Matt Ball Dissects the Streaming Wars: Apple TV+ vs. Netflix vs. Disney+ vs. HBO Max – Business Casual

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Key Takeaways

  • The leading players in the streaming wars: Netflix, HBO Max, Disney+, and Apple TV+
    • Netflix, of course, has been around for a while
    • Apple TV+ launched on November 1st, Disney+ just launched on November 12th, and HBO Max will launch in 2020
  • Pricing:
    • Disney+ plans to launch at a price point of $7/month
      • If paid for annually, it will cost ~$6/month ($69/year)
      • If you pay for 3 years at a time, it will cost $3.88/month
    • The most popular Netflix package costs $12.99/month
    • Apple TV+ will cost $4.99/month (but it’s free for a year if you buy new Apple hardware)
    • HBO Max will cost $14.99/month 
  • Subscriber numbers:
    • Netflix currently has 60 million subscribers
    • Disney+ claims that by 2024, they’ll have 60-90 million subscribers
    • HBO Max is expecting they’ll have 50 million subscribers by 2025
  • How will everything play out?
    • Time will tell; we likely won’t have an answer until 2021
    • One thing’s for sure: Netflix is the front runner

Intro

  • Matt Ball (@ballmatthew) is the former Global Head of Strategy for Amazon Studios
    • He’s currently a venture capitalist focused on interactive media
    • Check out his website and essays
  • Host – Kinsey Grant (@KinseyGrant)

The Streaming Wars

  • Every time a platform shift occurs (either from PCs to laptops, PCs to mobile, or cable TV to digitally delivered TV), it’s always the most significant opportunity for market share shifts and for new entrants to invade the market
    • “What we’re seeing right now is really the point in time in which the jostling is about to begin”Matt Ball
  • There’s a lot of unanswered questions:
    • Who will win? Who will survive?
    • What does “winning” mean?
    • How many media companies will succeed?
    • How many services will the average consumer adopt?

The Main Players

  • Netflix, of course, has been around for a while
  • Apple TV+ launched on November 1st, Disney+ just launched on November 12th, HBO Max will launch in 2020, and NBC’s Peacock is also coming soon (April 2020)
    • There are also a few smaller players (i.e., Fox Nation and Quibi)

Why isn’t Amazon, with Prime Video, at the forefront of the streaming wars race?

  • “There’s always a difficulty in understanding what an arm of Amazon is doing and what performance/success looks like” – Matt Ball
    • With HBO or Netflix, it’s quite simple: How many subscribers do they have, and how many shows do they have?
    • We don’t even know the specific core metrics for Prime Video
  • Think about these things:
    • When Roku launched its connected TV device in 2008, it was the market leader for more than a decade
      • Apple TV launched in 2007, and Amazon’s Fire TV launched in 2014 – it now has the largest market share
    • Amazon was estimated to have 15-20% of the market share of digital movie/TV show downloads back in 2012, compared to 70% from iTunes
      • They’re now roughly neck and neck
  • The takeaway: Don’t sleep on Amazon

Why 2019 for the battle of the streaming platforms?

  • One reason: There are long lead times to each deal cycle
    • For example, Netflix’s deal with Disney’s films was struck in 2013 (it then came into effect in 2017, running for two years)
      • Most competitors in the streaming service race have all been operating under a deal structure similar to the above. We’re nearing a 1.5-year window where most companies are starting to get their rights back.

Just how important is the race to market?

  • Some companies aren’t as prepared to launch, but they know that if they wait… it’s game over
  • Launching a few weeks before another company probably won’t matter in the long run, but if it’s a few years prior…. then it’s serious

Content Strategies and Motivations

  • Apple wants to do $50 billion in services by 2020
  • Disney has a significant focus on intellectual property and gathering data
    • “Disney is the most dominant media company we’ve ever seen, and they are going to leave off the table tremendous profitability by choosing to develop their own service. They could be generating billions of dollars per year in zero-risk cash just by licensing their content.” – Matt Ball
      • (Like allowing Netflix to play their content)
    • One of Disney’s biggest aims is to understand which of their characters/titles are the most popular
      • Then, with this data, they might ask: “How do we get a family, who’s never bought a cruise vacation, to purchase one?”
  • Netflix’s strategy is more so aligned with delivering as much video content to as many customers as possible 
    • Because of this, they have to address a wide range of audience interests
  • HBO is focused on providing content specifically and exclusively for most-prioritized time of the consumer (~9 PM Sunday evening)
    • Thus, they charge more (it’s more “high-end”)

Pricing

  • Disney+ plans to launch at a price point of $7/month
    • If paid for annually, it will cost ~$6/month ($69/year)
    • If you pay for 3 years at a time, it will cost $3.88/month
  • The most popular Netflix package costs $12.99/month
  • Apple TV+ will cost $4.99/month (but it’s free for a year if you buy new Apple hardware)
  • HBO Max will cost $14.99/month 

What about the cost of producing content?

  • Budgets have skyrocketed
    • In 2000, Band of Brothers broke every record by making a $100 MM mini-series, costing ~$10 MM/hour
      • Apple just launched production for Band of Brothers 3 which will cost upwards of $25 MM/episode
  • There are reports that every single original series that Disney+ is making will cost $15-20 MM/episode
  • Netflix spends $12 billion+/year creating original content

The Impacts of Pricing

  • Netflix recently announced that in Q2 of 2019, they saw the first loss of U.S. subscribers since 2011 (this has since bounced back)
    • Many thought this was because Netflix raised prices earlier in the year
    • Matt has some thoughts:
      • “Most companies on Earth would kill for a competitive dynamic where you increase your prices 20%, and you lose 0.15% of your customers”Matt Ball
      • Netflix is CONSTANTLY losing/gaining subscribers – financial reports are just a moment in time

Netflix Doesn’t Have a Backup Plan

  • They don’t have a theme park (like Disney), nor do they sell ads – does this put them in danger?
    • Sure – there’s inherent danger in having less of a cushion 
  • “What will make Netflix succeed, despite this influx of competition, the enormity of their content loss, and their lower price points, is the scale of their present-day advantages”Matt Ball
    • A perfect example: Right now, Netflix has more engineers than HBO has employees

Media or tech company? Can it be both?

  • In short, the line is blurring
    • These media companies are adopting more of a tech-driven mindset with an obsession of data
    • At the same time, they’re also adopting more and more of a media approach to thinking about content, more akin to Hollywood or a screenwriter than AI or a robot

How will the streaming wars play out?

  • “I don’t think there will be any clarity on Netflix until 2021” Matt Ball
    • “Unless they blow it out of the park, I can virtually guarantee that the response to their success will be easily excused away”
      • For example, if Netflix has a great Q4 in 2019, the argument will most likely be: “That’s only the case because all of Apple’s launch shows were bad” (or something similar)
  • Disney claims that by 2024, they’ll have 60-90 MM subscribers (Netlfix already has 60 MM)
  • It won’t be until early 2021 that most of HBO Max’s originals hit the streaming service
    • HBO Max is expecting they’ll have 50 MM subscribers by 2024
  • In summary: “The clarity on what all of this means will take some time” – Matt Ball
    • But one thing is clear, Netflix is the front runner 

What should Business Casual listeners be paying attention to?

  • The video gaming space

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Additional Notes

  • Americans watch 5.5/hours of video/day (~5 of that is accounted for with TV)
  • On average, Americans listen to 2.5 hours of music per day
  • Two of the most-watched shows on Netflix: The Office and Friends
    • NBC gets the rights back to The Office in Q1 2021
  • The iPhone X has 16,000 data points of tracking on your face
  • Matt loves HBO’s Watchmen
  • Matt follows a ketogenic diet
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