Subscribers caught amid Streaming Wars
Apple and Disney vie for customers with deals
Buy a new iPhone, iPad or Apple computer and you get the new Apple TV Plus streaming service for free, for one year.
Sign up with Verizon Wireless for phone service, and you’re entitled to one free year of the new Disney Plus streaming service.
And keep subscribing to or add the HBO Now app to your phone and you get a bonus – a free version of the new HBO Max streamer as well.
Welcome to the 2019 edition of the Streaming Wars, kicking off in earnest Friday with the launch of Apple’s TV Plus entertainment service. It’s a bid by the iPhone maker to expand beyond sagging gadget sales and move to big media’s new favorite way of making a dollar – with recurring monthly payments that don’t have to be split with distributors.
Nov. 12 is the date for Disney, which is well established in cable with ESPN, the Disney Channel, Freeform and several networks new to the fold from the 2018 21st Century Fox acquisition, such as FX and National Geographic. Warner Media’s HBO Max follows in May, with NBC’s Peacock also set for spring.
“Nobody knows how this will shake out,” says Daniel Ives, an analyst with Wedbush Securities. “But the idea of subscription fatigue is real. People will not pay for all of them.”
Indeed, notes Andrew Funderburg, who runs a Portland, Oregon-based software firm. He’s not motivated to buy any of the new entrants. “I’m on streaming service overload. Netflix, (Amazon) Prime and Hulu are enough.”
Netflix is the current industry leader, with 160 million subscribers, followed by Amazon Prime Video’s 100 million and Hulu’s 28 million.
But most people pay $119 yearly to Prime for the expedited shipping. The entertainment (and now free grocery delivery) are bonuses. Hulu, which began as a consortium of network TV interests (NBC, Fox and ABC) is now owned by Disney, which has added the service of network TV shows, movies and originals as a bundle with Disney Plus and ESPN Plus for $12.99 monthly,
a move expected to greatly grow Hulu’s numbers.
The streaming wars began as a response to the cutting-the-cord movement. Cable operators have been reporting losses for the last few years, thanks to the ease of connecting new, antennas for local channels and eliminating the cost of not just monthly service but costly equipment rentals for cable boxes and DVRs. (Some 3 million cut the cord in 2018, according to Leichtman Research.)
Many viewers have found they could live with just Netflix and Hulu streamed through their TVs. If they wanted more, like their favorite channels, new, cable TV alternatives from YouTube TV, Hulu TV, Sling TV and AT&T have popped up to serve them.
Meanwhile, as Netflix began generating massive revenue from streaming – over $5 billion in the most recent earnings report – big media started removing shows from Netflix and planning to get a piece of the action.
Apple needs to replace sagging iPhone sales, Disney to compensate for the losses in cable and look to the future and AT&T to find a way to justify its huge 2018 $85-billion acquisition of Time Warner and help pay down debt.
And if more people cut the cord and step away from cable to just have the new streaming services, “It’s kill or be killed in these great streaming wars,” says Peter Csathy, the president of CREATV, an industry consultancy. “In a sense, it would rather cannibalize itself instead of being cannibalized by others.”
“The idea of subscription fatigue is real. People will not pay for all of them.” Daniel Ives analyst, Wedbush Securities
The programming:
❚ Disney Plus is offering access to its classic library of animated films, plus everything from the Pixar and Star Wars libraries, most of the Marvel superhero lineup, the complete episodes of the Simpsons, new takes on Lizzie McGuire and the Lady and the Tramp plus original series and movies.
❚ Apple TV Plus has a small assortment of original series, headlined by Jennifer Aniston and Reese Witherspoon in a backstage TV drama, “The Morning Show,” the return of Oprah Winfrey’s Book Club and a new sci-fi series called “See,” with “Aquaman’s” Jason Momoa.
❚ HBO Max has some 10,000 hours of content, new and old fare from the libraries of Warner Bros., HBO, CNN, TNT, TBS, the Cartoon Network, Adult Swim, Turner Classic Movies and DC Comics. There’s reruns of “Friends” and “he West Wing,” a prequel to HBO’s “Game of Thrones,” new movies with Reese Witherspoon and Meryl Streep, revivals of the classic Looney Tunes (Bugs Bunny, Porky Pig) cartoons and a new series featuring the Hanna Barbera characters (The Flintstones, Jetsons, Yogi Bear, Mr. Jinx) called “Jellystone.”
❚ From NBC’s Peacock, debuting in
April, the company says it will offer reruns of “The Office,” which used to be available on Netflix and “Parks and Recreation,” and offer reboots on classic older NBC series like “Punky Brewster” and “Saved by the Bell.”
For now, consumers are weighing their options, trying to decide whether they should ditch Netflix, Hulu or another service for the new ones.
We asked TV viewers on Facebook and Twitter how they were faring. Spoiler alert: Of the ones looking to add to their portfolio, it was Disney Plus, hands down.
“Disney for sure!” noted Hillary Lyle, an Akron, Ohio, mom. Having small kids at home makes the Disney Plus purchase a given, and she’s considering HBO Max because of the library shows it will offer, like “Friends” and “West Wing.” “Apple shows look terrible and they’re not offering enough value; no go on Apple.”
And because of “The Mandalorian,” a live-action take from the Star Wars universe, “Disney+ was a must,” says Zach Heath, who runs a Providence, Rhode Island-based marketing firm. “We slowly rolled over our Disney VHS library into DVDs, and now those are entirely unnecessary until the next storm when the internet goes out for days.”
“The newcomer to content creation was also appealing. “Apple because it’s free for the first year with my phone purchase,” noted Monika Thormann from Bloomington, Illinois. “Disney because it looks like quality content vs. quantity.”
She’s not going to sign up for HBO Max because she won’t have to. As a HBO subscriber, she’ll get it free.
However, the challenge for Big Media will be holding on to subscribers. Unlike cable, which generally requires calling in a visit from a technician, adding and subtracting a streaming service can be done via a click of a mouse.
“In much of the work that I have been doing with consumers lately, they talk about signing up with a streaming service for certain hit shows, only to plan on churning out after watching them,” notes Marshall Cohen, the president of Marshall Cohen Associates, a media research firm. “My prediction is very high churn metrics as consumers go away and come back.”
And once they go away, rivals will be all over them to swoop them back in. With another sweetheart deal.