The streaming wars are heating up. Who will win?

Source: Piñata Farms

Raise your hand if you watched Die Hard Wonder Woman 1984 or Soul over the weekend.

The release of these blockbusters on HBO Max and Disney+, respectively, are among other major streaming developments, as noted by The Economist:

• Warner will release 17 feature films on HBO Max in 2021
• Comcast’s Universal Pictures will make films available online 17 days after hitting AMC theaters
• ViacomCBS’ Paramount Pictures sold films to Netflix instead of releasing them in theaters
• UPDATE: NBCUniversal’s streaming service Peacock hosts all of The Office content as of January 1st, 2021. 

The biggest mic drop was from Disney+, which announced 10 new Star Wars series, 10 new Marvel series, and 30 other series/films.

By 2024, Disney will spend $14-16B a year on content

This is in the ballpark of the $17B outlay Netflix made in 2020.

In fact, the meteoric rise of Disney+ makes it the only real contender to Netflix’s streaming crown (to wit: Netflix has an industry-low churn rate of  2-3%).

Disney forecasts 260m subs by 2024, which could put it on track to eventually overtake Netflix, currently with 195m users (not including the 10 college friends you share your account with).

Traditional TV networks going digital will see profits crushed

Media analyst Doug Shapiro lays out why:

• Cable TV is very profitable, with consumers paying for bundles they mostly don’t watch (e.g., 100s of channels)
• TV is bigger than streaming: Traditional TV made $100B (ads, affiliates) in 2019, which is 5x streaming ($19B)
• Streaming monetizes worse than TV: A pay TV home generates 6x more revenue than a pay streaming home

Further, none of the traditional networks (other than Disney) have been able to capture significant streaming share. WarnerMedia, NBCUniversal, ViacomCBS, Fox, and AMC all have lower streaming share vs. TV.

What about Apple and Amazon?

These 2 tech giants are using Apple TV+ and Prime Video, respectively, to subsidize the rest of their business:

• Apple: All that sweet high-margin hardware
• Amazon: Literally everything in your “one-day shipping” shopping cart right now

The non-Disney TV networks (AKA subscale streamers) have no choice when it comes to streaming, per Shaprio.

“But they are ultimately fighting for share of a shrinking pie,” he says. “The TV industry is likely to change radically as a result.”