The next saga in the “streaming wars” is about to begin, and investors have a lot of options to weigh.
Ever since
Netflix Inc. (
NASDAQ:NFLX) exploded onto the scene and took every household by storm, media companies have been itching to capitalize on their own properties and get a piece of the lucrative market. Over the past few years, the major competitors were
Amazon.com Inc (
NASDAQ:AMZN) with Amazon Prime Video and Hulu, which is controlled by majority shareholder
The Walt Disney Company (
NYSE:DIS).
The new competitors definitely managed to grab a slice of the pie, but next month marks the start of a massive shakeup. On Nov. 1,
AppleInc. (
NASDAQ:AAPL) is launching its own streaming service, Apple TV+, at a lower price than all competitors. Just a few weeks later, Disney will flex its status as the largest media conglomerate in the world with the family-friendly Disney+.
As if the scene won’t be crowded enough, the cable conglomerates aren’t looking to be outdone.
Comcast Corp. (
NASDAQ:CMCSA) is set to launch it’s own service for
NBCUniversal called Peacock in April 2020,
AT&T (
NYSE:T) will utilize
WarnerMedia’s assets for HBO Max also slated for Spring 2020, and
CBS Corporation (
NYSE:CBS) is looking to capitalize on the momentum and push to expand on its already live CBS All Access service.
For investors, the choice isn’t just which streaming subscription you want in your home, it’s which will likely to see a return. Make no mistake, the streaming wars are big money and a long-term game. NBCUniversal obtained the rights back to the most popular show on Netflix,
The Office, for
US $500 million, and WarnerMedia snagged back the sitcom
Friends for
US $425 million. Netflix alone reportedly spends
$1 billion on content each month.
So the question is, who will win out? Which streaming services will stand tall and make money, and which will fall by the wayside? After talking to our resident tech experts and investors, Stockhouse has you covered with some of our picks for what’s to come.
Survival of the Biggest Libraries and Bankrolls
One thing almost all experts agree on is that the streaming wars will be
a war of attrition. Even if some of the services to struggle out of the gate, don’t expect them to fall out of favor that quickly. Not only do massive media companies have a lot invested in these services, but they also have the ability to weather the storm.
The winners of the streaming wars will be the companies that survive through a solid subscriber base and healthy content library. Though Netflix will take a beating, it currently has the base and bank to
outlast the competition, with the most-watched original content and hits like Seinfeld on the way.
As for new services, Disney+ has an
edge that can’t be beaten. With a library of more than 300 movies, including almost all Disney, Pixar, Marvel, and Star Wars movies, it’ll be hard for many parents to ignore. Throw in 61 originals in development and one of the lowest prices at $6.99, Disney’s strategy is clear: take an early financial hit while undercutting and massively growing.
The big question mark is Amazon Prime Video. It currently has a healthy subscriber base courtesy of Amazon Prime subscribers and it’s own impressive lineup of original content. Unlike Netflix, which is reliant solely on the streaming service, the company also has plenty to fall back on. Unfortunately it will have a tough time growing as the streaming service lacks the brand power of its competitors. It will survive, but it’s hard to tell if it will thrive.
New Streamers not named Disney will Struggle
The rest of the competition all have at least one key weakness that makes them troublesome as investments. The biggest surprise will likely be Apple TV+, which has a
low price and massive subscriber base of eligible iOS devices, but barely any content.
Users will try out the service, but unless the service is able to quickly grow its library, it won’t be able to retain or attract new ones.
For the cable streamers of HBO Max, Peacock, and CBS All Access, the biggest problem will be growth. Their parent companies are putting their all behind the endeavours, but the money invested has led to some absurd pricing and
target subscriber numbers that are more than Amazon Prime Video and Hulu’s subscribers combined.
They each have a few big shows, and they are each able to tap into existing cable clients, but growth is a different story. A continuing trend of cord-cutting and lack of current mainstream offerings will likely make these the last option customers will consider. A late start sets them back even further (compounded with many big shows only trading hands in late 2020 or 2021).
That leaves Hulu, one of the existing streamers that will likely struggle. It currently has a solid subscriber base, but the new cable streaming services will target the same audience and entice cable subscribers with a free service. Thankfully, it has Disney’s support and is an optional bundle along with Disney+. If it survives long enough for other streamers to fall (extremely likely), it’ll recover strongly.