Yahoo – AFP,
Rob Lever, March 17, 2019
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Netflix has taken the lead in streaming to expand into 190 markets but is now facing some deep-pocketed rivals including Apple and Disney (AFP Photo/ROBYN BECK) |
Washington
(AFP) - Some of the biggest names in media and tech are gearing up to move into
streaming, in what could be a major challenge to market leader Netflix.
Apple is
expected to make its move with an announcement March 25 on its media plans,
with a war chest estimated at some $1 billion and partners including stars like
Jennifer Aniston and director J.J. Abrams involved in content.
Walt Disney
Co. has announced its new streaming service Disney+ will launch this year, as
will another from WarnerMedia, the newly acquired media-entertainment division
of AT&T.
The new
entrants, with more expected, could launch a formidable challenge to Netflix,
which has some 140 million paid subscribers in 190 markets, and to other
services such as Amazon and Hulu.
"It's
really going to change the industry," said Alan Wolk, co-founder of the
consulting firm TVREV who follows the sector.
Wolk said
he sees seven or eight powerful players in streaming which will lead to
"huge competition for new shows and hit shows."
These
rivals are coming into the segment which has been transformed by the
spectacular growth of Netflix and a growing movement by consumers to on-demand
television delivered over internet platforms.
In the US
alone, an estimated six million consumers have dropped pay TV bundles since
2012, while on-demand services such as Netflix, Hulu and Amazon have been
surging, according to Leichtman Research.
But just as
Netflix has disrupted traditional "linear" television, rivals are now
moving to disrupt Netflix.
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Strong name
recognition and sought-after content is liekly to make Disney a
formidable competitor in streaming television (AFP Photo/Alberto E. Rodriguez)ls)."
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Feeling
pain
Netflix is
likely to feel pain, not only from the new rivals, but also from the loss of
content from the big libraries of Disney and Time Warner.
These
Hollywood firms "have big libraries, so the cost of their content is much
lower than it will be for Netflix, which has to pay for all its content,"
said Laura Martin, analyst with the research firm Needham & Co.
"Netflix
will lose subscribers to these new entrants," Martin said.
AT&T's
WarnerMedia will launch its service later this year that combines the content
from its premium HBO channel (known for "Game of Thrones") and the
vast Time Warner library or films and shows.
Disney's
service will have its films and TV shows, along with the library it is
acquiring from Rupert Murdoch's 21st Century Fox, a deal closing in the coming
days. That includes the "Star Wars" and Marvel superhero franchises
and ABC television content.
JP Morgan
analyst Alexia Quadrani predicts Disney will eventually scale up to become as
big as Netflix, or even bigger by signing up 45 million US subscribers and 115
million internationally.
Quadrani
cited Disney's "unmatched brand recognition, extensive premium content,
and unparalleled ecosystem to market the service."
The analyst
said Disney benefits from its global ecosystem that develops good customer
relationships from its theme parks, hotels, cruises, and consumer products.
Wolk agreed
that Disney "is in a good spot" because of its strong brand and content
but predicted that consumers may be overwhelmed by the growing options.
"I
think there will be a lot of churn," Wolk said. "People will
subscribe to one service to watch one show, and then it becomes easy to cancel
and take another."
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Jennifer
Aniston is one of the Hollywood stars Apple is counting on as it prepares
to
launch its streaming video service (AFP Photo/Alberto E. Rodriguez)
|
No panic,
yet
Some
analysts say Netflix has no reason to panic -- yet.
"Netflix
has figured this business out, they know what consumers want," said Dan
Rayburn, a streaming media analyst with Frost & Sullivan.
But Rayburn
said that over time, rivals may be able to leverage their user base and
infrastructure to eat away at Netflix's advantage.
"What
does Netflix own? Nothing," Rayburn said.
"If
you're Amazon or AT&T you can give this stuff away and be a loss leader,
that's the big value."
Still, he
said any company that wants to challenge Netflix needs to be "quick and
nimble" and that it remains to be seen if the legacy players can do that.
Richard
Greenfield of BTIG Research also questioned the capability of the legacy
entertainment firms to compete in the world of new media.
"We
believe legacy media has missed their window to compete with Netflix (and other
tech platforms) unless they are willing to truly go all-in," Greenfield
said in a recent research note.
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The
streaming service from AT&T's Warner Media will include
programs from HBO
such as "Game Of Thrones," whose star
Emilia Clarke is seen here (AFP
Photo/Alberto E. Rodriguez)
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'Innovator's dilemma'
Greenfield
said that means moving the focus away from the box office and getting better
control of content.
"Disney
is battling a classic innovator's dilemma that makes it hard for them to truly
pivot to direct-to-consumer, not to mention, they and the rest of legacy media
do not really appreciate how important technology is to success in
direct-to-consumer streaming," Greenfield wrote.
Daniel Ives
of Wedbush Securities said Apple could be the wild card, but that the iPhone
maker might need to acquire a content provider like CBS or Sony Pictures to be
a major player.
Apple
"is definitely playing from behind the eight ball in this content arms
race with Netflix, Amazon, Disney, Hulu, and AT&T/Time Warner all going
after this next consumer frontier," Ives said in a note to clients.
"While acquisitions have not been in
Apple's core DNA, the clock has struck midnight for Cupertino in our opinion
and building content organically is a slow and arduous path, which highlights
the clear need for Apple to do larger, strategic (deals}."
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Netflix CEO Reed Hastings gives a keynote address, January 6, 2016 at the Consumer Electronics Show in Las Vegas, Nevada (AFP Photo/Robyn Beck) |
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