+ free for the first year along with any purchase of a new Apple product. This also extends to upgrades if you upgraded your iPhone to the iPhone 11. This helps introduce more consumers to Apple tv+ and encourages them to explore the new shows. It also works the other way — as the offer of a year of free service can also get consumers to upgrade their iPhone, iPad or Mac.
Apple has approximately 1 billion customers around the world so if 10 percent became paying subscribers at the introductory $4.99 per month for the Apple tv+ streaming service, that would rake in $500 million in new revenue alone.
Sports Holdout
One area of cable subscriptions that has not yet been impacted by the shift to streaming video online is sport events. Major American sporting events are still carried by traditional TV networks. Watching the Super Bowl is an annual tradition on television that is not going anywhere yet. Netflix or any other video streaming platform has yet to duplicate a similar enthusiastic communal viewing experience hosting over 100 million people at the same time.
Amazon has made an indent into sports by acquiring rights to streaming regional sports networks, specifically for New York teams. Disney also owns the popular ESPN+ network that it launched earlier this year.
“Did You See It Last Night?”
By far, one of the biggest changes from the advent of the streaming video revolution is a shift in culture. For so many decades, tens of millions of Americans have watched the same show together on television all at the same time. Watching television has been a communal event since the 1940s. Fall TV show premieres in September marked the start of a new school season with matching ad campaigns. Everything was based around TV. The shows themselves developed certain formats to accommodate ads and commercials. Broadcasting in turn, happened all at once as companies followed a strict schedule of programming. Viewers could only see a new episode of a beloved show on a specific day at a particular time. There was also only limited viewing of prior episodes and seasons of any show.
With the arrival of Netflix and its surge in popularity, millions of people have reported watching the same show at the same time, although data algorithms provide different viewing experiences for different viewers. Watching shows can still be a communal event — just in a different way as media giants are now linking their intellectual property to streaming platforms and individual users can watch these shows on demand, delivered by data algorithms that pay attention to what you liked before in order to deliver more of what you enjoyed before.
The concept of time as it pertains to viewing shows is changing. Streaming video online through Netflix and new video platforms offers viewers the ability to watch any show at any time on demand. With shows available year round, they are less dependent on seasons. Ad campaigns also are shifting. Netflix, Disney+ and Apple tv+ all offer ad-free programming. Discussion about a show is also not limited to the day of release, though some hype and viral traffic can also be expected. Old episodes of popular shows such as “Seinfeld,” “Cheers,” “Friends” and “The Office” are available all the time and become popular again to new audiences, running alongside the latest episodes of contemporary shows such as “Riverdale,” “Flash,” “Modern Family” and more. Overall, there is also just more content available everywhere. To some extent, the way that streaming changes TV culture will depend ultimately on individual consumers’ watching and spending decisions.
We hope you enjoyed this in-depth review of streaming video services available today and arriving soon in 2020. Please let us know what you think at hello@elf.agency. Also, you can subscribe to our newsletter. Every week starting in 2020, we’ll have an in-depth review of one original streaming show on Apple tv+ or Disney+ on our blog with a minimum of 5-6 episodes available first before we review any show. Thank you and happy reading!
