Think That There Are Too Many Streaming Services? The Big Streamers Agree With You
Before the streaming wars had begun in earnest, I envisioned a variety of services to cover every type of user. For example I predicted that each sports league would sell a service directly to fans to provide a tailored experience for them and cut out the middleman taking a portion of the revenue.
I was wrong.
The WWE tried this strategy, but has since pivoted to offering their content on Peacock. The NFL will move to provide all of their games next season via streaming, but they will be offered by partners. MLB is moving more slowly to streaming, but seems to be following the NFL’s model by distributing games across a number of services.
So why share the fan’s dollar instead of offering a dedicated service to capture all of it? Because there are too many streaming services already.
The market for a dedicated service would be limited to true fans, and by going this route the leagues would wall off games from casual fans. A bundled service has a broader appeal.
Just this past week CNN+ was shut down less than a month after its debut. I don’t believe that it was killed because of its lack of popularity, though by all accounts its initial usage was terrible, but because its new parent company’s CEO knows that a single diversified service will be more successful than smaller, more targeted services.
The newly formed Warner Bros. Discovery has already announced that it will be merging HBO Max and Discovery+ into a single offering. This combined product will have HBO’s prestige dramas and comedies, DC Comics’ movies and series, and Discovery’s endless reality programming to create a true four quadrant service (meaning that it appeals to men and women both over and under age 25).
Disney seems to be headed in a similar direction with its services. In the US Disney heavily promotes the Disney+/Hulu/ESPN+ bundle. Outside of the US, Hulu’s original content is offered as a part of a single service with Disney+ branded as Star. I predict that we will see a consolidated product inside the US some time after NBC’s programming departs Hulu for Peacock later this year.
These combined, more broadly appealing services are threatening Netflix as it has never been threatened before. The big dog of streaming saw its first ever subscriber drop last quarter. To be clear, Netflix still has about 90 million more subscribers than its nearest competitor, Disney, but that gap is closing fast. The competition is starting to provide a compelling combination of must-see shows along side never-ending filler content, but is also looking beyond Netflix’s strategy by also offering lower cost, ad-supported tiers and live sports.
Unfortunately even after this forthcoming wave of content consolidation there will still be more streaming services than the average consumer is willing to pay for. Paramount is probably the most obvious acquisition target but because it also owns CBS the FCC won’t allow it to be combined with Disney (owner of ABC) or NBCUniversal, and neither Amazon or Apple wants to get into the legacy broadcast business.
So for the foreseeable future we will continue to see the big streamers that we have today, and the big tech and big media companies behind them will battle it out by adding as much content as possible to them to appeal to the widest possible audiences, leaving little room for smaller services that most people would never want to pay for.
