Is It "Winner Take All" In The Streaming Wars?

April 15, 2021 Hayden Schuster

I write about the future of Business, Psychology, and the Creator Economy. My goal is to educate, motivate, and create educational content for my readers. If this interests you, Subscribe to my “Predicting The Future” newsletter and get new articles directly to your inbox!

What will the future of “Streaming” look like? How are major players reacting to the ever-changing landscape? How will technology change the way we consume? These are all questions only time will tell; however, using data and statistics, we can make an educated guess for who might be successful in the streaming wars. It’s also important to note it may not be a winner-take-all. In fact, I have multiple subscriptions to various streaming platforms as we speak. Okay, let’s get into it.

To start, the Pandemic fast-forwarded the entire streaming industry tenfold. When the world was quarantining, watch time skyrocketed and powerful streaming services like Netflilx, Disney+ and others flourished.

Now, to clarify, I believe the “streaming wars” include any time-consuming form of entertainment that’s being streamed. For example, I include Twitch, TikTok, and Youtube as indirect competition to Netflix due to the fact that they’re both competing for our TIME. Therefore, In my opinion, there are three major categories of “streaming” to consider:

Traditional Streaming Services (Netflix, Hulu, Disney+, Amazon Prime Video, HBO Max, Peacock, Paramount+, etc.) This could be watching a Marvel movie on Disney+ or a binge-watch of the TV Show “Stranger Things” on Netflix.

Video Games/Esports + General Entertainment Streaming (Twitch, Youtube, FB Gaming, Live Sports, etc.) This could be watching your favorite streamer playing video games in a live tournament OR watching a cooking tutorial on Youtube. Note: In the future, it could include Agumented Technology or other breakthroughs.
Social Media Streaming (Facebook Watch, TikTok, etc.) This could be watching a Facebook Original TV Series or Scrolling on your TikTok feed for 4 hours.

I’m going to cover only Traditional Streaming Services today due to the fact that it’s currently most dominant. These services are what most of us know and love right now.; However, in the future, I might argue that Video Games/Esports + General Entertainment Streaming and Social Media Streaming will catch up significantly and potentially take the lead with total TIME watched. Okay, let’s get started:

Netflix

Current Subscribers: 204 Million (Industry Leader)
Market Share: 20% of US Streaming Market (As of April ‘21)
Q4 2020
Insight: CEO Reed Hastings says Netflix's biggest long-term threats are substitutions to movies and TV series, such as augmented reality, video games, or drugs offered by pharmaceutical companies.

Reasons for Netflix success in the future:

They listen to the wants and needs of their customers
Netflix is known for its data-driven approach to content and acquisition, looking at trends in what’s proving popular with its viewers to guide its strategy. Remember, Netflix entered the media industry at a time where VHS tapes were just beginning to lose popularity to the new technology of the DVD. Since then, the world has seen rapid growth and change in technology. Netflix has proven time and again that keeping up with the changing technology is vital to keeping customers happy and loyal to the brand.
Likewise, Their algorithm is a well-oiled machine of big data they will use to keep their content marketing strategy rolling for years to come. It’s brilliant. If they see their customer wants a new Reality TV Show, you already know they’ll use some of their $17 million to make it happen before their competitors.
They continue to focus on original content
Netflix invested $16+ Billion into their pursuit of increasing and diversifying their original content in 2020. In 2016, the company had just $11bn worth of content assets, which was split between 86% licensed content, and 14% original content. However, by last year, content assets reached $25bn and the split was now 54% licensed to 46% original. This shift is helping the company become less at risk of studios pulling their content because it has more of its own to showcase.1 With Disney, HBO Max, and others competing for subscribers, they will continue to pull their content, putting Netflix in a dangerous spot. Good thing they thought years ahead. Likewise, to compete with massive Movie Studio deals (Like Warner + HBO for example) to steal attention, Netflix expects to release one new original film every week this year. We’ll see if this works.

Scale of profit & growth worldwide
Oftentimes we forget we’re talking about most countries on this planet and not just here in the US. Sure, Netflix may be losing some Market Share to Disney+ and other competitors here, but elsewhere they’re flourishing and seeing monumental returns. Netflix said in its most recent letter to investors that it’s also looking for foreign language shows and films which can gain traction overseas. Netflix cited the example of Lupin, a French heist TV series which topped the rankings in markets including Argentina, Germany, Italy and Spain.2 Likewise, Infrastructure (like good WIFI) and Technology (Affordable TVs, Phones, & Computers) will continue to improve in poorer countries, giving Netflix and other streaming platforms a chance to add to their user-base over time. This benefits the industry leaders the most.

Disney+, Hulu, & ESPN+

Disney+ Subscribers: 100 Million!! (Launched Nov ‘19)
Disney+ Buget between $1.5 and $1.75 billion to spend on content in 2020. However, this isn’t the full story. Disney has invested billions in content across their various assets, which they can add to their streaming services.
Disney forecasts 260m subs by 2024 (and plans $17 Billion on Original Content), which could put it on track to eventually overtake Netflix, currently with 195m users
Hulu Current Subscribers: 40 Million | ‘20 Content Budget: 3 Billion
ESPN+: 12 Million Subscribers
All Three combined = Approx 152 Million Subscribers
Insight: Disney+ only took 16 months to surpass 100 million sign-ups — it took Netflix 10 years.
"The enormous success of Disney Plus, which has surpassed 100 million subscribers, has inspired us to be even more ambitious, and to significantly increase our investment in the development of high-quality content," Chapek said in a statement.

Q2 2010 - Q4 2020

Reasons for Disney+ success in the future:

They have a worldwide brand (+$$$) built with nostalgic content families love.
Over the past century or so, Disney has painstakingly defined itself as the leading producer of family-friendly movies and TV shows. Their best work, like the MCU and Pixar movies, have a universal appeal and can be enjoyed by both children and adults. Also, while Netflix and other streaming services (excluding Amazon Prime Video) has to keep raising subscription prices to ensure quarterly profits for their shareholders, Disney has enough capital from their box office dominion and merchandising empire to be able to sink billions of dollars into their streaming service without breaking the bank.3 This is a winning-recipe.
Bold, high-quality movie and/or TV Show premiers to draw new subscribers from around the world
We’ve seen this throughout their go-to-market strategy 6 months ago. Hamilton, Soul, Mulan, WandaVision, The Mandalorian, etc. Everytime they introduce a big new movie, the subscriber count sees a jump. They have the resources and the data to be successful moving forward.
Direct-to-consumer business is their top priority
YES, good adjustment in my book. As of October 2020 Disney has pivoted and is now restructuring its media and entertainment divisions, as streaming becomes the most important facet of the company’s media business. On Monday, the company revealed that in order to further accelerate its direct-to-consumer strategy, it would be centralizing its media businesses into a single organization that will be responsible for content distribution, ad sales and Disney+.4 This is how you level up, in my opinion.

Amazon Prime Video

Current Subscribers: 200 Million (Included w/ Prime Membership) as of April ‘21
Original Content Budget: $7 billion in 2020

Reasons for Amazon Video success in the future:

It’s FREE w/ a Prime Membership
As the ultimate free, video add-on for Amazon Prime members, the streamer has easily scaled its subscriber base to an estimated 200 million worldwide. Amazon’s ultimate goal is to add value to Amazon Prime Subscriptions, which is why they’ve expanded into many different industries, including streaming. It’s a natural transition.

Overall Presense
Amazon has an incredible amount of presence in most people's homes. Not only are millions of people getting packages from Amazon every week, but 34 million consumers have a Fire TV device hooked up to (or embedded in) their TVs. Owning the platform consumers stream video on is a huge advantage for Amazon. It can advertise its latest film or series to consumers every time they turn on their device. The user experience for streaming Prime Video content may be slightly better than streaming from other services on a Fire TV due to the deeper integration. It'll be hard for Fire TV users to completely ditch Prime Video for other streaming services. Amazon continues to make Fire TV devices more attractive and affordable in order to grow its presence on the television screen. And its widening lead in the streaming platform business indicates the strategy is working.5
Channels
I didn’t even know about this until recently. I bought a Fire TV Stick and my girlfriend said she only had HBO through the Amazon Video Channel, and I got curious. Amazon Channels is a surprisingly successful business for Amazon, estimated to bring in $1.7 billion in gross revenue in 2018. Analysts expect that number to be around $3.6 billion for 2020.
Channels offers a simple way for Prime members to subscribe to additional streaming services. It puts Prime content right alongside content from HBO, Showtime, and others. That reinforces the value of Prime Video content since consumers see it alongside the rest of their streaming content. It also embeds Amazon very deeply in the streaming ecosystem, making it hard to leave.
That's why others, including Apple, have made moves recently to emulate the Amazon Channels model. Apple is offering Apple TV Channels and will include its own content alongside that from HBO and others. Selling other streaming services is not only lucrative, it also increases the prominence and value of the distributor's streaming service.6

HBO Max

Current Subscribers: 41 Million (Carried over subscriptions from HBO Now)
HBO Launched w/ $1.2 billion and $1.5 billion to spend on content this year.
AT&T said it now expects global subscribers of between 120 million and 150 million for HBO Max and HBO by the end of 2025.7
Will Nix Same-Day HBO Max Releases in 2022 as Part of New Deal With Regal. Regal Cinemas agreed to Warner Bros. '21 day-and-date release strategy in exchange for a 45-day theatrical window in 2022.

Reasons for HBO Max success in the future:

Content Is King, & HBO Has A Deep Library

HBO's content muscle will be a big help to HBO Max, but AT&T isn't counting on HBO hits alone. The company is after licensed content, too. AT&T's biggest get is Friends, the 1990s sitcom that is among the streaming world's most coveted prizes.

In an era when licensed content is becoming scarcer, HBO Max will have it. In a tribal streaming market, that could make a difference. We already know Netflix's licensed content is a big deal to the service, especially in terms of total streaming hours (one possible explanation -- old sitcoms are easier to binge over and over again than modern serials and prestige television). Having something besides HBO originals is important, and having something as popular as Friends could be huge.8

Big Deal W/ Warner Bros Shows Upside & Futuristic Thinking

HBO Max released "Wonder Woman 1984" on Christmas Day, the same day it arrived in theaters. The movie made more than $16 million in its first weekend, the best opening during the pandemic. This could be a successful way to get people to subscribe to HBO Max. I will be closely watching the relationship between Warner Bros and HBO Max for the foreseeable future. I believe this strategy could pay off for them.

“The release of Wonder Woman 1984 helped drive our domestic HBO Max and HBO subscribers to more than 41 million, a full two years faster than our initial forecast,” said AT&T CEO John Stankey in a statement. 9

Apple TV+

33.6 million users at the end of 2019 to a projected value of 40 million by 2020
The majority of Apple TV Plus subscribers — 62% — said they were on the free promotional offer that Apple extended to buyers of its hardware devices, according to research firm MoffettNathan’s Q4 2020 SVOD Tracker report. 29% of those said they do not plan to resubscribe once the promo period expires; only 30% said they plan to renew at the regular $4.99/month price (and the rest were unsure).

Paramount+

Current Subscribers: 8 Million as of Nov 2, ‘20. (Rebranded + Launched March ‘21, current subscribers TBD)
ViacomCBS forecast streaming subscribers will grow to 65-75 million, mostly at Paramount+ as the company unveiled its new direct-to-consumer service to launch March 4.10
Viacom CBS will ramp up investment in pure streaming content to $5 billion in 2024 from $1 billion last year and that could accelerate if its services exceed subscriber growth targets11
Paramount has announced that A Quiet Place Part II will be releasing on Paramount+ right after 45 days of its theatrical release.12

Peacock

NBCUniversal's Peacock streaming service has signed up 33 million subscribers13
“The Office,” which moved from Netflix to Peacock at the beginning of 2021, has also been a key draw for the streaming service, according to NBCUniversal CEO Jeff Shell.
$800 million to $1 billion to spend on content, and CBS All Access, which has a content budget of $800 million, according to Bloomberg.

In conclusion, I believe we will see several big winners, including Netflix, Disney+, Amazon Prime Video and HBO Max; however, consolidation may happen and the landscape will change at a rapid pace. I will be watching big mergers and breakthroughs in the coming years. Likewise, keep your eye on Twitch, Youtube, TikTok, and many other streaming services that will continue to take our valuable TIME. We’ll dive into these platforms soon.

Thanks for reading! Have a wonderful weekend!

https://www.themedialab.me/7-key-factors-behind-success-story-netflix/#:~:text=With%20all%20the%20great%20and,customers%20glued%20to%20this%20platform.

https://videoweek.com/2021/02/09/the-2021-global-content-wars-whos-spending-what-and-where/

https://screenrant.com/disney-plus-beat-netflix-streaming-tv-movies/

https://www.cnbc.com/2020/10/12/disney-reorganizes-to-focus-on-streaming-direct-to-consumer.html

https://www.fool.com/investing/2019/06/13/reasons-amazon-prime-video-will-survive-streaming.aspx

https://www.cnbc.com/2021/03/12/att-expects-120-million-to-150-million-hbo-max-subs-by-end-of-2025.html#:~:text=Menu-,AT%26T%20raises%20HBO%20Max%20subscriber%20forecast%2C%20sees%20120%20million%20to,by%20the%20end%20of%202025&text=AT%26T%20said%20it%20now%20expects,million%20U.S.%20subscribers%20by%202025.

https://www.fool.com/investing/2020/03/01/reasons-to-believe-in-hbo-max-and-reasons-not-to.aspx

https://www.theverge.com/2021/1/27/22252069/hbo-max-subscribers-wonder-woman-1984-att-earnings

https://deadline.com/2021/02/viacomcbs-65-75m-streaming-subscribers-2024-paramount-plus-pluto-content-1234700657/

https://otakukart.com/435501/a-quiet-place-part-ii-premiere-date-for-paramount/#:~:text=Paramount%20has%20announced%20that%20A,Paramount%2B%20on%201st%20November%202021.

https://www.indiewire.com/2021/01/peacock-subscribers-2021-beats-expectations-1234612695/

Hayden 👟ster