Streaming Wars: Really?
Streaming wars is a common term we come across in news articles and discussions. But the question is: Is there really a streaming war? Because there is a war only when everyone wants the same piece of land. In the content world this is not the case.
People have been consuming content for a long time. People used to watch stage plays which transitioned into movie theatres and television which has transitioned into streaming now. Content hasn’t changed but how the content is consumed and when the content is consumed has certainly changed. In the past few years, we have seen eCommerce companies undergo a similar change. How and when of the ‘Shopping’ has changed but not what people shop for.
If we trace back as to what leads to a successful eCommerce company there are three things: a large catalog, speed of delivery, and quality of the buying experience. The parameters to be successful in streaming are similar except that instead of the speed of delivery there is the quality of streaming (Video, audio, and discoverability) quality.
Netflix:
Netflix has checked all of the boxes above. Netflix started as a marketplace (content aggregator). Now, it is the largest studio in the world and has content in every genre and for anyone and everyone in the house. Critics blame Netflix for burning cash to create original content similar to how Amazon was blamed in its earlier years. But unlike e-commerce companies, there is no marginal cost (the cost to produce one extra unit of a product) in creating content. And with good content you create assets for every dollar spent (think Seinfield). Also, Netflix has pricing power. I.e. When you have 500m customers, increasing the subscription by 1$ every year can help you cut the cash burn without losing customers. Netflix’s biggest weakness is that it has not been able to make its customer base buy something apart from the content given the high customer acquisition and retention cost.
Amazon Prime:
This is exactly the game Amazon is playing. By giving video free with Prime delivery, Amazon hit a masterstroke. They have data about what customers like, dislike, and have the cash to wait until they can monetize their prime video offering. However by selling movies and streaming content on the same platform, showing ads in between movies Prime has compromised on the customer experience. Also, their search algorithms (try searching for a movie with the wrong title and finding it) and their video quality (still not 4k?) have been a big letdown. Amazon has the technical know-how and more importantly the time to fix the above. But its weakest link seems to be knowing how to create good original content.
Disney:
And this is where Disney’s biggest edge is: knowing how to make great content for 100 years. Disney personifies happiness for all of us. With a big marketing muscle, brand image, and global distribution, Disney added a significant subscription base in a really short time. Disney’s content for family audiences is unparalleled. Also, it is the only platform that has sports, news and entertainment in one platform which makes buying is worth every cent. Its challenge is will it and can it move beyond the family genre that other streaming services seem to be comfortable doing.
YouTube:
Youtube is a marketplace where anybody can be the content creator and content viewer. They have the content, the best search, and ML algorithms to help you find the content you are looking for. It is a great market place and with its advertising model is the most affordable of all the above. To be a mainstream content player, there needs to be more than just the market place which means Google needs to produce original content. Being a technology company. Google hasn’t understood the original content creation yet.
Apple:
Apple has cash reserves to product content, a customer base that it can sell to. But the question remains whether people buy an Apple phone to watch Apple content or will they watch apple content because they have an apple phone. It is definitely the latter. And this leaves out half of the world.
Everyone mentioned above has a very different target segment that they cater to and different business goals. Youtube is a marketplace for any type of content for content creators, advertisers, and consumers. Apple’s primary target is Apple consumers. Amazon wants Prime Video to be an add on to make its package look sweeter. Disney wants more kids to come to its theme parks after watching content online. Netflix has a significant subscriber base but doesn’t know what to do with this subscriber base. Disney and Netflix are competing for the mainstream space but Disney has to play catch up on becoming a technology company which is not its core competence (Can be derived from their UI as well).
There are no wars in the streaming market because of dual citizenship, triple citizenship, and infinite citizenship is possible. There are 1000 channels and everyone still makes money because their target market is different. With technology, scale becomes easier but is not guaranteed. If you have good content you will have consumers. If you have a revenue model appropriate for your customer base, you will be successful. Content rules!
