An already impressive array of streaming services is about to become even more remarkable as four new services from incumbent media players are set to launch in a succession of initiatives, starting as early as November and continuing until the first quarter of 2020.
With the new flexible services threatening to convert more consumers into cord-cutters and into leaving the pay-TV ecosystem behind, besieged pay-TV providers are justifiably feeling the heat.
At the end of 2018, online streaming services accounted for one-third of all global paid video subscriptions, while traditional pay TV accounted for the remaining two-thirds of the market. The number of streaming subscribers worldwide is expected to reach 921.8 million by 2020, up 19% from 771.8 million in 2019. Subscriber numbers will then grow another 16% from 2020 to 1.1 billion in 2021, according to Media & Advertising research from IHS Markit | Technology.
Netflix was the world’s leading subscription service in 2018, counting 138 million subscribers within its ranks. Last year, it offered 1,567 hours of original content on its worldwide streaming platforms, well ahead of online and traditional competitors.
In second place after Netflix was China’s Tencent Video, with 74 million subscribers, followed by Baidu, also from China, in third place with 68 million subscriptions. Occupying the No. 4 spot was Amazon, with 56 million subscriptions.
The chart below shows the world’s top providers of online streaming services in 2018.
The four biggest streaming players remain firmly ensconced at the top, but by the end of this year, a small band of new players will be joining the streaming market and launching services of their own, challenging the old guard especially in the United States, where the new upstarts are based. But far from being speculative start-ups, the new entrants are among the world’s largest brands with substantial media holdings, and so are likely to roil an already vigorous streaming landscape.
The new streaming players are Apple, NBC Universal, Warner Media, and Disney, each with its own subscription package to offer consumers.
Three new entrants: Apple, NBC Universal, Warner Media
Apple is launching Apple TV+ on Nov. 1, pricing its offering at $4.99 a month but free for one year to anyone purchasing an Apple device during the period. To draw in the crowds, Apple is banking on the cachet of some of Hollywood’s top box-office stars to headline its slate of original TV shows and movies, including the likes of Reese Witherspoon, Jennifer Aniston, and Jason Momoa.
For its part, NBC Universal is launching its streaming service, to be christened Peacock after the station’s sobriquet, in April 2020. Streaming content will come from NBC Universal movie properties including Universal Pictures, Focus Features, and Dreamworks Animation, as well as from original shows and TV hits like The Office and Parks and Recreation. Its business model will combine subscription services and ad-supported programming, the dual revenue sources considered as key strengths of the model. Subscriptions will be free to those already with a pay-TV service, while those without a pay-TV service can expect to pay a monthly subscription fee of $12.
Meanwhile, Warner Media—formerly Time Warner and renamed after its acquisition by AT&T—hopes to entice viewers with its streaming service, to be called HBO Max, by bundling movies from Warner Bros. and New Line Cinema together with cable channels HBO, Cinemax, and Cartoon Network properties now belonging to the telecom giant. The Warner library includes several valuable franchises, such as the Harry Potter series and The Lord of the Rings trilogy, along with a trove of classic films that appeal to the older generation. The business model for the service has yet to be announced, but it will likely be a single-tier subscription service that is bundled with pay TV.
The fourth contender: a colossus named Disney
The fourth new player, the media and entertainment conglomerate Disney, is introducing Disney+, a direct-to-consumer streaming service that will offer programming drawn from its formidable array of properties, including Marvel, Star Wars, Pixar, 20th Century Fox, and ABC. All of Disney’s properties currently available on former partner Netflix will be withdrawn permanently, returning to the studio.
Disney has undertaken a significant internal restructuring to launch Disney+ and ensure that it’s given the appropriate resources to succeed. An aggressive strategy leaves it well-placed to do so when Disney+ launches Nov. 12 in the United States, Canada, and the Netherlands, and then in Australia and New Zealand a week later. Disney has also said it expects to launch in most major global markets within the first two years of the streaming service.
Disney recently agreed to a deal in which it will eventually take full control of Hulu; currently it has a majority control of the service with NBC Universal as the only other shareholder. Its other major online channel initiative is ESPN+, which counted 2 million subscribers at the end of 2018. Disney will offer a three-pack bundle consisting of Disney+, Hulu, and ESPN+ for $12.99 per month, equal to the Netflix standard rate.
Disney will offer three streaming services in a three-pack bundle at $12.99, compared to Netflix’s one main offering that is also priced at $12.99. But although three streaming services seem better than one at first glance, Netflix still greatly overshadows the Disney bundle in the quantity of content being offered. Moreover, Netflix will continue to promote its service as completely ad-free, while the Disney bundle will sport a mix of ad-free and ad-supported content.
It is unlikely that Disney will offer a secondary bundle completely ad-free in the short term. Because most of Hulu viewers watch the ad-supported offering, Disney is leaning into its largest subscriber base with this bundle.
A comparison of original programming plans between Apple and Disney was published on Sept. 24 by IHS Markit | Technology, which also estimated the level of investment in each initiative and analyzed the differing objectives of the two companies.
An increasingly crowded field
With the streaming industry’s traditional heavy-hitters and new but powerful entrants alike vying for consumer dollars and market share, the streaming landscape is likely to become crowded.
However, for consumers that subscribe to at least one streaming service, IHS Markit | Technology research shows they are willing to subscribe to one or two more services. In the United States, households subscribe to 2.4 subscription video on demand (SVoD) services on average, paying a flat monthly rate for each service in exchange for unlimited access to a wide range of programs.
The popularity of a streaming service may vary, depending on the region where it competes with other services, including those supplied by the local market. In the United States and the United Kingdom, the Top 2 players are Netflix and Amazon, but the No. 3 spot in both countries is occupied by different entities, by Hulu in the US and by Now TV in the UK.
In Asia, local streaming providers are very strong, underscoring the importance of regional dynamics in determining a player’s overall standing in local markets.
In Japan, for instance, the top streaming services operator in the country is dTV, followed by Amazon, which is making great gains in landing new customers in the country. Meanwhile, Netflix is in third place—not the worst spot for the industry’s No. 1 streaming player, but also far from an ideal position, compared to its perch at the top in many other markets.
Live sports streaming
Unlike video streaming where viewers can watch a title at a moment of their choosing, sports streaming works differently because it broadcasts live action, with a potentially large audience simultaneously watching the event unfold in real time. Plenty of additional technical issues must be considered and layers of redundancy added to the streaming platform, raising the stakes for streaming sports even higher. And if the streamed event is offered through a subscription service, dissatisfied audiences are more likely than the average over-the-top (OTT) consumer to express their displeasure by cancelling.
As a genre that typically serves 90% of its audience live, sports has been almost untouched by the time-shifting and binge-watching revolution transforming the wider TV and video industry. Sports today remains a linear experience, whether aggregating mass audiences on broadcast TV or underpinning the value proposition of subscription services.
At the same time, the maturing of pay-TV markets is opening opportunities for new online subscription plays, notably DAZN. Owned by the UK-based Perform Group, DAZN is No. 3 in Germany after Netflix and Amazon, and is also enormously popular in Japan.
For more information on IHS Markit | Technology research on streaming video and other video-related subjects, visit our website and go to the Video research category, under the Media & Advertising research service. IHS Markit | Technology is now a part of Informa Tech.