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The Streaming Wars Is About Global Distribution And Investing In Programming

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In the past two years, media companies have launched direct-to-consumer video services to compete with Netflix NFLX . All of them have been following category leader Netflix with global expansion and investing billions of dollars in content. As a result, the demand for streaming video remains strong.

For example, DEG estimates consumer spending on SVOD providers grew 21% in the first half of 2021 reaching $12.2 billion. Kantar estimates that three-quarters of U.S. homes have at least one streaming service. Nielsen’s monthly Gauge Report for July says streaming video accounts for 28% of all viewing among persons 2+, up 2% from May.

Additionally, based on second quarter 2021 earnings reports from media companies, streaming video has become a priority ahead of traditional cable and broadcast television. To be competitive, industry analysts expect an increase in mergers, such as Discovery and Time Warner or partnerships, such as the recently announced SkyShowtime between Comcast CMCSA and ViacomCBS, expected to launch in western Europe next year. SkyShowtime is also an example of streaming video providers strategy to distribute content globally. 

Subscriber Counts

Netflix: Despite a sluggish second quarter, Netflix remains the category leader in the streaming wars. In the second quarter 2021, Netflix added 1.5 million net new subscribers globally (compared to ten million in second quarter 2020). In the U.S./Canada market, subscriber counts had fallen by 430,000 totaling 73 million subscribers.

Netflix first expanded globally in 2010 when it entered the Canadian market, the following year Netflix was launched in Latin America and the Caribbean. Netflix is now available in 190+ markets worldwide with 209 million paying subscribers, a year-over-year increase of 8%.

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Disney DIS : Disney had the strongest three months of any streaming provider. At the end of second quarter 2021, Disney+ had 116 million global subscribers (including India’s Hotstar), adding 12.4 million net new subscribers for the quarter. When compared to June 2020, the number of Disney+ subscribers worldwide doubled from 57.5 million. Disney+, in less than two years, has become the biggest Netflix rival. Already available in Latin America, Australia and western Europe among other markets, Disney plans to distribute Disney+ to eastern Europe, Middle East and South Africa in 2022.

Disney’s Hulu, launched in 2007, also reported strong growth and finished the quarter with 39 million subscribers, a year-over-year increase of 22% from 32.1 million. In the near future, Disney plans to distribute Hulu, which has been available only in the U.S., globally. ESPN+, begun in 2018, has 14.9 million subscribers, an increase of 75% from last year’s tally of 8.5 million subscribers.

Disney also bundles its three streaming services at a price discount. In total, Disney has nearly 174 million streaming subscribers worldwide, emerging as a strong rival to Netflix. Parrot Analytics reports “The Disney bundle has created a strong walled garden that should keep subscribers happy for now… The prospects of short -and-long -term demand and subscriber growth look good for Disney.”

Comcast: At the end of second quarter 2021, Comcast’s Peacock, launched in July 2020, had 54 million sign-ups and 20 million active accounts. This is an increase from 42 million and 14 million respectively from the first quarter of 2021. Comcast recently announced plans to make Peacock available free to the 20 million Sky customers in Europe later this year. In addition, the Spanish-language Telemundo announced the launch of a new division called NBCUniversal Telemundo Hispanic Streaming, which will provide 50 new projects to Peacock and other streaming platforms beginning in 2022.

There have been rumors of a partnership between Comcast’s Peacock and ViacomCBS owned Paramount+, as both streaming services lag behind Netflix and Disney. All talks have been placed on hold for time being. In August however, Comcast and ViacomCBS did announce the launch of SkyShowtime which, pending regulatory approval, is set to launch next year. SkyShowtime will be available in 20 European markets and 90 million homes. The streaming service will have programming from a variety of content from Comcast and ViacomCBS.

ViacomCBS: In second quarter 2021 ViacomCBS announced the addition of 6.5 net new streaming subscribers, giving them a total of 42 million globally. Although most of the increase came from Paramount+, subscriber counts also include Showtime, Noggin and BET+. ViacomCBS also said the ad supported streamer PlutoTV now has 52 million active global users, up from 50 million in the first quarter. On the strength of Paramount+, ViacomCBS has set a goal of 65 million to 75 million global streaming subscribers by 2024. Paramount+ is available in Scandinavia, Latin America and most recently Australia. The SkyShowtime agreement will make Paramount+ available in 22 western Europe markets and replace their presence in Scandinavia. PlutoTV is already available in a number of western European markets.

Discovery: Discovery+ was launched last January 4. In its first seven months they have totaled 18 million subscribers, up from 15 million at the end of April. (The subscriber counts also include other streaming providers in the Discovery Communications DISCA portfolio including Eurosport Player and GolfTV, but a large majority comes from Discovery+). On July 15, The Magnolia Network from Chip and Joanna Gaines was launched on Discovery+.

Discovery+ is available in several western European markets with plans to launch in Latin America and Asian markets in the future. The acquisition of WarnerMedia’s HBO Max, announced last May, is expected to be approved in mid-2022. 

Warner Media: AT&T’s T WarnerMedia in the second quarter 2021 added 2.8 million net new subscribers to HBO Max and HBO in the U.S. In addition, over the past year, HBO Max and HBO have added 10.7 million net new subscribers bringing the overall subscriber count in the U.S. to 47.0 million. Globally there are 67.5 million subscribers, up from 55.5 million one year ago. HBO Max has set a goal of 70 to 73 million subscribers by year end.

Globally, WarnerMedia had postponed plans to launch HBO Max in 21 European markets until next year. One reason for the postponement is the contractual obligations HBO presently has with distributors across major western European markets. Currently, HBO Max is available in 39 Latin America and Caribbean markets. WarnerMedia is expected to launch CNN+ a new streaming service in the first quarter of 2022.

Others: There are numerous smaller streaming providers available to consumers: Starz, owned by Lionsgate, has 16.7 million global streaming subscribers with 28.9 million total subscribers. While linear TV subscriptions have fallen for Starz, streaming video, year-over-year, increased by 58% globally. AMC Networks AMCX includes such niche streaming providers as AMC+, Acorn TV, Allblk, and Shudder. AMC+, recently launched in Canada, has a stated goal of 20 million streaming subscribers by 2025. Previously, AMC announced an increase of 157% in streaming subscribers in 2020. The Fox owned Tubi, an ad supported streaming service, has 33 million monthly active users primarily in the U.S. with plans to expand globally.

Content Fueling subscriber growth and helping to cut back on churn content. When Netflix debuted House of Cards in 2013 there were only a handful original programs streamed. Since that time, hundreds of new streaming programs have been launched, easily outdistancing the amount of original content found on cable, premium pay cable and broadcast television, helping to coin the terms “peak TV” and “streaming wars”.

As streaming becomes more competitive, video providers have been investing in original content, licensed programming and live sports. According to Wells Fargo WFC , this year, the top five media companies will invest $97.6 billion in content (including sports). Disney will invest $30.5 billion in content, the most of any media company. NBCUniversal will invest $18 billion, followed by Netflix at $17.4 billion, Warner Media at $16.7 billion and ViacomCBS at $15 billion. Wells Fargo estimates in 2024, these five media companies’ investments in content will grow to $124.5 billion, an increase of 28% in just three years.

Programs

In just eight years, streaming programs have become the most critically acclaimed of any video platform. The trend began with Netflix. In 2013, Netflix launched its first original series House of Cards, in its six seasons the political drama earned 56 Primetime Emmy nominations.

In 2021 streaming programs will dominate 73rd annual The Primetime Emmy Awards. The Crown on Netflix and The Mandalorian on Disney+ each earned 24 nominations more than any other more program. WandaVision also on Disney+ has 23 nominations. Streaming programs accounted for five of the eight nominations for Outstanding Drama Series and seven of the eight nominations for Outstanding Comedy Series. In total, Netflix ranks second in Primetime Emmy nominations at 129 (behind HBO’s 130) and Disney+ ranks third with 71 Emmy nominations.

Presently, Netflix has about 6,000 titles in the U.S. and growing, with 40% of the titles called “Netflix Originals”, up from 25% in February 2020. Despite the increase in competition, data from Diesel Labs, a predictive media analytics company, point out Netflix’s share of top titles by engagement in the U.S., reveal a healthy share of engagement. In addition, according to the Nielsen Gauge Report, in July, Netflix had a 7% audience share, the highest of any streaming provider and one-quarter of all streaming viewers. Also, for the week of July 19, Netflix had eight of the ten most watched original series.

Another streaming provider with a large content library is Discovery+ with over 55,000 episodes from over 2,500 TV programs (including some original content) from their bullpen of cable networks. A study from Parrot Analytics says the high in-demand programming from Discovery, HGTV and TLC, etc. and the planned merger with WarnerMedia will put Warner Bros Discovery near the top when it comes to demand share. Also, PlutoTV said they have over 200,000 hours of content doubling, the total from last year.

Movies: Also helping to boost subscribers was the decision by WarnerMedia to release all 2021 feature films movies in theaters and online simultaneously, these included such blockbusters Godzilla vs. Kong and Space Jam: A New Legacy. For 2022 a majority of WarnerMedia films will premiere in theaters first and become available on HBO Max 45 days later. In addition, next year WarnerMedia will produce ten films exclusively for HBO Max. Comcast announced their Universal Studios UVV films will be available on Peacock within four months of their theatrical release.

Disney+ has content from a variety of sources including the growing Pixar, Star Wars, Marvel and Nat Geo. Disney has, at times, released movies concurrently online (at a premium rate) and theatrically including such titles as Black Widow and Jungle Cruise. Over the past two years, Netflix has produced four movies that were nominated for an Oscar for Best Picture (none winning); The Irishman, Marriage Story, Mank and The Trial of the Chicago Seven. According to Deadline, in the final four months of 2021, Netflix will release 43 new films.

Live Sports: Live Sports is one genre media companies are not following Netflix. The streaming pioneer has no plans to acquire the streaming rights of any live sporting events. 

With new rights fees being negotiated that includes streaming video, premier live sports are now being streamed and are helping to boost streaming subscribers. Peacock provided thousands of hours of coverage from The Tokyo Olympics with more coming from the Beijing Olympics next February. In a first, Peacock will be the exclusive source of a Notre Dame football game on September 11th. Starting with the 2022 season, NFL Thursday Night Football will be streamed on Amazon AMZN . ESPN+ has a myriad of premier sports from the MLB and NHL to MLS and Grand Slam tennis. Global soccer matches will be available on Paramount+, and ESPN+. English Premier League PINC on Peacock.

For years it was thought live sports would save the cable bundle. that is no longer true. Earlier this year, Comcast announced they will be pulling the plug on their vertical sports cable network NBCSportsNet with many events migrating to Peacock. 

As big media companies are now clearly focusing on their streaming strategies for the future, cable subscriptions, a strong revenue source, continues to drop. In the first six months of 2021, an additional 2.6 million subscribers have “cut the cord”. Variety reports, the number of cable TV subscribers is 25% lower than it was in 1996.