Who will win the Video Streaming War?
The Video Streaming war is heating up. There will be casualties. Some combatants will get wounded and others will be killed off. It’s simple math – There is just not enough good video content to go around and not enough ‘eyeballs’ (hours in the day) to watch all of this content.
In this article I play ‘Las Vegas’ bookie and soothsayer alike and give odds on who will be the big winner(s).
To be one of the survivors good strategic planning and execution will be needed. The right weapons will need to be deployed (deep deep pockets will be one of the factors). Who amongst the competition has the right arsenal?
With the recent announcement that Apple is jumping into original content, Facebook is expanding their video footprint, YouTubeTV is being refined and Disney is stepping into the ring – the pool has gotten quite crowded. Someone is going under.
So in classic Las Vegas fashion I’m going to provide the odds of long term (5 year) success of each of the major players in the game.
EXISTING PLAYERS
Amazon Prime – Odds of success 1:1
On the Plus side -Amazon “owns” the internet more than any other player in the game, Already investing in original content it can parlay it’s brand recognition, one-stop shopping and ubiquity to it’s advantage. It’s Amazon Prime is not just a video subscription, but so much more. Partnerships with premium content channels – HBO, Showtime add additional reasons to choose Amazon.
On the Minus side – No regular TV or cable TV channel connections, Can’t rent movies or content directly on the App, Everyone hates a monopoly.
Keys to 5 year Success – Improve and integrate app with rest of Amazon shopping, Interactive viewing experience (Including AR or VR), Live stream TV/Sports, Buy a competitor or content provider (e.g, Hulu, CBS, ABC, NBC, FX)
Netflix – Odds of long term success 4:1
On the Plus side – World wide distribution, Brand name recognition, Already spending heavily on original content creation. And the existing business model generates cash. (always a good thing).
On the Minus side – No streaming TV deals, Will be losing exclusive Disney content, Pressure to continue existing growth rates, No Ad Revenue, Cost and ability to procure exclusive distribution deals is getting more challenging.
Keys to 5 year Success – Create better movie deals, Acquire a competitor or other content and smaller distribution providers, partner with social media – Snapchat/Twitter. It also must continue to create “must see” blockbuster series like House of Cards.
Hulu – Odd of long term success 6:1
On the Plus side – Owned by consortium of Mega TV/Content & Distribution companies, Making original series, Has the inner path to TV content, Has a Freemium/Ad revenue model, Has relationship with premium channels – HBO/Showtime and others.
On the Minus side – Ads are obtrusive and turn off and there is limited access to newer premium movies.
Keys to 5 year Success – Create TV streaming deals, Live stream TV and Sporting events, Create better and more original content ( have a Mega “must see” Series). Don’t get bought out (by Netflix or others) or purchase premium assets like HBO or SHOWTIME.
Crackle – Odd of long term success 25:1
Keys to 5 year Success – Owned by Sony, it needs to expand beyond just a Distribution hub for content by offering original content, Create live TV and or sports events. High probability of being bought out.
SlingTV – Odds of success – 50 :1
Keys to 5 year Success – Expand beyond just a Distribution hub for content by offering original content, Create live TV and or sports events. High probability of being bought out.
HBO – Odds of success 4:1
HBO (owned by Time Warner) has the panache of being the standard bearer for quality video content. It’s accomplished this while creating it’s own direct distribution channel in addition to it’s primary distribution relationship with others. Being part of the Time Warner empire, it has the support to weather the coming battles. But is it enough? HBO thrives on having ‘hits’ that keep people on the hook. They will need another one or two ‘Mega Hits’ after Game of Thrones to maintain the brand and stave off competition. Entirely possible that it will be sold to one of the other players in the game. It’s the Golden Fruit that everyone wants to emulate (or own)
SHOWTIME – Odds of success 5:1
Owned by CBS it is the their address for premium TV and movie entertainment. Still perceived as one step behind HBO, it is still dependent on others distribution channels. Being part of the CBS empire, it has the support to weather the coming battles and perhaps absorb another competitor if CBS acquires a property like HULU. Conversely it could be sold off to HULU or other players in the game. SHOWTIME, like HBO, will need to churn out premium content and create ‘Mega Hits’ to maintain the brand and stave off competition. Entirely possible that it will be sold to one of the other players in the game. If HBO is not available for acquisition, SHOWTIME would be a nice catch as well.
STARZ – Odds of success 10:1
Starz will need to expand beyond being just a distribution hub for content by offering original content, create live TV and or sports events. Even though it is not in the same league as other premium networks, it still has a value and a high probability of being acquired.
Google (YoutubeTV) – Odds of success – 3:1
Google has not really jumped into this game yet. It’s still playing on the fringes and living ‘drafting’ off the worldwide success of YouTube. It can bide it’s time and let others eat each other alive. Then swoop in and buy the carcasses of the losers. It also does not have to wait until this happens and can just buy it’s way in. With it’s huge advantage in search and paid advertising. It’s a natural for Google to augment it’s YouTube franchise with better quality streaming content.
The question is what Google really wants to do with YouTube. It has been quite reactive in the past three years and seen Facebook take a major bite of the video market space. Will YouTube TV be able to play in the ‘premium’ content game or continued to be looked upon as a place for ‘cute kitten’ videos. With an audience that has come to expect higher and higher production values, it looks like they are late the game. One big acquisition though can change the paradigm.
NEWCOMERS TO THE GAME
Facebook – Odds of Success 2:1
Facebook is to social media what Amazon is to online commerce and Apple is to Mobile. They are the ones that move the dial. With video being the dominate source of interactivity on Facebook (and Instagram) – it’s only natural that streaming video would be a next move. With over 2 Billion users worldwide the Facebook Live initiative has a built in audience.
And similar to it’s counterparts, Facebook, even though it is late to the game, can easily cross the chasm on the backs of Netflix, Hulu and others by simply writing a check and folding one or more of theme into it’s platform.
Facebook has planted the seeds wisely. First developing a relationship with Nielson, then courting advertisers to switch allegiance away from mainstream TV while expanding its social media tentacles even further down the demographic food chain (through Instagram). Streaming video is a natural progression for them.
Apple – Odds of Success 3:1
Apple has a cash war chest like none other. (upward of $250B). It has the financial muscle to buy it’s way into this space even though it goes against it’s DNA to do this. Apple appears set on developing it’s own original quality content. The problem is that the quality expectations are high. Anything that is less than top notch will diminish the brand.
Unlike all the other players in this game – Apple controls it’s video ecosystem. And it knows distribution (just look at what it did with iTunes). Between tablets, smart phones wireless headphones and VR devices, Apple has a built in audience of hundreds of millions (billions worldwide). And Apple has shown that it can outlast it’s competition.
Will a key to success be to purchase an existing distribution channel (ABC/CBS/HBO or even Hulu). One thing for sure – when Apple decides to jump into a market – they are in it to win it. Look for Apple-Amazon-Google wars to heat up.
Disney – Odds of Success 8:1
Disney is caught between a rock and a hard place. It is the premier address for children’s and family entertainment. But it has limited control over the streaming distribution. It is not surprising that they now plan to put their foot into these waters. Disney has to go down this route in order to maintain leverage in the years to come. Especially as others duke it out for supremacy.
Disney has deep pockets to muscle itself in the high rollers table. It is highly likely they will acquire others to stay in the game. Look out Netflix, Hulu, and others.
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In conclusion – based on my crystal ball into the future five years hence – I see the big Three in the streaming entertainment video world to be Amazon, Apple and Facebook. Google and others will certainly still be around, but won’t be the dominant forces they once were.