Under normal circumstances, we would be having a much different experience this summer. This mid-August week would have seen the closing of the 2020 Tokyo Olympic games, which would’ve been a unifying and celebratory event for everyone around the world. At this point, we would have had an exciting post-Comic Con outlook to get excited about, as the industry would’ve been rolling out all their most exciting news in the mega Summer event. And at this point, we would have had a robust Summer movie season with the likes of Black Widow, Wonder Woman 84, Tenet, Pixar’s Soul, and many more already in our rear view mirror. But none of that has happened. The coronavirus continued to rage on for the entire summer, even hitting it’s peak in July, and that left us with no Olympics, no Comic Con, and no movie season whatsoever. 2020 is almost certainly going to be seen as the “lost year,” with so much in the way of entertainment and sports having been either altered or cancelled outright in the hopes of flattening the curve of the pandemic. Worse yet, it’s a problem that we still haven’t seen the light at the end of the tunnel with yet. We know that like most other pandemics it will eventually burn out, but the impact will be felt long after it has subsided. Movie theaters will forever change, as will sports and fan conventions. We may never see the box office numbers that were once the life blood of the industry the same way again, and at the very least, it will take several years if not a generation to get it back to where it was during the 2010’s. And yet, people are still able to find entertainment that has helped them to endure through these hard times, and it’s been through a platform whose development could not have been better timed for the era that we are going through right now. For the moment we are in right now, streaming has been the life preserver for an industry and an audience that needs fresh and new entertainment.
The year 2020 will be known for quite a lot of things, but it will probably also be known as the year that Streaming came into it’s own as a vital part of the entertainment industry. With movie theaters, performance venues, and sports arenas all shut down in compliance of the disease control requirements, streaming became more essential for the average household than ever before. For the last decade, streaming was just a secondary option for anyone wanting to watch something new on television; competing more directly with say cable television than with any other entertainment output. But, with things the way they are now, people are looking more and more at streaming as the future of entertainment. With the “Stay at Home” orders coming down hard on many American states at the first outbreak of COVID-19, people were distressed by the fact that it left them with so little options for entertainment. But with the loss of movie theaters and sports venues came a boom for streaming services. The streaming market saw a nearly 20% increase in new subscriptions in just the first half of 2020 alone, greatly outpacing even their most optimistic of predictions. The market leaders, Netflix and Amazon benefited greatly from these market conditions, but the same was also true for the fresh new crop of competitor whose launch over the last year could not have been more opportune, even though it came in the middle of a pandemic. For some like Disney and Universal, streaming came as a much needed life line to help save them from the struggles of the economic hit that came from the pandemic. And while the market has given a favorable hand to the streaming newcomers, it hasn’t all been spread out equally. With this tumultuous and empty summer about to soon come to an end, it’s makes sense to take a look at who the winners and losers are in this Summer of Streaming.
First, we definitely need to examine the strength of these services by the factors that they themselves measure their success. Chief among them is the rate of new subscribers to their service and the retention rate that they yield over time. Netflix has managed to build it’s empire through a very high retention of old and new subscribers over it’s decade long history of streaming content. As a result, they now have nearly 200 million individual accounts that pay the monthly subscription cost, which generates monthly revenue for the company in the billions, which in turn goes into the production of new exclusive content that will help them to grow their subscriber base even further. This cycle has enabled Netflix to not only compete with the major studios as a formidable producer in it’s own right, but has up to this point also put the theatrical market into a defensive mode. Amazon, though they operate a bit differently offering their streaming service as an extension of their Prime membership, still has a high retention rate of their viewership, which has firmly put them in second place overall. But there is also the other marker of success that the streaming market has been making progress within, and that’s in the accolades it receives. It’s not enough to have a high quantity of viewable content on any given platform; it also matters if it’s quality as well. That has been the thing that upstart Hulu has proven among it’s bigger competitors. Despite having launched well before Netflix and Amazon, Hulu’s subscriber base has remained relatively small. But, they made up for it by making history as the first streamer to have won the top award at the Emmys, taking home Best Drama for The Handmaid’s Tale. There are certainly several ways in which the newest competitors can tout their achievements, and the one’s shown from Netflix, Amazon and Hulu have proved that. And given the shake-up that 2020 has made, these factors may end up being the new barometer for success in a very changed industry.
Considering all the factors, new subscribers, high retention, and accolades for the quality of the content, there are certainly some winners in this Summer streaming season. Of the newest contenders, there is no doubt that Disney+ takes the crown by a significant margin. Launching last November to much fanfare, Disney+ positioned itself perfectly to not only put itself in strong contention with the streaming giants of Netflix and Amazon, but to also have a strong foothold just in case something crazy and unexpected happened, like say a pandemic. Once theaters began closing, Disney made the risky but overall right choice to bring their short-lived box office champ Onward (2020) immediately to the platform. Onward only managed a two week run in theaters before the shutdown, and while it did cost Disney money to cut it’s run short, it did benefit Disney+ with more interest from prospective subscribers. Couple this with earlier than expected premieres of Frozen II (2019) and Star Wars: The Rise of Skywalker (2019) on the platform as well, and Disney+ was generating some much needed buzz for a still relatively new streaming service. And then they pulled out their ace in the deck; the musical Hamilton. Originally intended for a theatrical release in 2021, Disney instead opted to launch the much anticipated filmed version of the blockbuster stage musical on Disney+ instead; and on a well timed Fourth of July premiere too. With this, Disney not only propelled themselves ahead among new streaming competitors, they also gave the top dogs a run for their money. Hamilton was the most streamed film on any platform this summer, even higher than any Netflix premiere, and by a wide margin. If streaming is going to challenge the norms of Hollywood distribution in the next decade, it may not be Netflix that leads the charge but Disney given the huge swings they are currently taking, and that’s without having played their Marvel cards just yet.
One thing that has also benefited Disney+ plus thus far is their ratio of value to content at the core of their service. Their $7 a month price tag is relatively reasonable and perhaps even a bargain given what they already have put on their service. Not only is every Disney movie ever made available, but also every Star Wars, Marvel, and Pixar film, plus a whole host of 20th Century Fox and National Geographic titles as well. Netflix by comparison has a higher $12 a month base subscription, but their decade long production of original material has helped to back up the value of their service. Eventually Disney will raise their price once they fill their platform with more original content, but for the meantime, their launch comes at a reasonable rate which has allowed for new subscribers to flock to them quickly, even in the middle of economic hardship. And for a start-up, that value to cost ratio matters and it probably is what is separating the leaders from the rest of the pack. This price point in particular is what is holding back what could have been one of the other top contenders from reaching where it should be. HBO Max, the streaming platform run by Warner Media, has touted itself as the new home for everything under their media umbrella, including Warner Brothers Entertainment, HBO, DC Comics, Turner Classic Movies, Cartoon Network, as well as exclusive rights to Studio Ghibli. However, while their lineup of content was impressive, their starting price was not; $14.99 a month. Charging more a month for a platform with very little content than what Netflix has with their huge library, was a hard pill to swallow for many potential subscribers, and in many ways it has been what has prevented it from having a huge start in the market, which has alarmed some in the Warner Media empire. Still, a last minute deal made with cable giant Comcast has given HBO Max some legs to stand on, but their continued absence from other streaming hardware makers like Roku and Amazon Fire may also dilute any success for them in the future. For HBO Max’s shaky start, they can only hope that future high profile exclusives like the Snyder Cut of Justice League (2017) can give them the boost they’ll need to gain ground on the likes of Disney, Amazon and Netflix.
It makes you wonder if HBO Max had not made that eleventh hour deal with Comcast that they might have crashed and burned upon release. It shows that more than anything that succeeding in this new market depends greatly on a good strategy. Disney benefited from ideal timing and the strength of their catalog, but also being able to improvise in a time of crises has given them the edge they needed to stand out on top. While HBO Max has had to figure their strategy out in new circumstances, other new platforms are making themselves stand out in other ways. Apple TV+ launched two weeks prior to Disney+, and did so with lesser fanfare, but also with an entirely different roll-out model. Apple’s platform runs through their iTunes store, making each of their exclusive content available to purchase separately without a subscription, but also makes this available as well at a bargain rate of $4.99 a month. The downside is that Apple’s exclusive offerings are the smallest of any of the streamers, but again the smaller monthly price helps to match that value ratio. In addition, Apple has also given people who have purchased any of their hardware products within the last year a free year long subscription, which is helping to bring people to their service who otherwise would’ve passed it by. It’s too early to say what their retention rate will be once those free year subscriptions are up, but it nevertheless is a smart strategy for a newly minted service to start out with. The same could hold true for late comer Peacock. Launched recently in July, Peacock is taking a very different strategy by offering a sizable chunk of their content for free. Once potential subscribers sign up for the service, then they are able to watch a number of shows on the platform at no charge, with the remainder available behind a pay wall. Again, it’s hard to know if this may entice new subscribers to pay more for the premium content, but giving away so much for free at the get go is a smart strategy to entice people to try the service out first; like giving them a test run to see if they like it. Once Peacock starts offering more exclusives and puts more of it in the premium paywall column, they could likely benefit from all the free subscribers who have enjoyed their service up to that point and find people more willing to pay up. The times right now favor experimentation when it comes to making a streaming platform work, and for Apple and Peacock, they are experiments that could lead to good things down the line.
But, from what we have seen over the summer, there is certainly one example that will probably stand as a prime example of how not to launch a streaming service. Poor Quibi almost seemed doomed from the get go. The pet project of former Dreamworks Animation founder Jeffrey Katzenberg and his chief investor, former Ebay CEO and California gubernatorial candidate Meg Whitman, Quibi was and is an odd little duckling in this streaming battlefield. Instead of competing with the big studios over challenging the likes of Netflix, Quibi sought to carve out it’s competition against another internet giant; YouTube. Quibi’s format centers around short 10 minute long videos that are ideally watched on mobile devices; with some shows uniquely formatted to play in a smart phone’s portrait mode. Though short in length, each show would be given polished production values, and would be produced by some top tier filmmakers with marquee names attached to them. No doubt Katzenberg was calling in quite a few favors from some of his many Hollywood friends, and there were some interesting projects announced to help launch the service. The unfortunate thing is Quibi’s very format model does not justify it’s value of a subscription service. YouTube offers millions of hours of content to for free to anyone who opens up their web page, supporting itself and it’s community of content creators through ad revenue. No one would want to pay extra to watch something similar to that format, and that is what is at the heart of Quibi’s failure. Upon launch, Quibi couldn’t muster 1 million subscribers in it’s first week; a number Disney+ achieved in it’s first hour. And since then, their subscriber base has dwindled more than 80%, leaving the struggling streamer with the smallest overall viewership of any streamer. Sure, it was a unique angle to take, making what are essentially bigger budget YouTube videos, but it does not justify the cost of Quibi’s subscription value, and as of right now, Katzenberg’s baby is sadly on life support. Nobody wants to be a cautionary tale, but Quibi may indeed be what we look back on as the model for exactly the wrong way to build a streaming service.
It will be interesting to see what the competition that this summer has brought to the streaming wars will create for us in the years ahead. Disney is certainly happy to see their streaming platform become a huge success, especially when all the other divisions of their company are suffering during this pandemic. The upcoming experiment with Mulan on premium VOD will be yet another monumental movement by Disney+ that may change the film industry even more in the future. And though HBO Max, Peacock, and Apple TV+ are all growing their viewership much more slowly, their experimentation may pan out in the years ahead as well; perhaps even putting them in contention with the industry leaders. The only certain thing right now is that Quibi is not very likely to last long in this market. If they couldn’t make their move in a period of time where streaming was the only game in town, then there is little hope for their future. They’ll likely end up on the ash heap of other failed industry experiments like MoviePass, with their assets likely sold off to each of their competitors. And let’s not forget, Netflix and Amazon continue to grow as well with this ever expanding market. Netflix enjoyed it’s best quarter ever in fact, with all the people waiting on the fence finally diving fully in once the loss of the movie theater business made streaming more essential than ever. At this point, we are learning what it takes to make the best moves in an industry that is rapidly changing. When many of these streamers set out to launch themselves over the course of the last year, I’m sure that none of them thought that their value would be so needed so soon. And as a result, we are seeing what could be the start of the new power base for the future of the industry; especially if the theatrical market fails to recover from this pandemic. Some are winning and some are losing, but the race to the top is a long game, and it’ll be interesting to see what each streaming services pulls out of their sleeves in the years ahead, hopefully in a more stable world than we live in now.