Are you ready for the great streaming wars of 2019?
Forthe last decade Netflix has rapidly built an empire that was morethan just a new way to watch television and film. Netflix pioneered the on-demand subscription model of streaming mainstream movie and television content over the internet. From releasingentire seasons in one fell swoop, to blurring the line between a TVseries and a film, Netflix was not just a disruptor in an industrythat had become complacent, it was a nuclearbomb, forever dismantling an entire entertainment business model.
Audiencesmaking the transition to streaming have had it easy over the past fewyears, only having to navigate a small handful of offerings. Netflix,Amazon, and Hulu, plus a few smaller niche entries made subscriptiondecisions relatively straightforward. However, the first phase of thestreaming transition is now over and as we look towards 2019 andbeyond we see a looming battleground with every large media companybeginning to catch up.
Over the next 12 months several majorplayers will look to challenge Netflix's supremacy – Disney, WarnerMediaand Apple are all entering the streaming fray. So get ready to makesome choices as the streaming landscape fragments.
Netflixis not a television network, Netflix is television
Moreprescient observers may have better read the writing on the wall butthe rise of Netflix, and streaming in general, seems to have takenmuch of the entertainment industry by surprise. Back in 2011, BrianRoberts, CEO of Comcast, the company overseeing NBC, one of thelargest broadcast networks in the United States, expressed greatpositivity at this young streaming upstart called Netflix. Robertsessentially saw Netflix as value-adding the large back catalog ofNBC content, literally referring to Netflix as anew euphemism for "reruns".
"We're not seeing it cut into our core business, but weare glad as a producer of content to see the value of that contentrising," Roberts optimistically said in 2011.
Whilethe early 2010s were filled with Netflix scraping major content dealsfrom Hollywood's big players, the streaming service knew its modelwas on shaky ground. It was well aware that a business model based on licensing other company's contentwould quickly become unviable. To be entirely secure it needed to become a ground-upcontent producer, and it needed to get onto this quickly, before themajor studios wised up and pulled their libraries of TV and film intotheir own streaming services.
In2011 Netflix began its original content mission, but the firstprogramming didn't appear until 2013, when season one of House ofCards dropped in its entirety on the service. Over the next few yearsNetflix was not shy about declaring its grand plans, yet it still tooka while for Hollywood to take this new player seriously. WhileHollywood continued doing what it had been doing for decades, Netflixwas pumping billions of dollars into its original contentpipeline, from funding shows at the development stage to buying therights of others during post-production. This was a game of quantity overquality, and it worked.
Bythe end of 2018 Netflix had spent over US$12 billion on content, justin the prior 12 months alone. Worldwide, the company has produced, orexclusively acquired, around 700 different television shows, andhundreds of movies. And the pace is not slowing down, with thatyearly original content spend continuing to grow as the company pumpsbillions more into producing everything from reality TV to potentialOscar-winning movies.
In2016 Disney invested a billion dollars into a streaming technologycompany called BAMTech. It was the first step in the company's longgame to get into the streaming business. Over the next couple ofyears Disney consolidated much of its content, while also spendingover $50 billion to acquire the entire back catalog of 20th Century Fox content.
Andin 2018 Disney+ was revealed. Due to launch in 2019, Disney+ will bea huge new streaming player, composed of everything from Disney'senormous back catalog of movies and animated films, to both old andnew content from the Marvel and Star Wars universes.
Disney+is going to be big. It's estimated that on launch it will boast over 7,000 episodes of TV and 500 movies, with a vast array oforiginal content on the horizon, including Marvel, Pixar, and StarWars TV shows. And Disney+ isn't the only streaming service Disneyis investing in. The company will also launch a massive sportsstreaming service called ESPN+, and it's rumored to be workingtowards gathering a majority stake in the Hulu streaming service. Allin all, this will suddenly turn Disney into a massive streamingdelivery and production player.
Justa billion dollars in content
Notto be outdone, Apple started laying the foundations for its ownoriginal content in 2016. The company, already technologicallyequipped to stream content to hundreds of millions of people aroundthe world, slowly built up a team of former major studio executivesbefore dropping a raft of huge content announcements in 2018. With aninitial annual production budget of around $1 billion, the companyrevealed upcoming productions to include a comedy-drama seriesfeaturing Reese Witherspoon and Jennifer Aniston alongside originalseries from Oscar-winning creatives such as Damien Chazelle and M.Night Shyamalan.
Atthis point it is unclear exactly how Apple is planning on rolling outits original content but the rumors are it will attempt to upend thesubscription model by offering many shows free of charge to existingApple device owners. This may take the form of a new "TV" appappearing on Apple TVs, iPhones and iPads.
Theability for Apple to roll original media content into itspre-existing technological ecosystem certainly places it in a novelposition. But how many billions of dollars is it willing to burn inthe attempt to drag streaming audiences away from the torrent ofother services that are popping up?
Howmany streaming subscriptions can you handle?
Alongsideall of this we find every major content producer in Hollywood rushingto consolidate their own back catalogs. It seems Netflix's 2011prediction was prescient, to say the least. Streaming services in 2019and beyond will not be just be content aggregators but also contentproducers. Why license out your TV and film archives when you canbuild your own streaming service?
WarnerMediais another big player set to reveal a new streaming service in 2019.This one will aggregate decades of Warner Bros film content,including such franchises as Harry Potter and the DC comics films.WarnerMedia also manages a vast array of TV content from HBO series to the Cartoon Network.
Andjust to add more insanity to the mix, we must not forget the broadarray of smaller streaming services producing original content.Facebook Watch, CBS All Access, YouTube Premium, and many more areproducing original TV shows or movies designed to drive subscribers to theirown services. Back in 2016 this burgeoning production pipeline wasdescribed as a looming "arms race," but in 2019 we will see thebeginnings of an outright war.
Streamingis undoubtedly the future of entertainment delivery but how manysubscriptions can one household handle? In an increasingly fragmentedstreaming universe are you willing to pay for five or six differentmonthly subscriptions?
Adecade ago streaming promised a more cohesive future entertainmentworld, a step beyond the messy, fragmented universe of cable TV whereone chose from infinite combinations of "bundled" cable networks.The irony consumers will soon face is that the subscription streaminglandscape may move through the same loop cable TV went through inthe 80s and 90s. Fragmentation, leading to bundled packages,culminating in consumer frustration. It is nearly impossible toenvision a future where Disney, Apple and Netflix all agree to somekind of single bundled streaming subscription, so in the short termget ready to manage a complicated portfolio of personal subscriptions.