Sparking a new boom in the Media & Entertainment world, streaming companies are continuously upping their game due to the nationwide COVID-led shutdowns. Established players in the industry are revamping their strategies to stay ahead of competition while new entrants such as HBO Max, Quibi, and Peacock are ramping up their efforts to grab the viewers’ attention.
The streaming landscape took a transformative turn when the entire world was forced to move inside their houses and search for new sources of entertainment. Presented with diverse choices when it comes to streaming platforms, cord-cutting across the globe has made individuals transition to streaming platforms, such as Netflix, Amazon Prime Video, Hulu, Peacock, HBO Max, Disney+, CBS All Access, Apple TV+, Tubi, YouTube, Quibi, Crunchyroll, and Shudder. One might not be paying cable bills anymore but would have to subscribe to a bundle of OTT platforms to keep up with all the content out there. As diverse types of content keep switching platforms, it can take a while to identify the type of content offered on each platform.
Streaming wars intensify
The intensifying of the streaming wars over the last few months due to the launch of several high-profile OTT (SVOD) platforms, cannot be ignored. A year ago, the talk was mostly around which platforms would survive alongside the OTT market leaders, Netflix and Amazon Prime Video. However, the OTT landscape changed swiftly when launch plans for high-profile streaming platforms such as Apple TV+, Disney+, HBO Max, Peacock, and Quibi started to float. The companies had even set aside millions for marketing and promotion. The entrance of the new platforms prompted subscribers to sign up for one or more platforms.
Here is an overview of the new entrants in the OTT space primarily responsible for the intensifying the streaming wars.
Since its launch in November 2019 in the United States, Disney+ has been an enormous success. According to Bob Chapek, CEO, Walt Disney Company, by August 2020, the platform recorded more than 60.5 million paid subscribers. After a year of its launch, Disney+ has reached a new record of 73.7 million subscribers (CNBC). The growth path has been phenomenal, considering the goal of the company at the time of its launch, to reach from 60 to 90 million subscribers by 2024 (CNBC).
Disney+ is quickly catching up with Netflix, which recently announced having recorded 195 million subscribers. The timing of Disney+’s European launch played a significant role in its success, as it was launched just before the COVID-19 lockdown. Viewers were already seeking more entertainment sources when the lockdown began, giving Disney+ the required momentum to succeed in Europe.
Although credit must be given to Disney’s powerful brand awareness campaign, tactical bundling (such as Disney+/Hulu/ESPN+ bundle for the US audience) helped in expanding the reach.
Currently available only in the US, owned by AT&T and WarnerMedia as its parent company, HBO Max was launched on May 27, 2020. The VOD service automatically provides subscriptions to individuals who are subscribed to HBO, providing a jumpstart in terms of subscriptions. The company recorded 36.3 million subscribers in the US by the end of the second quarter, growing slowly from 34.6 million in 2019 end (IBC). As predicted by AT&T, by 2025, the company aims to have 50 million subscribers in the United States.
Being one of the most expensive OTT platforms in the US (subscription fee of $14.99/month), HBO Max has two core goals – the “activation” of the existing HBO channel through the current customers and the use of the extra Warner/Tuner content to grow the audience base, especially the young families.
The content strategy of HBO Max focuses on premium content, with ample amount of high-value content for the audience to choose from. This is being built on HBO’s reputed brand image that is associated with high-quality shows. With plans of international expansion in South America, parts of Eastern Europe, and a few parts of Asia, HBO Max focuses on original content production to entice the audience.
An AVOD (Advertisement video-on-demand) service, Peacock provides three subscription tiers – Free, Premium, and Premium Plus. Viewers can access limited content on the platform with ads interspersed in the ‘Free’ plan. In the ‘Premium’ plan, viewers have access to the full content library with advertisements. In both the ad-supported plans, commercials are capped at 5 minutes/hour. The Premium Plus plan provides access to the full content library without ads.
Experts believe that these three subscription tiers are incredibly attractive as the advertisement load is lighter than traditional TV, which has commercials for 11 minutes/hour on an average.
NBC Universal had planned to launch “Peacock” alongside the 2020 Olympics. Even though the Olympics had to be postponed due to the pandemic, the company was able to launch the platform as scheduled.
Apple’s concentrated effort to enter the streaming space is hard to analyze as the company has not released any numbers yet. The service, which is freely available to anyone who purchases the new Apple iPhone or computer, provides a very narrow selection of original content.
In January 2020, a report by Ampere Analysis stated that Apple TV+ had around 33.6 million subscribers in the United States alone (IBC), with a majority enjoying free subscription period. Apple’s biggest challenge will be to retain the customers after their free subscriptions end. The limited content on the platform is going to make things more difficult.
Impact of the streaming wars on the OTT landscape
The fierce competition by the new entrants has not affected the market leader Netflix as, by the end of second quarter, the company recorded nearly 200 million paid subscribers (CNBC). A study published by Piper Sandler states Netflix subscribers are the most likely to remain loyal to the brand, post-pandemic. Stocks of Netflix witnessed an all-time high after this survey was published. The survey also revealed that 41% of Netflix subscribers are likely to continue their subscriptions even after lockdowns get over while 28% of Amazon Prime Video subscribers would remain loyal to the brand. The long haul will be followed by 17% of Disney+ subscribers, 19% of cable TV subscribers, and 7% of HBO Max subscribers.
Disney+ has primarily attracted young adults and individuals with children therefore, the success of the platform has not impacted the big players, such as Netflix and Amazon Prime Video yet. Similarly, for HBO Max, most of the initial subscriber base consists of existing HBO subscribers, which again does not pose a threat to the big OTT players.
The impact of the high-profile new entrants will also vary according to region. For example, the market in the Nordic countries will witness less competition than others as people there are accustomed to stacking and have more budgets for video on demand.
Interestingly, the biggest impact of the high-profile new entrants in the OTT space has been on the traditional broadcasters. Due to the nationwide lockdowns, there was a surge in streaming and traditional TV viewership. While the streaming platforms kept enjoying the upward graph, traditional TV viewership declined from its peak to 3 hours 2 minutes per day, i.e. witnessing a sharp decline of 44 minutes, by June end. According to Ofcom, although broadcast TV viewing remains 11% higher than the last year same time, it is lower than it was in 2014–17.
The COVID-19 pandemic has led to a change in the viewing habits and preferences of people.
SG Analytics conducted a survey of over 1,500 viewers of digital content across the US to understand viewing habits and subscriber preferences. Download the whitepaper here: OTT Viewing Platforms
The arrival of “streaming wars” was publicized by analysts and journalists when the legacy media companies decided to flood the streaming video market with their own platforms. Even with such increased competition, OTT leaders such as Netflix have held their ground strongly. The large Media & Entertainment companies believe that streaming is the future. Many of these companies including Disney have waited too long to enter the OTT media space and are now executing strategies that will help them leverage their highly profitable legacy business to become successful in the streaming space. A report by PwC states that viewers will be willing to pay for only three to five streaming services.
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