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The streaming industry has become a cultural obsession. These days it is hard to find someone who does not have a Netflix account or at least a Hulu one. Netflix has north of 149 million active subscribers and was responsible for 15% of all internet traffic in 2018. The industry is showing no signs of slowing down and Netflix is now well-established internationally, being available in 190 countries. They boast a market cap of $155 billion and their stock is trading around $350 per share.
Subscription services are an excellent money maker, especially when they are experiencing rapid growth as Netflix and Hulu have. The entertainment industry is not going anywhere and consumers will always be eager for new content to watch.
In the past couple of years, some big players have announced plans to enter the streaming industry and capture some market share. Some of these giant companies already have huge content libraries and others are multi-billion dollar powerhouses ready to get involved. The streaming industry is poised to change over the next few years as there will be a variety of enticing services to choose from with diverse sets of high-quality content. Let’s take a look at the five premier players with the best odds to win the upcoming streaming war!
We will start with the undisputed leader in streaming with 149 million+ subscribers and a 71% market share. Netflix is the obvious pick to win the streaming wars since they are the pioneers of the industry. Being the first to market is a huge beneficiary in business and creates a steep hill to climb for all competitors looking to enter the market. They have been heavily investing in original content for years, with titles like House of Cards and Black Mirror.
The biggest key for Netflix to remain on top will be the success of its international business. They added 7.31 million international subscribers in Q4 of 2018 alone, and CEO Reed Hastings predicts that eventually, they will account for upwards of 90% of all paying subscribers. The international market represents enormous growth opportunities for streaming platforms, specifically in Asia, where there is a massive young, tech-savvy population.
Consumers often tend to be resistant to change. Netflix already has 51% of adult Americans subscribed to its service, so it may take a lot to convince them to abandon their current platform, which they have become so accustomed to. However, as big media giants get involved, we may see many titles being pulled off of Netflix, possibly resulting in them relying strictly on their originals going forward.
Netflix has a huge lead over the competition and already has a strong international presence. Those reasons, along with their extensive list of successful original content make them the front runner of the streaming war.
In 2011, Amazon CEO Jeff Bezos announced that Amazon Prime members would now have access to over 5,000 movies and tv shows ad-free. Today, over 100 million people globally have Amazon Prime. Not many viewers exclusively watch Prime Video, however, as most prefer the content on Netflix. Amazon has superior financial backing compared to Netflix and could easily outspend them on original content in the coming years.
Amazon has certainly shown ambition in growing its streaming platform by allowing users to purchase an Amazon Video only package at half the cost of Prime. They have also made major content acquisitions, including the Lord of the Rings series and Thursday Night Football.
The success of Amazon Video will depend on how much money they decide to pour into original content, and which further acquisitions they make.
Apple revealed its intent to launch a major upgraded streaming service, Apple TV+, this past spring. The service is expected to be released sometime this fall, but details regarding price remain unknown. Apple TV+ will include content from over 150 streaming apps, including Amazon Prime and Hulu. The app will be available in over 100 countries and will be usable on a variety of devices.
Apple announced plans to invest $2 billion this year on producing original content. They showcased a star-powered team of actors and actresses who will be a part of their original series; the team included: Jennifer Aniston, Reese Witherspoon, and director Steven Spielberg. The success of their original content will be the x-factor here, as it is with most of these streaming services.
Apple’s service will reportedly not use ads, so it will likely be relying on a subscription-based model for revenue. Apple has a history of redefining sectors of technology, most notably computers and phones. Will TV be their next victory?
This year, Disney has emerged as a serious contender in the streaming industry with the announcement of their service, Disney +. The Disney brand has incredibly loyal fans, and they possess a gigantic content library, which includes Pixar films, Marvel, Star Wars, National Geographic, and all property of Fox, whom they recently acquired for $71.3 billion.
Disney +, set to release on November 12th, will be ad-free and cost $6.99 per month, cheaper than Netflix at $8.99 per month. This price undercut is a wise move on CEO Bob Iger’s part because it will serve as a competitive advantage, being the best option for price-sensitive consumers. They are predicting the service to reach 60-90 million subscribers by 2024.
In addition to the previously mentioned property of Disney; they also own ESPN and a majority stake in Hulu. Having the edge in sports should serve them as another competitive advantage in the industry. Disney can afford to be patient as they grow Disney +, thanks to their large revenue streams from the theme parks, merchandise, and other assets.
Multi-national media conglomerate AT&T has also announced its plans to enter the streaming wars. Their service will include Cinemax, HBO, and the recently acquired Time Warner content. The enormous, yet necessary purchase of Time Warner gives them the rights to CNN, TNT, TBS, Warner Bros titles, and more. The service is rumored to cost $16-17 per month, but do not be surprised if we see a tiered pricing approach.
AT&T’s streaming service is a safe bet to be popular due to its wide range of offerings. Their monthly price appears high at first, but HBO Now reached up to 8 million subscribers this past spring despite a relatively high cost of $14.99 per month. Now AT&T is essentially taking that service and adding the ridiculous amount of content from Cinemax and Time Warner, for just a couple extra dollars per month.
And the winner is…
As the streaming market becomes more competitive, it will lead to better content as more money is allocated towards boosting the platform’s offerings, and a price war with companies trying to undercut one another. Both of these outcomes are great news for the consumer!
In all likelihood, there will be multiple thriving competitors in the streaming war generating huge profits, with no distinct winner.
Streaming services have proven to be wildly popular with consumers, and each of the five we looked at has unique selling points that appeal to a wide audience. Many of the titles featured in these services have highly loyal fans, who will feel obligated to buy the streaming services that offer their favorites. The quality of the original content on these platforms will be a key factor in their growth.
The five services we analyzed are all backed by companies with tremendous amounts of capital to ensure their success. It will be common to see people subscribing to multiple services due to the diversity of content and original titles of each platform.