The streaming wars have started to heat up!
In 2020, the total number of subscribers of the top nine streaming services in the United States, including Netflix, Prime Video, and Disney+, grew by more than 50%.
The streaming wars are now fighting over a total paying audience of nearly 250 million.
Americans per household now subscribe to an average of 3.1 streaming services, up from 2.7 in 2019.
The current leading power of the streaming wars is Netflix.
Back in 2007, Netflix, a DVD rental company, took a bold step to transform itself. It invested in a streaming service that gave all of its subscribers the option to stream their inventory online.
Netflix later introduced a bold way to release their shows so that all episodes would be available online at once. This experience became so popular that, over time, viewers’ appetites increased. The days of watching only one episode a week were over.
In less than a decade, Netflix has almost single-handedly introduced the world to the power of streaming. The rapid rise of Netflix has completely changed the way that the public consumes film and television, restructuring the entire entertainment industry. In 2017, Netflix had more subscribers than all cable TV viewers in the United States. In May 2018, Netflix’s market value surpassed Disney for the first time.
As Netflix and Amazon’s streaming platforms are blooming with original movies and television content, Hollywood and Silicon Valley giants are eager to get in on the action. As a result, Disney, Warner, Universal, and Apple have all started to adjust their business models, determined to join the industry of media streaming.
In 2019, two new streaming platforms, Apple TV+ and Disney+ were launched. In the spring of 2020, NBC Universal and Warner launched their streaming services Peacock and HBO Max.
Now, the players are in place, ready to join the “Game of Thrones” of streaming territory.
Launch date: November 2019
The original tactic of the Disney empire was not to directly confront other streaming services, instead it wanted to absorb its rivals. Disney Chairman Robert Iger once asked the founder of Netflix, Reed Hastings, how much he would sell Netflix for. Hastings promptly rebuffed the offer and said: “Not for sale!”
Instead, Disney acquired Fox, which has a large inventory of IP, film and television works. In January 2020, 20th Century Fox was renamed 20th Century Studios, and Fox Searchlight Pictures was renamed Searchlight Pictures. Goodbye, Fox!
Disney also bought out the equity of Hulu, a streaming platform with a younger user base, and started to build its own version, which we now know today as Disney+.
In 2018, Netflix’s “Defenders series” under Disney’s Marvel Entertainment was canceled. As the streaming business becomes clearer, Marvel’s TV division is being completely restructured. Kevin Feige, creator of the Marvel Universe, will develop original series for Disney+ through his Marvel Studios, bringing the Marvel Universe to a future where big-screen movies will be linked to streaming shows in real time. The Marvel brand has now achieved an unprecedented unity.
When Disney+ first launched, it offered viewers more than 7000 TV episodes and 500 movies for $6.99 a month. You’re paying the price of a coffee for a month’s access to the Disney, Pixar, Marvel, and Star Wars franchises. Did I mention Fox’s ‘Avatar’, as well as all 30 seasons of ‘The Simpsons’?
The price is the second-lowest among the “big six” streaming platforms, due to the relatively small amount of content that Disney+ offered when it launched. Its original and exclusive new content relies on the Star Wars spin-off ‘Mandalorian’. For copyright reasons, some Marvel movies will have to wait a few years before they can be watched on Disney+.
Disney expects the content on Disney+ to grow to 620 movies and 10,000 episodes by 2025. Original series featuring “Loki”, “Winter Soldier”, “Wanda Vision”, “Hawkeye” and other Marvel stars are all already in production. They are sure to bring more fans to subscribe once they go online.
Disney+ will continue the Disney brand of family-friendly content for younger audiences. This means that you won’t be able to watch controversial or adult content on their platform. If you do want to watch an R-rated movie, don’t panic. You can buy Disney’s “All in the Family” package for $12.99 a month that includes membership to Disney+, ESPN+, and Hulu with ads.
Launch date: March 2007
Although it has far less content than Netflix or Amazon, Hulu is still able to provide its 28.5 million members Emmy winner shows like “The Handmaid’s Tale” and “Casual,” as well as sitcoms like “The Mindy Project”. It has been popular in North America with a new generation of socially engaged young viewers.
Hulu in the future will be a vital part for Disney’s streaming to attract mature audiences. In March 2020, Fox’s FX Network will launch a separate channel for Hulu, called “FX on Hulu”. FX’s existing signature shows, “American Horror Story” and “Pose” will air exclusively on Hulu’s platform.
Last but not least, Robert Iger announced that Fox Searchlight Studios will also produce original films for Hulu. Over the past 25 years, Fox Searchlight has produced more than 200 films and four Oscar winning movies.
HBO paid $1 billion for the copyrights of Searchlight films, under a ten-year contract that expires in 2022. “The Shape of Water”, “The Grand Budapest Hotel”, “The Favorite”, and “Black Swan” are among the 200 Searchlight movies which are expected to appear on Hulu in the near future.
Launch date: November 2019
In September 2019, the streaming media Apple TV+, which has been in preparation for three years, made its debut at Apple’s launch event. It announced that Apple TV+ would go online simultaneously in more than 100 countries on November 1.
Apple TV+ launched with eight original TV shows. “The Morning News”, starring Jennifer Aniston and Reese Witherspoon. A sci-fi series “See”, with production cost at $15 million per episode, starring Jason Momoa. The broadcast mode of Apple TV+ combines Netflix and traditional TV broadcast mode. It will adopt the combination of whole series broadcast and weekly broadcast.
Being rich and wayward, Apple relentlessly invested in their streaming service. Steven Spielberg, Alfonso Cuaron, J.J. Abrams and other renowned directors have all signed lucrative production contracts with Apple to create new original series for Apple TV+.
Just gathering stars isn’t enough. Apple TV+ has bought the rights to remake Asimov’s “Base” and is planning to develop an IP product around this sci-fi as well. Apple’s ambition is not only in the TV business. Films are their next target. Talk show queen Oprah Winfrey is teaming up with Apple TV+ for a documentary. Apple has also partnered with a lot of award-winning works like “Lady Bird”, “Room”, “The Farewell”, and “Moonlight”.
Like Disney+ and Netflix, Apple TV+ content is ad-free. But Apple TV+ has less contents and which leads to a cheaper subscription fee of only $4.99 per month. Customers who buy the new Apple product will also get a free one-year Apple TV+ membership.
Launch date: May 2020
Backed by AT&T, North America’s largest mobile operator, Warner Bros announced that it will launch HBO Max, a streaming platform, in May 2020. Offering subscribers more than 10,000 hours of TV and movies, including more than 1,800 movies, as well as some of HBO’s hit shows over the years.
Warner’s decision to bundle with HBO is largely an attempt to use the new platform to combine Warner’s IP properties with HBO’s signature “premium content”. In this way, it can give the impression that HBO Max is a must-have product for every family.
HBO, the Cartoon Network, TNT, TBS, and CNN, these traditional channels accumulated a vast number of film and television shows. Warner Brothers, a huge video library, contains “DC series”, “The Hobbit”, “The Matrix”, as well as “Casablanca”, “Shining”, “Singing in the Rain”, and “Citizen Kane “. Such classic series masterpieces will be presenting to all subscribers in HBO Max.
At the age of streaming media, classic comedies have become more and more popular for every household. Most viewers come home after a long day of work, and they just want to turn on TV and watch a joyful sitcom. HBO Max bought back “Friends” from Netflix for $500 million. And that’s not even the biggest expense. HBO Max also paid close to $1 billion for five years of exclusive online rights to “The Big Bang Theory”.
Animation series have long been the most widely broadcast and attractive contents on streaming media platforms. HBO then hijacked Hulu’s most popular animated series, “South Park” and “Rick and Morty”, for $500 million.
With “South Park” and “Rick and Morty” attracting adult animated fans, HBO Max has not forgotten its younger audience. Warner Bros will create 80 new episodes of the animated classic “Bugs Bunny”, as well as buying the “Sesame Street” franchise to appeal to a wider family audience.
HBO Max hopes to launch 31 original series on the platform in 2020 and another 50 in 2021. Most of which will air on a weekly basis and keep HBO’s original programming and distribution model.
DC will use HBO Max to produce original series such as “Green Lantern”, “Strange Adventures”. Comedy newcomers such as Mindy Kaling and Esha Rae will also develop shows for HBO Max to keep women in the audience.
Quality and commitment mean higher prices, with HBO Max set at $14.99 per month, it has become the most expensive service of all streaming channels. But HBO itself is also pricey, and audiences in North America who already subscribe to HBO will automatically switch to HBO Max membership, with no additional charges and no ads at all.
Launch date: April 2020
Universal, one of the “Big Five” companies in Hollywood, joined the battle of streaming media after Disney and Warner Brothers started streaming media. NBC Universal, which started as a television company, will launch a new streaming service in April, called Peacock, in order to match NBC’s iconic Peacock logo.
At Peacock’s launch event, users will be able to choose from more than 15,000 hours of TV and film content, including NBC sitcoms such as “The Office” and “Parks and Recreation”. NBC paid $500 million to buy “The Office” back from Netflix to stream on its own channel in 2021.
Peacock also unveiled a number of original contents at the launch event, including Alec Baldwin and Jaime Dornan’s “Dr. Death”, as well as a rebooted sci-fi series “Battlestar Galactica”.
NBC’s North American broadcast of the Tokyo Olympics will also be available on Peacock’s website, which will attract more subscribers from this popular event.
In terms of pricing, Peacock takes the unusual route of offering a free (with ads) version and a paid (ad-free) version. At a time when all other streaming services are trying to drive advertisers out, Peacock is opening its doors to let in more advertisers.
Launch date: September 2006
Amazon, the world’s largest e-commerce company, experimented with a streaming service even a few months early before Netflix. After 13 years of development, Amazon’s streaming platform, Prime Video, now has 1,981 series, 18,405 movies. Prime Video has a large library of content and priced only at $8.99 a month. Amazon Prime members in North America will automatically get access to Prime Video for free.
In terms of original content, Prime Video has kept them in a relatively high level. Hit shows such as “The Man in the High Castle”, “The Marvelous Mrs. Maisel”, or last year’s alternative superhero drama series “The Boys”. You don’t see this series was made by an “outsider” whose origin is an e-commerce company.
Under the competition from other streaming services, Amazon has also joined the “cash war”. While developing its own IP, it bought the TV adaptation right of “The Lord of the Rings” and spent $1 billion on the series, hoping it would fill the void left by the end of “Game of Thrones.” At the same time, it also cooperates with NFL and ATP Tennis Masters to cover the live programs of a large number of popular events in Europe.
Launch date: 2007
Netflix has 158 million subscribers worldwide, covering 190 countries. Netflix holds a 54% share of the global SVOD market, far ahead of Amazon’s 30% market share, making it the most powerful player in the current streaming service battlefield.
Netflix had more than 1,500 TV series episodes, more than 4,000 movies in stock, and produced more than 1,500 hours of new original movie and television content in the past year. Netflix sticks to an ad-free strategy, relies on subscriptions for revenue. Due to high cost and high-quality original contents, the subscription price has been rising each year. Currently, a standard subscription to Netflix North American members costs $12.99 a month, second to HBO Max, and if you want to upgrade to Ultra HD, you have to buy Netflix Premium for $15.99 a month.
Popular sitcoms purchased by Netflix, such as “Friends” and “The Office” have been redeemed by their original owners and sold to Netflix’s rival platform. Under pressure from its lack of its own sitcom, Netflix paid a huge amount on comedy “Seinfeld”, which will be available exclusively online from 2021.
Netflix’s early entry into international markets has eased the pressure on North American subscriber numbers to reach the full capacity. Unlike its rivals, Netflix will not only take Hollywood movies and shows to the world, but also customized the content to Canada, Japan, South Korea, Indonesia, South America, Taiwan and other places. Tailor-made original drama for the local audience, making the overseas strategy very down-to-earth.
Netflix has also been more eager to find new alliances to boost its original content business. The Nickelodeon cartoon network, creator of “Teenage Mutant Ninja Turtles”, and “SpongeBob” has signed a long-term deal with Netflix. The two companies plan to work together to create original animation, which will be available through Netflix.
In recent years, Netflix has moved into Hollywood and targeted the “Big Screen”. Movie hits like “Roma”, “The Irishman”, and “Marriage Story”, as well as commercial productions like “Six Feet Under” all have challenged the comfort zone of Hollywood’s blockbuster studios.
Earlier last year, the Motion Picture Association of America (MPAA) officially accepted Netflix as the seventh member of Hollywood’s traditional “Big Six”. It means Netflix is officially on the same level with Disney, Warner, Universal, Sony, Paramount and Fox. Now Netflix has transformed from being a pure recipient of content to a producer of original movies.
Who Is Winning the “User War”?
The number of subscribers is the life of streaming media platforms. And it is also the main battle field for major platforms to compete. More subscribers mean more profit space.
Disney+ already had 1.9 million North American subscribers before its launch. Within 24 hours of the launch day, Disney+ announces 10 million new users on the platform, far exceeding Disney’s initial expectations. Within five years, Disney+ hopes to grow to around 60 to 90 million members.
Apple TV+, which has 4 billion users on Apple devices, spend up to $40 million promoting new and original shows on its platform.
Warner has set a target of 50 million North American subscribers for HBO Max by 2025, which currently has about 38 million subscribers in North America.
At its current pace, Netflix’s dominance of the subscriber market is unlikely to be challenged any time soon. It may take a few years to generate a winner in this “user war”.
Who Is Winning the “Content War”?
The impact of streaming media on the movie industry is yet to be determined, but it has already permanently reshaped the television industry. It is radically changing the way viewers consume home entertainment.
The rise of streaming giants like Netflix has directly taken the jobs out of traditional television networks. North American networks have seen rating declines in recent years. The rating of “This Is Us” season 4 dropped more than 25 percent. Audiences today may still watch major live events and news on TV, but that is not necessarily the case for film and television.
Disney+ reported to spend $1 billion on original content in 2020. Apple’s production budget for the Apple TV+ is capped at $6 billion, while AT&T says it has budgeted $2 billion for HBO Max’s initial launch.
And it’s not just TV shows that benefit from the streaming war. Filmmakers are also enjoying the benefits of the streaming war. The dilemma that good works have no access is solved in an instant. Potential hot movie projects that once suffered from not having a studio to fund their release have changed. As streaming platforms’ demand for original content has grown, film-makers has become the target for new platforms to scramble for.
The Hollywood industry believes that creative people who can really tell a story will meet a golden age in the streaming media era. Whatever the future of the streaming market may be, viewers and filmmakers will not become the losers in the content war.
Who Will Have the Last Laugh in the Streaming “Game of Thrones”?
The new streaming media units are burning money to grab users. This war is full of “knives and swords”, but the result may not be as deadly as everyone imagines.
In a user survey conducted on the day Disney+ launched, 34% of new users also had accounts on other streaming platforms. Netflix CEO Hastings believes that consumers will subscribe to multiple streaming platforms in the future. So, subscriber numbers will not decline, and the battle will be won or lost by measuring the amount of time viewers spend viewing content on each platform. Netflix’s rapid subscriber growth is driven by the volume of content that brings new shows online every few days.
Warner’s choice of HBO’s brand for streaming HBO Max is also a double-edged sword. HBO’s brand is designed to highlight the quality of the original series, but it is also likely to turn off younger viewers and those who are looking for more entertaining content. The integration of DC and other pan-entertainment content will be the fuel for HBO Max to go further down the road of streaming.
Peacock is one of the unconventional platforms in the streaming war. Peacock Network was originally designed to serve the existence of Universal NBC’s parent company, Comcast Corp. Their business goal is not to compete with other competitors for user traffic, but to preserve the cable network’s lifeline – advertisers.
When it comes to Apple TV+, even Apple’s CEO Tim Cook has admitted that the biggest problem with Apple TV+ is that “we don’t know how to do content.” The eight shows aired on the first day of Apple TV+, including the heavily funded “The Morning Show” and “See” received many negative reviews by audiences. Apple’s arrival on the streaming platform was meant only to add to its existing business. Overtaking Netflix or Disney+ was never its goal. But even after a rocky start, Apple TV+ is willing to invest heavily to continue the experiment.
As a unit of Amazon, Prime Video doesn’t have to care as much about profitability as Netflix does. Faced with the threat of new streaming platforms, Prime Video began to adjust its existing strategy, focusing on maintaining existing subscribers and trying to provide a more holistic service for Amazon Prime members.
No live streaming, no parent company, and no advertisers. Netflix is both a pioneer and a lone ranger in the business. Under the impact of other five competitors, Netflix is reexamining its content product strategy. Netflix is cautiously renewing old shows, and for those which are getting expensive to produce, Netflix will put an end to the show. Popular shows “Dear White People,” and “Bojack Horseman” were ended after six seasons. As Netflix is about to hit the ceiling of membership growth, the only way it can continue to make money is by becoming more like Disney, using hit shows’ IP like “Stranger Things” and “The Crown” to lure more loyal members.
So, which company are you rooting for in the “Game of Thrones” of streaming?
Written by Yiheng Zhang
Edited by Adele Su Yan Teo, Jimei Shen, Calvin Ma & Alexander Fleiss