• Varun Sharma

Future of Streaming Wars

Updated: Oct 18, 2020

Note: This article was originally published on December 3, 2019


Cable TV is dead. Actually, let me rephrase that. The entertainment model on live TV is nearly dead. Sporting events and live news are still alive. Quite recently, the number of streaming subscribers around the world surprised the number of cable subscribers. What this means is that Streaming Video on Demand (SVOD) is on the rise and is changing the landscape for consumers, players, and content producers.


Streaming Wars have gotten heated lately with the launch of Apple TV & Disney+ in November 2019. From a consumer perspective, there’s bad news and good news. The good news is, consumers will face a plethora of choices for their streaming video needs based on what works best for them. The bad news is, no single service offers it all — live sports, movies, original TV shows, and news. I mean if it did, it would potentially be a winner in the category. This does make it trickier to figure out which service to go for.


From the entertainment industry perspective, the company needs to remain relevant. Some have realized rather late that SVOD is the future and it’s better to invest in it. This is disrupting the industry. An interest marketing tactic to emerge so far in the streaming wars isn’t a particular campaign, but rather the blocking of certain ads. Disney prohibiting Netflix ads from running on their TV stations is an intriguing development because it signals that competition is a real threat despite how reluctant executives who oversee streaming services are to acknowledge that.


Disruption also directly impacts the quality, the quantity and the price paid for the acquisition of content. For example, Friends was licensed at 30 Million USD/Year in 2016. The same show was licensed at AED 100 Million USD/Year in 2018. WarnerMedia realized that the price could go up and so it did. The price will continue to go up for shows like these. As more streaming services enter the ring, the bargaining power will go even more down.

The war also leads to better Original Content. I think the long term winner will have the best original content. It’s a tough call to work on original content compared to just leasing out content from other platforms but from a sustainability standpoint, the original content will be the biggest driver and will keep the consumers coming. This will also change the economics for production houses and content creators too. The limit for the upside has been removed and the better the content, the higher the chances of being recognized.


To better understand the streaming industry and where it’s heading, I want to break down the key players and make better judgments. The key criteria are the quality and quantity of the content, the value provided to the customer, the control over distribution and the ability to monetize content.


Netflix: This is the OG Streaming Service with the largest budget. It has a first-mover advantage and one of the most user-friendly interface. The latest trend with Netflix to market its original content better. From an industry standpoint, the strategy has come in a bit late. By working on deals to acquire streaming rights for great shows like Seinfeld, Netflix has limited control over its distribution and a limited continuous revenue stream. Netflix has long relied on content its licenses from the studio, and it must now cope up with efforts by suppliers turned rivals to claim back its rights to stream shows. They do have a lot of data on themselves though. So much so as going back to 1998 when they launched an online store for DVDs. They need to figure out how to use the data better.


Apple TV+: Apple’s strategy is a bit different. It releases average content at a cheap or a free price, with Apple products, to loop in more customers in the Apple ecosystem. Apple TV+ has started with a focus on original first-party content. Currently, it does face a lot of skepticism but for the price, it’s currently offering, it’s unbeatable. Apple also has 1.4 billion active devices worldwide, — iPhones, iPads, Macs, and a few televisions hooked up to Apple TV devices. Is that an advantage? Yes, as it gives Apple control of the interface and the ability to serve out updates and embed features in its OS to support the streaming service.


Disney+: Disney has an entire catalog to fill the library of its new service which recently got launched. They say content is king and 10 million subscribers in a day, even with technical glitches, is a validation of that. It also means being in the business of content creation means you create better content. Disney has understood that SVOD is important even calls Disney+ the “most important product the company has launched.” Also, as it has offerings for both children and adults, it works out great for families. The rise of Disney+ will possibly leave the frontrunners Netflix in a vulnerable position. Currently, the service is a complement to other service but I am expecting it to grow its library to become a solid substitute.


Amazon Prime: Amazon Prime is one of the largest recurring revenue bundles and what Amazon has done right is incorporating retail shopping, music, original series, and popular licensed content. It also has a second-mover advantage and has the largest library. Quantity over Quality is the motto. Plus, anyone who gets locked in the Amazon ecosystem does not generally leave it.


HBO Max: Currently selling as HBO Now, it’s doing great as a service. The content is of very high quality as HBO has one of the greatest cultures of creativity. As a brand, it focuses on the quality over quantity. HBO’s value is not about more, its value is derived from offering less. The price has not been announced yet and could be a huddle.


Peacock: Peacock is expected to launch in 2021. It will follow an ad-supported model. The advertising-based version of Peacock will be available for free for NBCUniversal Pay-TV subscribers, while an ad-free version will be offered for a yet-undisclosed fee. It might just be too late for Peacock to enter the SVOD wars.


Future & Verdict


Bundles are going to be the way of moving ahead. Disney is already offering an option with Disney, Hulu, and ESPN+. Amazon’s Prime Video is bundled with free shipping and music. I expect Apple to launch a bundled offering which includes Arcade, Apple Music, News and Apple TV+ at a monthly price. Consumers love the idea of it and will only be exploited in the future.


Currently, none of the SVOD are niche-based. It’s too early for that but I am expecting more shortly soon. In the long term, the niche-focused SVOD will be acquired by the larger players in the industry. Regional SVOD will have to expand rather quickly to sustain themselves and compete with global players.


Global mobile penetration is increasing over the last few years as global mobile data prices are going down. When the data prices are high, people are averse to consuming a lot on the go. When the data prices reduce drastically to a level where people don’t have to restrict their consumption anymore, their behavior will change. This behavior change will lead to more adoption of SVOD and mobile-only plans similar to what Netflix recently launched in India & Malaysia.


Streaming Wars is getting tougher, not just for the big players but also for the small players to sustain in. Quality original content is not cheap to produce. Leasing out shows is working out more expensive every year. This will force the weaker players to quit or join hands with the larger ones. I expect Disney+, Amazon Prime Video, and Apple+ will sustain eventually. The reason for that is big tech is a winner, in the case of the global economy. Apple and Amazon can afford to spend millions to acquire consumers and maintain their loyalty. Disney can just leverage its original content at dirt cheap(er) price.


All of the above will eventually lead to one winner. It’s far too early to call who, but it will get exciting over the next few years. The future of at-home entertainment will be a customized experience for each consumer. Competition is a good thing. It keeps prices low and the quality of the entertainment offered high.

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