Updated: Jan 5, 2021
So many shows to binge, so little time. It’s a first-world problem that has pretty much become the norm for today’s generation. Almost anybody would agree that if they just had some more time they could get through all of the shows they wanted to binge. Ironically, 2020 has swooped in with a brutal reality: be careful what you wish for. With nationwide quarantines in place due to the COVID-19 pandemic, society has been turned on its head. People are stricken for money with more free time than ever before but no idea what to do with it. As a result, streaming is at an all time high; yet the amount of options out there is even more overwhelming than we previously thought.
We’ve all likely heard the buzz word “streaming wars” thrown around, but now the gravity of its effects are really starting to settle in. With new players such as the brand new ever so confusing HBO Max and the soon to arrive Peacock (NBCUniversal) entering the battlezone, fuel is being added to the fire constantly. Essentially, this is a crucial point for the grandiose streaming wars. It’s now at a point of picking and choosing your platforms, leaving us with questions like: how is this new competition going to affect Netflix? Who will emerge as the winner of the streaming wars? One thing to keep in mind is that the situation is far too complex to be naming winners and losers. The most important thing to be aware of is that the “streaming wars” act as an umbrella which encapsulates smaller battles that are occurring. Netflix started these battles and knows how to get through them, while still remaining on top.
When you boil down the main appeal of streaming, it comes down to price, personalization, and on-demand satisfaction. Regardless of time, place or service provider, anybody could have access to some of their favorite shows or movies whenever they please. Gone are the days when the only thing on at midnight is George Lopez. Not to say that flicking on your TV to find the Lopez family soaring through the air to the tune of “Low Rider” wasn’t always deeply comforting, but now people have the freedom to choose what they desire. Not to mention you can eliminate commercials and STILL undercut your cable bill. Let’s put it into perspective of monthly payments. The average household pays about $217.42 per month for their cable package. Instead, a family could hypothetically subscribe to the premium plans for Netflix, Hulu, Disney+, Prime Video, Apple TV+, HBO Max, and CBS All Access and STILL be saving $139.48 per month!
Basically, the downsides of cable have continued to stack up and reveal themselves to the point where the only thing they have going for them is news and sports (although there are streaming options available, they are fragmented amongst Sling and Fubo). Thus, a new trend arose primarily in younger households known as “cord cutting”, where cable packages are forgone in favor of getting all your television content from streaming subscriptions. While cable might be kicked to the curb, cord cutting is further provoking the beast of the streaming wars leading to more and more new platforms entering the market. Undoubtedly, streaming is the future; and there’s no shortage of networks, studios and tech companies (Amazon/Apple) who want to join in on the ruthless competition and cash in for themselves. Despite this exciting prospect of more and more content, cord cutting is actually pushing the war further towards a negative outcome for us subscribers.
The Content Wars
Like any situation, there are two sides to this increased competition. More competition means more of a challenge for each platform, which means better content for us. Just take a look at the incredible new technology used to create The Mandalorian for Disney+, the increase in Emmy nominated streaming shows over the years, or the recent announcement of the Justice League Snyder Cut on HBO Max. The downside? This competition has unleashed what I like to call: the “content wars”. Just to clarify, this is not a term that is of public knowledge, but with eyes wide open it’s clear that it’s been happening right under our noses. Allow me to explain. Most TV shows and movies belong to a singular or in some cases multiple parent companies or networks (for example: Star Wars is to Lucasfilm/Disney just as Parks and Recreation and SNL is to NBC/Universal/Comcast). So by entering the streaming wars, these networks want to reclaim property that is rightfully theirs (you can thank the content wars for taking The Office off of Netflix in 2021). Meanwhile unclaimed movie/TV show properties are left to jump between platforms due to licensing agreements. So what’s the implication?
Slowly but surely, content is being split up and diluted; and in the end, we are the ones losing out. Think about Netflix and Hulu subscribers just a few years ago. If you were a sitcom fan, you could have Friends, The Office, How I Met Your Mother, Seinfeld, and It’s Always Sunny in Philadelphia at your fingertips ($17.99 a month total for Netflix and Hulu). Now you’ll be needing a subscription to Netflix, Hulu, HBO Max and Peacock to have them all (about $45 per month). Of course you could absolutely subscribe to each and every platform and cut the cord on cable as previously mentioned. But truthfully, this is becoming a pipe dream for many. There are still many households that are hesitant to cut the cord from cable, and even those that have already made the move, are in for a rude awakening.
Cord cutting may seem like it spells defeat for cable companies, when in reality many cable providers have made peace with the trend. In their minds why would they fuss over cable when they know you still need their services for WiFi (plus they don’t need to send out technicians to install cable boxes). Other providers, however, are not happy at all. But what can they do about it right?...kind of a lot actually. In addition to rising internet rates, providers can be even stingier with data caps (limits on how much you can download per month). Even though you aren’t technically saving any files to a hard drive while binge-watching, streaming is a form of downloading which can use up a lot of data quickly if it isn’t monitored. Companies like AT&T, Comcast and Cox will allow you to get around it by [you guessed it] paying more money. So you may want to cancel your cable package, but don’t be surprised if your bills don’t change much.
Which brings us to the current complicated nature of the streaming wars. While it sounds amazing, subscribing to every service is just not a realistic financial and logistical decision for many people. Naturally, your mind might go straight to password sharing a friend/family's account; but it's only a matter of time before the screen limit (how many people can watch at once) becomes inconvenient, or the platforms develop a way to box you out. And to be quite frank, it can be hard to decide what is really worth the money. Will you truly be getting your money’s worth from HBOMax if you only want to rewatch Friends? Is it too much of a gamble to pay for Apple TV+ hoping their originals will live up to the hype? Truth be told, there are certain forces we cannot control. It’s more than likely that service rates will rise, shows and movies will be separated and history will repeat itself. As this continues, old shows and movies likely won’t be as much of a determining factor any more. Instead, what will really make the difference is original content and customer service. Thus, while all of this competition looks like it might be too much for the OG king of streaming Netflix, they’ve shown us from the start how they have and will continue to persevere. So briefly, let us rewind.
Goodbye Blockbuster, Hello Netflix
Once upon a time, before they were a billion dollar entertainment giant, Netflix made their money through mail order DVD subscriptions. By cutting out late fees with a subscription based model and eliminating retail locations to cut costs, the company was able to dethrone Blockbuster and completely disrupt the market. Of course this business model was not free of downsides, however, Netflix excelled in their ability to both understand their viewers and adapt to what is easiest and most comfortable for them. In that same vein, they soon updated their business model to join online video streaming. This refreshing wave of personalized, on-demand, user friendly entertainment caught on and spread like wildfire.
For years they did struggle. Part of what makes Netflix so adaptable is that they were always looking 5-10 years down the road. This sort of mentality can lead to some huge payoffs, but it’s a slow burn. Obviously the mail-in rental subscription strategy was not where Netflix envisioned themselves staying forever. For years, technology wasn’t caught up to their vision. However, biding time with this subscription system allowed them to create a baseline for their famous recommendation algorithm. Not only did this help to personalize movie recommendations to provide a unique user experience, but it also provided data to tailor almost all of their future business decisions, including original content. Thus, the streaming wars began, and Netflix was prepared.
Why Netflix Will Persevere
Flash forward to today, and this slow burn has paid off for sure. Netflix’s years of experience and futurist mentality has brought them 182.8 million subscribers. Only Prime Video comes remotely close with 150 million (however, Amazon Prime subscribers are automatically and unwillingly subscribed to Prime Video; so it’s unclear how many of these subscribers actually use the service for streaming). Granted, many new platforms are still in their early stages and are doing fairly well. Disney+ has reported about 54.5 million subscribers in just over 5 months, and as of January, AppleTV+ reported about 33.6 million US subscribers after launching in November 2019. So you may be saying to yourself: Netflix did all the heavy lifting and struggling to figure this out, what’s stopping these new players like Disney, and NBCUniversal from playing copycat and using their brand power to dominate the streaming wars? It’s really quite simple:
Machine Learning: When it comes down to it, a streaming company is a company built on data. Netflix has been around the longest. The more time you’ve been in business, the more data you have. Netflix has by far the most subscribers. The more subscribers you have, the more data you have. Why does this matter? It’s simply because the more data you have, the better and more accurate your algorithm will become. Sure, these new platforms do have their own algorithms, but there’s no doubt that they are less in depth and based on weak correlations. Whereas Netflix can separate recommendations into ultra-specific microgenres such as “Visually striking nostalgic dramas” or “Understated romantic road trip movies”. Plus, they never stop trying to perfect their approach. For example, have you ever wondered why Inception will show up with an image of Leonardo DiCaprio one day and a few weeks later with an image of an action sequence with Tom Hardy? It’s all in the data; they know what will make you decide to watch and what will make your turn away. In plain english, Netflix understands their viewers like no other company.
Original Content Strategy: As mentioned previously, from the very beginning of their days, Netflix was using their data to prepare for original content. Not only did they understand what viewers wanted to see before they themselves even knew it, but they were and still are capable of producing a high volume of quality shows and movies with smaller budgets. With 128 Emmy nominations and 24 Oscar nominations, they lead the market yet again. So while these new platforms squabble about, struggling to secure their own content in the content wars, Netflix is cranking out originals like a well oiled machine. This isn’t to say that other platforms don’t have great originals. However, Netflix simply has more data and more loyalty. Additionally, while saying goodbye to old favorites like The Office may be sad, Netflix has plenty more content coming to take its place (wink wink Live Action Avatar: The Last Airbender).
Licensing Deals: Although Netflix has a great original content strategy to combat the content wars, there still are a lot of people who care about old shows and movies. Luckily, Netflix has been around long enough to become a household name. Thus, all of the properties that wouldn’t be claimed by large networks (Breaking Bad: AMC Networks, Sherlock: BBC) are snatched up by licensing deals with Netflix. So while it may seem like content is leaving day by day, there is a lot more pre-existing content out there besides the mainstream ones. Netflix is consistently building its library with classic/critically acclaimed films and even old favorites. Prime Video boasts having much more content, but any dedicated binger knows that you have to pay for a good amount of it even with your membership.
Loyalty: Overall, the time and effort Netflix has put in since 1997 has created a secure circle of loyalty. They’ve proven their customer service abilities to subscribers, plus studios and networks trust in their talent and business prowess. Even if users flock to the new platforms, most families will not cancel their Netflix subscriptions. New platforms like Disney+ and HBOMax have come to play with their own die-hard fans. But combined with these other forces, when the dust settles on the content wars and cord cutting, Netflix will be as strong as they’ve ever been. Better yet, if history tells us anything, they’re already prepared; and because of that, they’ll be stronger.
Written by Jake Zall
Edited by Nick Mandala