Think Streaming Is A Messy Business? It’s About To Get Worse

The planned launch of Disney+ and Apple building its own streaming service – Apple TV Plus (which is expected to launch in November 2019 at $4.99 per month) – has intensified the streaming war, where category bigwigs such as Netflix are facing growing competition from major new players, that are moving fast to capture additional market share. At this stage, it would be interesting to look at some hard numbers that have driven such a rapid growth in the category. For this purpose, we analyze the key numbers and compare key metrics of streaming giant Netflix with Disney, AT&T, and Viacom.

You can view the Trefis interactive dashboard – How Netflix Compares With Streaming Aspirants AT&T, Disney, And Viacom? – to better understand the streaming market and the competition between its four major players. In addition, here is more Trefis Media data.

Revenue Performance

The size and opportunity in the streaming category can be assessed by the fact that the top 4 streaming players together made more than $83 billion in streaming and video entertainment revenues in 2018. They are expected to add a net of ~$13.7 billion in total streaming revenues by 2020.

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Fight To Gain More Subscribers

  • The 4 players enjoy a cumulative viewer base of 1.9 billion (which includes TV viewers also in the case of Disney and Viacom, which could be a potential audience for pure streaming category).
  • In the recent past, Netflix is the only major player that has been able to increase its streaming subscriber base, from 93.8 million in 2016 to 148.5 million in 2018.
  • Companies are coming up with new offerings and plans to lure subscribers away from competitors.
  • Example: Disney+ (Disney Plus) is Disney’s $7-a-month streaming service that will launch in late 2019. This could have the potential to disrupt the market, mainly with its pricing (which is expected to be even lower for its loyal customers), which is half the price of HBO Now and a big discount compared with Netflix. This is expected to dampen growth in Netflix’s subscriber growth, which Disney is expected to eat into along with AT&T subscribers, over the next 2 years.
  • Viacom would likely see an increased subscriber base, mainly due to its merger with CBS, where the company would benefit with an addition of CBS’ Showtime subscribers being added to Viacom’s base.

Note: Subscribers are not fully comparable as Disney viewers include all content viewers (except sports channels) and Viacom includes highest viewer count for channels in that year, as a break-up of streaming subscribers for these 2 companies is not available. For 2019 & 2020, Viacom includes CBS subscribers as well, due to the proposed merger. Such a vast viewer pool is only indicative of the immense market potential, as a large part of this market can be converted into streaming subscribers.

Trend in Average Revenue Per User

  • Except in the case of Disney, average revenue per user is largely declining or seeing very low growth (Netflix).
  • AT&T could continue to see a drop in ARPU, as its Video Entertainment revenue continues to fall due to weak linear media demand, partially offset by offerings such as HBO Max and Warner Media acquisition.
  • Disney is likely to see its ARPU rise in the near future, as Disney+ is to drive revenues higher. Though offered at a discount compared to peers, its different plans under Disney+ are expected to boost the ARPU in 2020.

Conclusion

  • As changing preferences are drawing customers away from linear media to on demand services, streaming is a major category which has faced, and is expected to face, intense competition.
  • The market has seen major deal announcements and new initiatives to consolidate operations and capture market share.
  • Quality of offerings, choice and pricing of the plans offered would be the main factors on which companies would continue to compete and gain market share.
  • Based on current market trends and major announcements by companies, Disney is expected to perform much better than rivals in the near term

Trefis Team 

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