Streaming Wars: Media, Tech Companies Slug It Out With Netflix

In the weeks leading up to the November 2019 launches of Apple TV+ and Disney+, Wall Street analysts and company officials went into high gear with subscriber predictions, content reveals and special media events.

Each new service has a lot riding on it, with their high-profile parent companies spending millions of dollars wading into over-the-top video waters long dominated, on the domestic front, by Netflix, Amazon Prime Video and Disney-owned Hulu.

“Options are great for consumers when it comes to deciding what to watch,” said Peter Katsingris, SVP of audience insight at Nielsen. “But they’re also decidedly complicated for an industry that continues to fragment and search for unique ways to influence their behavior and perhaps steer eyeballs toward their network, program, service or brand.”

Disney expects to attract 60 million to 90 million subscribers for Disney+ through 2024, which would be more than half of Netflix’s current 158 million global subscriber count. It is giving away the service to Verizon’s unlimited data customers as part of a promotion.

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“What Netflix is doing is making content to support a platform,” Disney CEO Bob Iger told Vanity Fair. “We’re making content to tell great stories. It’s very different.”

Apple is targeting more than 900 million iPhone users worldwide through various incentives for Apple TV+.

David Sidebottom, analyst with Futuresource Consulting, said that as new OTT services expand on an international basis, colliding with legacy pay-TV agreements, mollifying distribution partners with differing levels of SVOD uptake will be factors in their evolving D2C strategy.

“Scale will be key in the [direct-to-consumer] space, but clearly the coming year is just the first phase in this era,” Sidebottom told the IBC365 platform. “D2C services will likely evolve, with their parent companies continuing to evaluate the benefits of D2C vs. third party [license] agreements.”

SVOD Minefield

As the subscription streaming wars heat up, most people (70%) believe there will be too many choices, and 87% worry it will become too expensive to keep up, according to a new study. TV Time, an online tracking platform for TV and movie viewership, along with UTA IQ, UTA’s data and analytics group, found that 42% of survey respondents plan to add another SVOD service, with 20% adding two. Conducted in September, the survey fielded 4,816 respondents in the

United States and 1,818 combined in the Netherlands, Canada and Australia. Disney+ and Apple TV+ had the highest levels of awareness (88% and 63%, respectively) among the upcoming services, followed by HBO Max (37%) and NBCUniversal’s Peacock (28%).

“While Disney+ appears well-positioned to succeed internationally, it may require additional focus in strategic markets to encourage people to subscribe,” Alex von Krogh, VP of TV Time, said in a statement. “It will be important to track how people engage with their programming from a global perspective and how that compares to competitors in those markets.”

Michael Pachter, media analyst at Wedbush Securities in Los Angeles, said he believes that with the surge of original content and catalog exclusives such as “Friends,” “South Park,” “Seinfeld” and “The Office” migrating online, consumers have more reasons to choose OTT. “If all that was happening were incremental services being offered, consumers might feel bamboozled,” Pachter said. “Instead, so much content is shifting to OTT services that many consumers will opt to subscribe to more than one service.” Pachter says long-term, exorbitant pay-TV contracts paved the way for OTT video, with online TV offering a less-expensive premium channel option. “I expect cord-cutters to look at rabbit ears and multiple SVOD services as a substitute. That’s why DirecTV lost 2 million subs since AT&T bought them,” he said.

More importantly, Pachter said that with Netflix losing Disney/Fox, NBCUniversal and Warner Bros. content, consumers will feel compelled to try new services offering recognizable programming and/or favorite shows. The analyst said he believes Netflix will lose around two-thirds of its content (measured in viewing hours) and will have a tough time replacing that with content of similarly perceived quality. Disney+ has an enormous library of content not available anywhere (including its vaunted library of animated classics, such as Snow White, Fantasia, Sleeping Beauty and, more recently, Aladdin, The Lion King, Cars and Finding Nemo) that will find its way to the service. The studio is also going to put its recent movies there and take those away from Netflix.

“That tells me that Disney+ gets to 30 million subscribers relatively quickly,” Pachter said.

Parrot Analytics tracked pre-release demand for Apple TV+’s original series, including “See,” “For All Mankind,” “Dickinson” and “The Morning Show.” Parrot found the shows were well ahead of the audience demand average across all TV shows in the United States over the same time period. “See,” a futuristic sci-fi drama starring Jason Momoa, and “For All Mankind,” which explores what would have happened if the global space race had never ended, were already attracting 11.7 and 11.1 times more demand than the average TV show in the United States ahead of launch, respectively, according to Parrot. “Dickinson,” starring Hailee Steinfeld as poet Emily Dickinson, registered 3.3 times the demand average, while “The Morning Show,” a comedy-drama series starring Jennifer Aniston, Reese Witherspoon and Steve Carell, managed 1.8 times the average in the United States during that time period.

A separate Ampere Analysis survey found “The Morning Show” would appeal to 35% of Apple customers (versus 25% of non-Apple device owners). “See” has a similar and strong appeal.

“Apple has a different business model from the other new platforms in that it is able to use Apple TV+ to incentivize device replacement — and therefore generate larger cash flow through those sales to fund content spend,”

Minal Modha, consumer research lead at Ampere, said in a statement.

The analyst found that the main barrier to uptake of Apple TV+ is a lack of interest in the offered content, which Modha said is mainly due to Apple being new to the original content space and consumers not knowing what to expect.

“As Apple TV+ begins to roll, we expect this barrier will be overcome,” she said.

Parrot compared the pre-release U.S. and global demand for Apple TV+’s four top series to that of other hit streaming shows. For example, U.S. pre-release demand for the Apple TV+ series tracked well ahead of Hulu’s first season of “The Handmaid’s Tale” in the week leading up to their respective premieres. In its analysis, the company compared the average U.S. demand over the period Oct. 21-27 for the Apple TV+ series to “The Handmaid’s Tale” season one demand over its seven-day pre-premiere period April 17-23, 2017. Internationally, the Apple TV+ shows don’t fare as well. Pre-release demand for “The Handmaid’s Tale” in most international markets pre-launch was well ahead of the pre-release demand for the Apple TV+ series on a per capita basis.

“Based on the demand that we are seeing, Apple TV+ promotion of the series in the U.S. has put them in a position to succeed domestically,” Courtney Williams, head of partnerships at Parrot Analytics, said in a statement. “However, they have to rapidly accelerate their international marketing if they hope to be a key player in the global streaming wars. The advantage of active and ongoing hardware penetration will be key domestically and should provide the necessary foundation to drive demand globally.”

Max is Coming

WarnerMedia isn’t launching high-profile HBO Max until May 2020, but that didn’t stop the former Time Warner company from unveiling the service Oct. 29 in a gala-like event on the Warner Bros. lot.

Pricing for the service is $14.99 a month — identical to the current HBO Now streaming service, which is being folded into Max. It will be aggressively marketed to AT&T’s 170 million mobile, broadband and linear TV subscribers. An ad-supported version of Max will debut in 2021.

“Just like cable introduced the rise of niche networks to dramatically grow audience, general entertainment streaming is the next great opportunity to aggregate and grow audience,” John Stankey, CEO of WarnerMedia, told attendees.

WarnerMedia is set to spend upwards of $2 billion annually on original content for Max, in addition to mining a treasure-trove of catalog content from Warner Bros., HBO and Turner.

Max will bow with 31 original series, increasing to 50 series by 2021. In all there will be 10,000 hours of premium content at launch, featuring 1,800 movies, including current box office hit Joker.

Wedbush’s Pachter is “pretty confident” the Max model will work, if it transfers existing HBO Now subscribers for a free probationary period lured by original content.

“If it’s $3 to $4 per month, they’ll get 10 million subs immediately and probably get to 80% conversion [from HBO Now] in a few years,” Pachter said.

Additional reporting by Stephanie Prange

Streaming Wars: Niche Services Soldier On

The streaming wars are intensifying, with established giants such as Netflix and Amazon gearing up for battle against big-money newcomers such as Apple TV+ (which launched Nov. 1), Disney+ (launching Nov. 12), NBCUniversal’s Peacock (launching in April 2020) and WarnerMedia’s HBO Max (launching in May 2020).

Indeed, in recent weeks the Hollywood trades — Media Play News included — have been filled with content reveals, lofty viewership projections and a fair amount of hand-wringing by analysts who wonder whether we’re heading for SVOD overkill.

But while the streaming goliaths are making a lot of noise as they go after each other with billions of dollars in content creation, acquisition and marketing funds — and an affinity for poaching showrunners and other executives from Hollywood, and from each other — a growing contingent of niche streamers continues to quietly march to its own drumbeat.

VET Tv is among them.

Launched in 2017 by retired Marine Capt. Donny O’Malley, the San Diego-based SVOD channel has about 43,000 subscribers who pay $5 a month to watch comedy sketches and series aimed at active military personnel. Shows such as “A Grunt’s Life,” “Drunken Debriefs” and “Kill, Die, Laugh” parody life in the service, with dark, irreverent, “inside” humor.

The steady flow of roughly $200,000 in monthly revenue is enough to allow O’Malley and his crew to produce a regular schedule of programming, with 13 series under their knapsacks and a 14th in production. The company has also just completed its first feature-length film — consisting of several “A Grunt’s Life” episodes, stitched together — which premiered Oct. 28 at the Rooftop Cinema Club in Los Angeles and is now available for streaming on VET Tv.

“If we can make a profit as filmmakers, no one and nothing else matters,” said O’Malley, who spent six years in the Marine Corps — including seven months in combat as a platoon commander and fire support team leader in 2012 in the Helmand Province of Afghanistan. “We’ve proved that we don’t need the studios to make a profit. We don’t need to compare ourselves to them, or any other business, for that matter. Our success comes from our ability to sustain this business model, and from the approval of our community.”

The key, O’Malley said, is to find an underserved niche.

“We got into streaming and VET Tv because we wanted to focus on giving our community exactly what they wanted,” he said. “The notion of pitching this idea around Hollywood producers never crossed my mind. We’re making this for the community and no one else. The customer is the gateway to success in this business. If the customer is willing to pay for the content, we’re on the right path.”

VET Tv is just one of hundreds of niche streaming services vying for eyeballs with carefully curated programming aimed at specific audiences with voracious, but narrow, appetites. Most follow the Netflix subscription model, offering unlimited content for a set monthly fee, generally in the $5 to $10 range. Others, including Tubi, offer their content for free, relying on advertisers to feed the kitty. Some streaming services were started by established broadcasting, cable or home entertainment companies. Among them are PBS Masterpiece Prime Video Channel, Comcast Cable’s Xfinity Flex, Dish Networks’ Sling TV, and HBO Max.

Others, like VET Tv, are independent startups.

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Over the past five years, according to Parks Associates, the number of streaming services has more than doubled to 271. The Los Angeles Times recently ran a series of stories about streaming and noted that subscribing to the top 41 services — a ranking that includes newcomers Disney+, Apple TV+ and Peacock — would cost consumers upwards of $400 a month, factoring in the additional cost of Internet service.

Mark Fisher, president of the Entertainment Merchants Association (EMA), knew there was a growing undercurrent of streamers earlier in the year when he teamed with Eric Opeka, the newly appointed president of Cinedigm Digital Networks, to produce an over-the-top (OTT) channels market and conference — OTT_X — in July 2019, alongside the seventh annual Los Angeles Entertainment Summit.

At the time, Fisher said, “The OTT segment of the video industry is growing tremendously and needs a premier event to bring key players together to do business, share knowledge, and expand their contacts.”

But even he was surprised at the turnout. “It was like the early days of the VSDA, with all these independent video retailers,” Fisher said. “The difference was that these were professional executives from existing and emerging companies, funded for growth. In fact, we had well over 400 people — not dozens of people from each of a dozen key industry players, but instead well over 100 companies represented by their key execs, meeting together and collaborating on making the OTT business — in all its business models (AVOD, SVOD, TVOD) — an efficient and effective way to provide entertainment to the consumer. Many of the workshop sessions were SRO, and we nearly ran out of food.”

Marc Rashba, a former Sony Pictures Home Entertainment marketing executive who is now president of MovieMethod LLC, a digital distribution partnerships company, agrees with Fisher’s assessment of streaming.

“Partners are telling me what’s happening now in OTT is analogous to the explosion of early days of cable,” he says. “While you have generalist providers like Netflix and Amazon, who are much like WGN and TBS in the early days, we’re seeing the explosion of niche providers who program to a very specific audience much like we saw with MTV, BET, CMT, Nickelodeon and more back in the day.”

Why are so many players jumping into the streaming business?

“What’s most exciting for content companies, and what they were not able to achieve in the home entertainment or TVOD space, is that they can finally develop a direct relationship with the consumer,” Rashba says. “Along with the data that comes from that relationship, studios can finally nurture the CLV (customer lifetime value, or a prediction of the net profit over the lifetime of the relationship) themselves and can maintain more control over their own future.”

Cinedigm’s Opeka attributes the increased interest in streaming to the recent rapid expansion of scale partners who are having a material impact on user acquisition and subscriber growth.

“Success in OTT for niche players used to mean a substantial investment in customer acquisition and technology, two areas extremely difficult for small payers to get a handle on,” he says. “Leveraging scale platforms like Apple, Amazon, Roku and, now, Samsung, Comcast and others have dramatically improved the unit economics for niche players and is leading to a rapid expansion of viable channels.”

Streaming services carry a wide range of programming, often with a very narrow focus. Pure Flix (pureflix.com) focuses on faith and family shows and in October bowed a new sitcom, “Mood Swings,” starring Donna Mills and Crystal Hunt. October also saw the launch of another streaming service aimed at families, Frndly TV.

They are far from the only niche streaming services generating a buzz:

• AMC Networks’ Acorn TV streaming video service features British and international episodic programming in the United States and Canada, with a focus on original and exclusive mysteries, dramas and comedies. In September, Acorn TV announced it topped 1 million subscribers. Charter Communications for the first time will include Acorn TV in its suite of SVOD services to Spectrum customers.

• AMC Premiere is an add-on to the AMC Networks’ pay-TV service, affording subscribers commercial-free viewing of original movies, TV episodes and exclusive behind-the-scenes footage. Premiere enables users to binge select series, including the Emmy- and Golden Globe-Award winning “Killing Eve,” “The Walking Dead,” “Fear the Walking Dead” and “The Terror,” among others.

• The Africa Channel is a showcase for English-language television series, specials, documentaries, feature films, music, soaps, biographies, current business analysis, and cultural and historical programs from the African continent. It boasts more than 1,000 hours of content and is available in more than 7 million homes in the United States and the Caribbean. In October, The Africa Channel introduced its service in Canada by launching on the subscription streaming platform Demand Africa. Dean Cates, VP of digital strategy for the new SVOD platform, says, “As a global OTT service provider, our goal is to make modern Africa’s influence and culture more accessible throughout the world.” Subscribers can view The Africa Channel for $1.99 per month or have it included free with their monthly or annual subscription to Demand Africa.

• BritBox launched in North America in 2017 to compete against Acorn TV. It features British-centric programming from the BBC, ITV and Channel 4. BritBox, with 650,000 subscribers, will bow service in the U.K. in the fourth quarter priced at £5.99 ($7.51) per month in HD.

• Hallmark Movies Now is an on-demand streaming video service offering family-friendly movies, documentaries and short films. The company was founded in 2007 by Academy Award-winning producer Robert Fried. It is owned and operated by Hallmark Cards and based in Los Angeles.

• Kanopy is a premium, free streaming platform offered through universities and public libraries and accessed with library or university memberships. Through partnerships with film distributors and studios such as The Great Courses, Criterion Collection, A24, Paramount, PBS and Kino Lorber, among others, it provides thousands of award-winning documentaries and films, contemporary favorites, classics, life-long learning courses and kids programming to public library members, students and professors at participating institutions. Kanopy is available on all major streaming devices, including iOS, Android, Apple TV, Android TV, Amazon Fire TV, Samsung Smart TV, Chromecast and Roku.

• NBA League Pass and NBA TV are owned and operated by the National Basketball Association, which for the first time has begun selling its branded streaming video service, NBA TV, without a requisite pay-TV contract. The service gives subscribers live access to out-of-market games. The league also offers NBA League Pass, priced from $119.99 annually, which gives subscribers access to commercial-free live streaming, archived games, condensed game replays, radio broadcasts, VR access and NBA Finals, among other features.

• Shudder is an American over-the-top subscription VOD service featuring horror, thriller and supernatural fiction titles owned and operated by AMC Networks. The service just renewed its first hour-long scripted series, “Creepshow,” which set records in terms of viewers, subscriber acquisition and total minutes streamed in its first season.

• Xumo is a free ad-supported TV service that delivers live and on-demand TV and movie channels, and is available in the United States on more than 30 different devices, according to the company, including Comcast Infinity X1 and Android TV. “We’re focused on bringing our service to the most-popular devices available and have expanded to a record number of new platforms this year alone,” notes Xumo’s SVP of product, Chris Hall. Xumo offers a library of on-demand content, including thousands of movie titles and TV shows such as “This Old House,” “Divorce Court” and “Unsolved Mysteries.”

One of the most-hyped streamers isn’t even in business yet. Quibi, the $4.99 monthly short-form video streaming service launching in 2020 from DreamWorks Animation founder Jeffrey Katzenberg and former HP CEO Meg Whitman, recently inked a distribution deal with T-Mobile. The app will deliver original video content no longer than 10 minutes in length from a variety of sources, including directors Sam Raimi, Guillermo del Toro, Antoine Fuqua, Steven Spielberg, Lorne Michaels and producer Jason Blum, among others.

“Quibi will deliver premium video content for millennials on a technology platform that is built exclusively for mobile, so a telecommunications partner like T-Mobile, with their broad coverage and impressive 5G road map, is the perfect fit,” Whitman said in a statement.

Indeed, T-Mobile has 83.1 million cellphone subscribers and 5G network ambitions. It also received FCC approval for the $26.5 billion acquisition of Sprint.

“Quibi is leading the way on how video content is made and experienced in a mobile-first world,” said Mike Sievert, COO of T-Mobile. “That’s why our partnership makes perfect sense — two mobile-centric disruptors coming together to give customers something new and remarkable.”

Q&A: Disney+ Content and Marketing President Ricky Strauss Discusses Service’s Launch

On the eve of the Disney+ launch, Media Play News queried Ricky Strauss, president of content and marketing, for insight into the new service’s strategy. Strauss is responsible for developing the strategic content vision for the service, overseeing development of the service’s original programming slate, production partnerships and content acquisitions. He previously served as president of marketing for The Walt Disney Studios. Blockbuster films that Disney delivered under Strauss’ tenure include Star Wars: The Force Awakens, for which Strauss was named Marketer of the Year by Advertising Age.

The official launch date of Disney+ is Nov. 12. How are you kicking things off?
This is a huge priority for The Walt Disney Co. and so we have tremendous support across the company. From parks to the cruise line and stores to a programming roadblock across ABC, Disney Channel and Freeform, we will be accessing an incredible number of touchpoints that allow us reach to millions of fans across our brands and around the world.

How important is original content?
Original content is a very important part of our strategy. Storytelling is the cornerstone of The Walt Disney Co. and the same award-winning creative teams behind the phenomenal success of Disney, Pixar, Marvel, Star Wars and National Geographic are creating exclusive original content for Disney+. We will launch with 10 original exclusive episodic series, movies and documentaries, and plan to premiere more than 35 originals within the first year.

Are you worried about devaluing Disney content by offering a buffet of it at such a low price?
The service has been priced based on our judgment that this delivers an excellent price-value proposition to consumers and positions us appropriately in the market.

Bob Iger has made Disney+ the company’s singular focus in 2019. How are you dealing with the pressure?
Pressure? What pressure? All kidding aside, yes, it’s a lot of pressure, but under Bob’s visionary leadership we are surrounded by the best and brightest in this business — all focused on making this a success. The energy and enthusiasm generated by working with such tremendous creative and strategic minds keeps us all going.

What are your thoughts on the competitive landscape?
It’s an exciting time and we believe we have a unique and significant role to play. Disney+ will compete based on the unparalleled strength of our brands, the quality of our intellectual property, and expertise in high quality video streaming. … Disney+ will have a robust library of some of the most beloved and storied brands in the industry, as well as a great slate of originals with a plan to continue growing over time. In year one, Disney+ will have more than 7,500 episodes of television and over 500 film titles which will include the most recent theatrical film releases. For fans of Disney’s brands, it will be an incredibly rich experience. Fans can revisit classics, explore new original stories from such epic cinematic universes as Marvel and Star Wars, and discover all new originals that exhibit the Disney storytelling ethos of creativity, innovation and imagination.

How can Disney lure subs beyond the Disney name and $6.99 price point?
The price point and the power of the Disney name are tremendous assets that offer a great deal of opportunity, which we will fully leverage. Beginning Nov. 12, consumers in the U.S. will also have the choice to purchase a bundle offering of Disney+, ESPN+ and Hulu (with ads) for $12.99 per month. The bundle offers a great value proposition, given the quality and breadth of content consumers will have access to across the three industry-shaping streaming services.

What impact will Disney+ have on the other streaming services, specifically Netflix?
We are focused on building our own best-in-class experience around the brands and stories that define Disney.

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Netflix Challengers: Are There Flies in the Ointment?

This is the month when the long talked-about “streaming wars” finally get underway — at least, the first round. Both Apple TV+ and Disney+ are launching in November, with two more heavyweights — NBCUniversal’s Peacock and WarnerMedia’s HBO Max — debuting next April and May, respectively.

Subscription video-on-demand (SVOD) pioneer Netflix has ruled the proverbial roost for years. Sure, Amazon Prime Video and Hulu have given Netflix a taste of competition, but Amazon Prime’s viewership numbers remain clouded by questions about how many people primarily sign up to get free shipping on hard goods — and Hulu has always been the home entertainment equivalent of a third-party candidate.

So with the November launch of Apple TV+ and Disney+, Netflix is finally facing some stiff competition, although, to be fair, both new services have inherent flaws that could impede their success.

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Apple TV+ is being launched by a technology company with no content to poach. As a result, the service’s success or failure hinges on the strength of its original movies, TV shows and other content. Apple TV+ readily admits, on its website, that “unlike most other streaming services, Apple TV+ does not include a back catalog of any kind,” and that “right now, the library of Apple originals in terms of raw numbers is quite small.” But the company is betting that the monthly subscription fee of $4.99 is low enough for curious viewers to take a chance on the new streaming service.

Disney+, on the other hand, comes from the vaunted Walt Disney Co., which has long held a Midas-like touch in everything from movies and TV shows to theme parks and toys. Disney is the only Hollywood studio with a viable consumer brand of its own. And executives are hoping that the Disney brand, along with a stable of acquired brands — including “Star Wars,” Pixar, Lucasfilm, Marvel and National Geographic — will not just provide the streaming service with a rich library of content, but also with strong platforms upon which to build original shows, such as the “Star Wars” series “The Mandalorian.”

Apple TV+’s challenge will be to produce a steady stream of top-quality, “must-see” originals, as Netflix has done. Netflix had the advantage of using studio movies and TV shows to captivate viewers while building up its slate of originals. But Hollywood has learned its lesson and is unlikely to feed another beast that may one day attempt to devour it, so Apple TV+ will have to go it alone.

Disney+, on the other hand, needs to get out of the recycling business. Even on the theatrical side, the studio’s success has largely been built on Marvel sequels and remakes of its own animated classics — and the team behind the new Disney streamer must encourage, develop and nurture new ideas and concepts if it is to pose a serious long-term challenge to Netflix.

But the streaming wars involve more than big guns. There’s a whole undercurrent of niche streaming services that cater to very specific audiences with targeted programming, such as VET Tv, a San Diego-based SVOD channel aimed at active military personnel with original shows such as “A Grunt’s Life,” “Drunken Debriefs” and “Kill, Die, Laugh,” which take dark, irreverent looks at life in uniform.

Parks Associates estimates that over the past five years, the number of SVOD services has more than doubled, to 271. And projections are that subscription streaming will grow at a faster clip than any other segment of home entertainment — almost as fast, one observer noted wryly, as traditional cable loses subscribers.