Among these newer announcements, Apple and Disney look the stronger contenders. Apple has the ready-made platform of a billion devices to promote and deliver its service, while Disney has the richest content portfolio across multiple categories – from video games to live sports to superheroes.
Vudu may have the heft of Walmart behind it, but the content investment is likely to be a fraction of the other two: Apple has said it will spend US$2 billion (£1.5 billion) a year at first, while Disney is spending only $500m on originals, including the likes of three Avengers spin-offs, but the group’s total annual content spend is nearly 50 times bigger. Walmart has not said what Vudu is spending. On the other hand, Vudu’s offering will be mostly free while Disney+ and Apple TV+ will both charge monthly subscriptions.
At any rate, all three are likely to struggle – and the same goes for the other new arrivals. We are heading for a serious case of “subscription fatigue”. When consumers watch free-to-air television, broadcasters take care of the messy process of making deals with content owners, aggregating it and serving it up. As pay-TV operators like Sky or the cable networks started to emerge, consumers had to sometimes choose a package to get a particular channel or program.
But with streaming in future, this experience is going to become more and more frustrating – Where can I find Westworld? Where is Blue Planet these days? – not to mention expensive for anyone tempted by multiple offerings. By building competing services, all these media giants are playing their own Game of Thrones.
The way forward is clear, but controversial. Apple, Disney, AT&T, NBCUniversal and the other large players should collaborate to create a dominant content platform. Partnering among subscription services would take some of the burden off consumers and make the combined offering more appealing than existing options. Imagine subscribing to a single service to receive access to everything from classic TV and movies to the latest shows. The market can probably handle two or three mega platforms, but not more.
Ironically, Disney already has a ready-made option in its arsenal. Hulu was set up as a joint venture between Disney, NBCUniversal, Fox and WarnerMedia (now owned by AT&T). Yet Hulu’s claim to be a cross-industry platform is getting weaker, not stronger: Fox’s 30% share defaulted to Disney when it was taken over, and AT&T has announced it wants to sell its 10% holding. Hulu may have recently diversified with its recent partnership announcement with music streamer Spotify, but Disney’s new dominance of the service will probably make it a less attractive option for other media companies to buy into than previously.
If media companies collaborated with their streaming services, it would certainly come with antitrust concerns. But unless they evolve into an industry platform soon, the door will open for other players to take the lead – I’m thinking digital giants like Google or Facebook, internet service providers or telecommunications companies.
Many of these players already have a subscription relationship with consumers, so it would be relatively easy for them to bundle video streaming into existing services. Amazon’s shift into the media world is a textbook example of how this could play out.
It is reminiscent of the early 2000s, in which the record majors built walled gardens around their content only to watch in horror as Apple’s iTunes stole the market from under them with a convenient, cheap and comprehensive option. Spotify then stole it again a few years later. Media companies should also beware the prospect of consumers being driven in larger numbers to illegal or quasi-legal video consolidation services.
There are recent precedents that they could follow of competitive partnering in other industries: BMW and Daimler recently announced they would join forces to build common platforms for ride sharing and electric vehicle charging, among other things, having realized they are stronger together than apart.
The media giants would be well advised to start exploring similar possibilities. Consumers are already baulking at both the cost of multiple subscription services and the inconvenience of having to keep track of which shows are on which services. The ultimate winner will be the first option that can provide scale and convenience at a reasonable cost. If today’s streaming companies aren’t careful, they will end up on the outside looking in.
Professor Michael Wade is Professor of Innovation and Strategy and Cisco Chair in Digital Business Transformation at IMD. He is Director of the Global Center for Digital Business Transformation, an IMD and Cisco Initiative.
This article was first published by The Conversation