Netflix battle against our time has been the more exciting competition team. Netflix success is directly related to how long the users spend on the platform. Consequently, using more Netflix video, the brighter Netflix prospects look like. Given the final amount of time available every day, Netflix stops competing for everyday tasks for our time and attention. This fight has put Netflix up against work, tasks, hardship and even sleep. The battle for our time, not Amazon or YouTube, has proven to be Netflix most formidable competitor to date.
Even though Netflix seems to already have quite a nuanced match on the hands up against the clock, competition will only intensify. So far Netflix has run away with the ball with little or no competitive response from other paid video streaming players. With regard to paid services other than Netflix, the list is not long with Amazon, HBO and Hulu who have the most mindshare. Things are about to change in a big way. In fact, we have not even seen a real fight yet in the paid video playback area.
Three notable competitors are about to enter the paid video streaming scene:
Disney. The company's existing intangible property portfolio, combined with assets acquired from 21
The new boy on the block. We see [ ] how it seems that Apple is fully committed to developing its own video streaming service. There are still questions about Apple's video strategy. However, the flow of reports of new shows and movies to Apple points to building a decent size (at least a dozen shows) portfolio out of the port.
AT & T / Time Warner (HBO). After buying Time Warner for $ 85 billion, AT & T has a strong incentive to capitalize on its crown jewel, HBO, to get a stronger position in direct-paid video streaming landscapes. AT & T seems interested in tinkering with HBO's strategy to value quality over quantity. Such a content strategy is being questioned relative to Netflix hunts both quality and quantity at the same time.
The three previous companies are likely to release a brutally paid video streaming war over the next five years. There will be an intense command war for the best ideas and performances. Talent is getting even smaller. Consumers want more in the way of choosing when it comes to looking at high quality programs. This fight will be so intense, free video streaming players, like YouTube, are likely to be drawn into the mix. The significant momentum found with the paid video area is a direct threat to ad-based video models. Google may feel the pressure to wade even further into the paid video streaming area.
Netflix's grip on the paid video streaming market is not as strong as it can be displayed. The company's competitive edge in the market is being sold.
Netflix's video catalog is underwhelming. Aside from the one to two dozen original hit programs, Netflix's broader content portfolio is not convincing. Much of the heroism is outdated while a surprising number of original movies feel like – as if they are low budget despite having house stars. While Netflix's expanding efforts with original shows may be enough to keep viewers as monthly subscribers, more content content content is needed if Netflix wants to increase viewer engagement.
Switching between video subscription services is easy. The idea that consumers will stick to a video streaming platform has not been fully thought out. While companies like Netflix are incentivized to keep viewers on their own platforms, attention is easily transferable to other video streaming services. Apple TV app breaks down barriers between video streaming services to the point that there are no obstacles at all. It is not surprising that companies such as Netflix have little desire to participate fully in such a service.
Netflix's technological advantage is misrepresented. As Ted Sarandos, Netflix Chief Content Manager, discussed in a recent interview, the intestine represents about 70 percent of the equation regarding Netflix that determines what provides good content. The story that Netflix really is a technology company that masks like a media company, becomes a stretch. Instead, Netflix is a media company that must continue to come up with popular hitshow.
Subsidized subscription prices contribute to the competition. Netflix continues to subsidize paid membership to seize as many users as possible. An unintended consequence of this practice is that Netflix will end up balancing the rules of competition for competitors by devaluating paid video content. By keeping the price low, Netflix makes it so much easier for new competitors to enter the market at prices that are not too far away from Netflix. Disney has telegraphed that it will probably cost its family oriented video package at around $ 5 a month, which is not much lower than Netflix's pricing, despite Disney having a content portfolio that will be a fraction of Netflix's size.
Paid video streaming does not have the characteristics of a win-win-all industry. No company wants a monopoly on good, convincing video content. Netflix is not going to be "the new cable bundle." Instead, consumers are likely to subscribe to multiple paid video streaming services. We can see that a handful of video streaming services have more than 100 million paying subscribers around the world. This reality has been made so much more likely given the significant financial resources found by industry players, including Disney, Apple, Amazon, AT & T and Google.
There have been two primary business models in the paid video playback area:
Direct subscription fee (Netflix, Hulu)
Greater entertainment package fees (Amazon)
The two business models have not been tested. Direct subscription fee continues to be subsidized for businesses to seize users. It is very clear that Netflix will have to increase subscription pricing in a large way, especially if the engagement time.
In the meanwhile, companies that submit video as just one of a handful of services for subscribers do not have to beat a profit with video streaming. By combining video to Prime, Amazon does not need to worry about video streaming prices. In the end, this dynamic will push the companies depending on the direct subscription fee. We have not seen what the video streaming industry looks like another big player bundle video as part of a major entertainment package. Apple is expected to offer a comprehensive entertainment package with music, video, news and even filing.
Paid music streaming gives a sneak peak of what can unfold in the paid video streaming industry. In some ways, the music flow industry is a few years ahead of video streaming when it comes to real competition.
There are important differences between the music and video streaming industry. With music, the same content is available on multiple paid streaming platforms. This has resulted in streaming companies that position music discovery and listening experience as the primary forms of differentiation. In a new development, hardware is now also placed as a differential with stand-alone stationary speakers, in addition to wear, increasingly plays a role in how consumers choose between music streaming services.
Meanwhile, differentiation for video streaming comes in the form of original content. For example, Stranger Things is only available on Netflix and will likely remain so in the foreseeable future. Based on Netflix subscriber trends, original programming plays an important role in driving subscriber growth. This has led to a kind of weapon raid when it comes to content budgets. Netflix allegedly uses nearly $ 10 billion a year on original content. Amazon uses almost $ 5 billion a year.
There are similarities between the two industries as well. Both music and video streaming began with a clear first-mover. Spotify was the undisputed leader in paid music streams, similar to how Netflix now has the same title in the paid video playback area. This title gave considerable attention to each company, which corresponded to strong early moments in terms of grabbing new users.
But with a true competitor in the music flow market, Spotify's mindshare has suffered. Exhibition 5 compares the growth of paid subscribers for Apple Music and Spotify. While each company continues to benefit from the increased music flow, Spotify must now share the stage with Apple for mindshare.
Based on company information, Apple Music's new user growth actually increases as time goes on. In what is likely to be a worry-free development for Spotify, Apple Music is now said to have more paid users than Spotify in the United States. Similar trends unfold in other developed markets.
Exhibition 5: Apple Music vs. Spotify