The Battle Between TV-Streaming Giants Continues, But Consumers Are the Real Victors Major streaming services via Netflix, Amazon, Disney and Apple continue to compete for subscribers. Here's what that means for you.
By Nick Platonenko Edited by Amanda Breen
Opinions expressed by Entrepreneur contributors are their own.
A new conflict is emerging online, and its fallout will have lasting ramifications on the media industry for years to come. The streaming wars are heating up, and while full-blown hostilities have yet to begin, one can see the battle lines being drawn. We also know the main combatants that will participate, particularly in the form of Apple and Amazon, but a number of other factions are prepared too.
The explosive growth of connected television (CTV) over the last 18 months has created huge new audiences for creators to tap into. A plethora of streaming services now exist with huge numbers of subscribers, from HBO Max's 50 million to Amazon's 150 million-plus subscribers on its Prime service, but exponentially growing audiences do not equate to shared opportunity. Indeed, the big fish in this industry are already looking for ways to take more of the market share for themselves.
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The richest waters are full of innovators
This may be the greatest battleground of the looming streaming wars: who can innovate the most to gain the biggest audience share. Companies like Disney, Netflix, Amazon and Apple recognize that consumers will not want to spend on all of their subscriptions, potentially costing hundreds of dollars, and will opt instead for a small group they deem to be worth the most money. This will likely be a catch-all service, one offering more than just video and TV content.
The benchmark, the golden goose of good content, will be a streaming service's ability to hit the 200 million global subscribers market like Netflix, and some are already well on the way. Amazon Prime will reach it soon, and Disney+ is aiming to reach 260 million by 2024, which, combined with Hulu (owned by Disney), would mean a total audience of nearly 300 million. If platforms are to reach this target, they will need to ensure that they continue to offer innovative and high-quality content while maintaining a loyal audience base.
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What can you add beyond video content?
Those streaming services that can provide interesting and innovative content beyond their usual services will have a significant competitive advantage, and we can already see how some companies will achieve this. Netflix, for example, recently announced that it was looking into podcasting and video games to bolster its current services. Disney is also looking into video games and is even experimenting with real-time sports betting, which is likely to significantly improve its appeal in international markets.
The second part may prove to be more difficult as whenever a product is altered or a company indulges in innovation, there is a risk that existing customers will decide that said product is no longer interesting to them. That means that streaming services will need to ensure that their churn rates are low and that the average time spent on their platforms is high. It's hard to gauge average churn rates across platforms as they typically don't release quarterly churn rates, but established services like Netflix and Hulu appear to enjoy lower percentages than relative newcomers like Apple TV.
How will advertisers respond?
This drive for new audiences and increased innovation combined with the requirement of retaining existing subscribers is naturally going to have a major effect on the ad industry. Advertisers are still grappling with the shift of most media consumers away from the television and couch towards CTV services. The upcoming streaming wars offer a good opportunity for advertisers to diversify and tap into this market.
We can already see innovative new ad techniques being used across streaming platforms — for example, on the video-game platform Twitch. Advertisers are now using stream display ads, which show up under or around somebody's stream and don't interfere with the user's visual experience, meaning the user doesn't miss any content. Targeted augmented reality ads, which use consumer data to create tailor-made ads that appear to pop out of the screen, can rapidly take advantage of emerging trends and offer considerable value for money.
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The customer is always right
It's important to note that consumers don't mind paying for ads as long as they have a positive effect on the cost of their subscriptions. According to Kantar, an international leader in statistical research and consulting, 49% of Americans agree that they don't mind seeing some advertising if it makes video-streaming services cheaper. Ad-based video on demand (AVOD) will likely be a key feature of the looming streaming wars as it can offer a good incentive to viewers combined with lower subscription rates.
Indeed, the choice presented between an AVOD-focused service or a subscription with a higher price without any adverts may be one of the key battlefields in the streaming wars. It looks like the rise of Disney and Amazon is almost inevitable while Netflix is getting nervous as users peel away at an increased rate, though its churn rate is still believed to be low. Innovative, cross-media services have been attempted and failed before, but now the industry is better prepared thanks to CTV's exponential growth, and regardless of who actually wins the coming conflict, the true victory will likely be the consumer.
What's the most important lesson to take away from all of this? There are a number of key factors, but innovation looks to be the most important battlefield in the coming streaming wars. Companies must be ready to take risks to secure a competitive advantage, and this applies not just to content, but also to pricing plans, subscription models and other areas too.
In almost every equivalent industry that has experienced something akin to the streaming wars, whether it be mobile phones, print media or even soft drinks, a few big fish will come to dominate the market. At the moment, Netflix is in decline but not dead, and Disney, Apple and Amazon look like strong contenders thanks to their vast financial resources. The other combatants face a challenge, but not an insurmountable one, and it will be fascinating to watch how the conflict unfolds.
