NET­FLIX AND CHILL NO MORE - STREAM­ING IS GET­TING COM­PLI­CATED

Techlife News - - SUMMARY -

Stream­ing TV may never again be as sim­ple, or as af­ford­able, as it is now.

Dis­ney and Warn­erMe­dia are each launch­ing their own stream­ing ser­vices in 2019 in a chal­lenge to Net­flix’s dom­i­nance. Net­flix view­ers will no longer be able to watch hit movies such as “Black Pan­ther” or “Moana,” which will soon re­side on Dis­ney’s sub­scrip­tion ser­vice. Warn­erMe­dia, a unit of AT&T, will also soon have its own ser­vice to show­case its li­brary of block­buster films and HBO se­ries.

Fam­i­lies will have to de­cide be­tween pay­ing more each month or los­ing ac­cess to some of their fa­vorite dra­mas, come­dies, mu­si­cals and ac­tion flicks.

“There’s def­i­nitely a lot of change com­ing,” said Paul Verna at eMar­keter, a dig­i­tal re­search com­pany. “Peo­ple will have more choices of what to stream, but at the same time the mar­ket is al­ready frag­mented and in­tim­i­dat­ing and it is only go­ing to get more so.”

Me­dia com­pa­nies are seek­ing to cap­i­tal­ize on the pop­u­lar­ity and prof­itabil­ity of stream­ing. But by frag­ment­ing the mar­ket, they’re also nar­row­ing the once wide se­lec­tion that fu­eled the rise of in­ter­net-based video. About 55 per­cent of U.S. house­holds now sub­scribe to paid stream­ing video ser­vices, up from just 10 per­cent in 2009, ac­cord­ing to re­search firm Deloitte.

Just as Net­flix, Hulu and Ama­zon Prime tempted peo­ple to “cut the cord” by can­cel­ing tra­di­tional ca­ble TV pack­ages, the newer ser­vices are look­ing to dis­mem­ber those more-in­clu­sive op­tions.

Dis­ney Plus is set to launch late next year with new Mar­vel and Star Wars pro­gram­ming, along with its li­brary of an­i­mated and live-ac­tion movies and shows. It hasn’t an­nounced pric­ing yet, but Dis­ney CEO Bob Iger said in an Au­gust call with an­a­lysts that it will likely be less than

Net­flix, which runs $8 to $14 a month, since its li­brary will be smaller.

AT&T plans a three-tier of­fer­ing from Warn­erMe­dia, with a slate of new and li­brary con­tent cen­tered around the ex­ist­ing HBO stream­ing app. No word on pric­ing yet.

In­di­vid­ual chan­nels, such as Fox, ESPN, CBS and Show­time, are also get­ting into the act. Re­search group TDG pre­dicts that ev­ery ma­jor TV net­work will launch a di­rect-to-con­sumer stream­ing ser­vice in the next five years.

Net­flix and oth­ers have in­vested heav­ily in orig­i­nal movies and TV shows to keep their cus­tomers loyal. Net­flix, for in­stance, said that 45 mil­lion sub­scriber ac­counts world­wide watched the San­dra Bul­lock thriller “Bird Box” dur­ing its first seven days on the ser­vice, the big­gest first-week suc­cess of any movie made for the com­pany’s nearly 12-year-old stream­ing ser­vice.

That first-week au­di­ence means nearly a third of Net­flix’s 137 mil­lion sub­scribers watched the movie from Dec. 21 through Dec. 27 — a hol­i­day-sea­son stretch when many peo­ple aren’t work­ing and have more free time.

But Net­flix, Hulu and oth­ers may soon have to do with­out pro­grams and movies li­censed from their soon-to-be ri­vals. In De­cem­ber, Net­flix paid a re­ported $100 mil­lion to con­tinue li­cens­ing “Friends” from Warn­erMe­dia.

Why are me­dia com­pa­nies look­ing to get in? Data and dol­lars. Sure, they get money when they sell their pro­grams to other ser­vices like Net­flix. But start­ing their own ser­vice al­lows net­works and stu­dios ac­cess to valu­able data about who is bing­ing on their shows.

For ser­vices with ad-based op­tions, that data trans­lates into more dol­lars from ad­ver­tis­ers. And ser­vices that rely only on sub­scrip­tion rev­enues, me­dia com­pa­nies can use the data to bet­ter tai­lor their of­fer­ings for in­di­vid­ual tastes, help­ing to draw in more sub­scribers.

“I think all me­dia com­pa­nies are com­ing to grips with the re­al­ity that you bet­ter es­tab­lish a re­la­tion­ship di­rectly with your au­di­ences,” said AT&T CEO Ran­dall Stephen­son at an an­a­lyst con­fer­ence ear­lier this month.

The busi­ness model that some net­works and con­tent com­pa­nies are cur­rently us­ing, dis­tribut­ing their TV shows and movies only by li­cens­ing them to stream­ing plat­forms, is get­ting “dis­rupted ag­gres­sively” as more com­pa­nies launch their own ser­vices, said Stephen­son, whose com­pany ac­quired Warn­erMe­dia in June.

For­rester an­a­lyst Jim Nail com­pares this mo­ment to the “Cam­brian ex­plo­sion,” a his­toric era when plant and an­i­mal species rapidly mul­ti­plied after Ice Age glaciers re­ceded.

“Big brands like Dis­ney have to eval­u­ate: Are we only go­ing to ac­cess this mar­ket by li­cens­ing our con­tent to Net­flix, Hulu and oth­ers?” he said. “Or, can we go di­rect to the con­sumer with our own ser­vice?”

But a mul­ti­plic­ity of stream­ing ser­vices could eas­ily over­whelm or con­fuse con­sumers. To get a full slate of pro­gram­ming, TV watch­ers may soon have to sub­scribe to sev­eral ser­vices in­stead of just one or two.

Among those op­tions will be ser­vices like Net­flix and Hulu that of­fer a wide range of video from a va­ri­ety of sources; ca­ble-like “skinny bun­dles”

such as FuboTV, Sling and YouTube TV that of­fer a va­ri­ety of live chan­nels; and chan­nel- or net­work-spe­cific ser­vices like Dis­ney Plus.

Con­sider just AT&T’s plan to launch a three-tiered ser­vice this year cen­tered on HBO. An en­trylevel bun­dle will of­fer mostly movies; a se­cond, slightly more ex­pen­sive tier will in­clude orig­i­nal pro­gram­ming and newer movies. A third and still more ex­pen­sive of­fer­ing would add more Warn­erMe­dia en­ter­tain­ment such as “Friends.”

The cost of mul­ti­ple stream­ing ser­vices could quickly ap­proach the av­er­age cost of a ca­ble bill — not count­ing the cost of in­ter­net ser­vice. That’s around $107 per month, ac­cord­ing to Le­icht­man Re­search Group.

“It’s un­likely any of the ser­vices in­di­vid­u­ally can charge more than $10 per month,” For­rester’s Nail said. “The great un­known is how many in­di­vid­ual stream­ing ser­vices peo­ple are will­ing to sign up for.”

Com­pa­nies are al­ready try­ing to tame this chaos by bundling mul­ti­ple stream­ing ser­vices to­gether. Ama­zon Prime cus­tomers can ad­don sub­scrip­tions to HBO, Show­time or Starz. Roku and Chrome­cast view­ers can ac­cess their dif­fer­ent ser­vices from a cen­tral place; Roku said it will start sell­ing in-app ac­cess to Show­time, Starz and other chan­nels as well.

How should con­sumers deal with all the com­ing change?

“Be pa­tient,” said Michael Gree­son, pres­i­dent of re­search group TDG. “We’re in a time of dra­matic change for the TV and video busi­ness. There’ll be great ben­e­fits, and ques­tion marks and con­se­quences.”

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