How 2020 Pressed Fast Forward on the Streaming Wars

As 2020 began, media giants were aggressively buying and stockpiling content for new online video services in the multibillion-dollar competition known as the streaming wars. Then the new coronavirus hit, cinemas closed, Hollywood temporarily shut down and everyone grabbed a remote, finding comfort or mere distraction in the entertainment offerings that unspool in a continuous flow of data over high-speed connections. A year already destined to be volatile for the industry suddenly hit fast forward on the future.

1. How many companies are competing?

Four of the most valuable companies in the S&P 500 launched streaming services just in time to divert and entertain locked-down Americans: Disney+, Apple TV+, Peacock from Comcast Corp. and HBO Max from AT&T Inc. They joined established players Netflix, Amazon Prime Video and Hulu. Quibi, a startup offering original short-form programming, also entered the market in April, and ViacomCBS Inc. plans a makeover for its CBS All Access service. Netflix, with 183 million subscribers globally, remains the one to beat. Rivals hope that by nabbing the rights to binge- worthy programs, such as “Friends” and “The Office,” and plowing money into new exclusive content, they’ll quickly catch up.

How 2020 Pressed Fast Forward on the Streaming Wars

2. Is there room for that many players?

Surveys find the average customer will pay for three to five streaming services at a time. (Basic plans generally cost $5 to $12 a month.) Since canceling is easy, subscribers may alternate between services, going wherever new content is added. Consumers’ desire to save money has given rise to free, advertising-supported apps such as Pluto TV, owned by ViacomCBS, and Roku Inc.’s Roku Channel. The industry is also competing with user-generated video content found on platforms such as Instagram, TikTok and YouTube, the most popular online video service in the world.

3. What about other kinds of streaming entertainment?

Those areas are also getting crowded. In cloud gaming, there’s PlayStation Now, Microsoft Corp.’s Game Pass for Xbox users and Stadia by Alphabet Inc.’s Google, among others. Twitch, the leading site for watching games being livestreamed by others, has competitors, including Facebook Gaming and YouTube Gaming. In the world of podcasts, Spotify Technology SA has emerged as the single biggest spender, investing hundreds of millions of dollars to acquire companies such as The Ringer and Gimlet Media Inc. and potentially steal advertising dollars from radio. Competition will lead to walls and silos: Comedian Joe Rogan announced that his popular program would soon be available only to Spotify subscribers, and many other exclusive deals will follow.

4. Is the same thing happening in the rest of the world?

Yes, and that competition involves some of the same companies. Netflix’s count of nearly 60 million subscribers across Europe, the Middle East and Africa isn’t far behind the 70 million it has in the U.S. and Canada; it’s also growing in Asia and Latin America. Disney+ has arrived in many of those same markets, and the company owns India’s Hotstar, which offers cricket and Bollywood films. In China, Alibaba Group Holding Ltd. and Baidu Inc. have streaming services called Youku and iQiyi, while European media companies have been joining forces to create their own Netflix rivals, such as BritBox, a joint venture of U.K. broadcasters BBC and ITV.

5. How did the pandemic change things?

Stay-at-home orders boosted video consumption across the board and the use of streaming services in particular. Netflix signed up more than twice as many users in the first quarter as it expected, and its serendipitously timed “Tiger King” documentary series went viral. A browser extension called Netflix Party let friends watch shows and chat together virtually. YouTube saw a spike in music video consumption, platforms such as Twitch and Instagram offered free live concerts, and musicians sold tickets to at-home performances on Stageit. The gradual loosening of quarantines moderated some of those shifts.

6. So are streaming companies sitting pretty?

Actually, they have some big obstacles on the horizon. Netflix’s U.S. expansion was slowing before the pandemic, and it warned that its massive first-quarter growth may mean a slower pace for the remainder of the year. All the streaming services rely on fresh programming to draw in customers, but lockdowns meant none of them were able to produce new TV shows or movies for months.

7. Who loses?

Cable-TV operators continue to hemorrhage subscribers, but those that also provide broadband to homes, including Comcast and Charter Communications Inc., benefit from a surge in new customers who want to stream. Movie theaters were already suffering declines in ticket sales and must now contend with the public’s fear of large gatherings — which might undermine live concerts and theater in the long term, too. Cinephiles lament the diminution of the big-screen experience. Director Martin Scorsese, for one, pleaded with Netflix viewers to watch “The Irishman” on a proper television or at least “a big iPad,” not on a tiny smartphone screen. That didn’t stop him from selling his latest movie to Apple.

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©2020 Bloomberg L.P.

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