Who Will Win in the Ongoing Streaming War?

The streaming war is ready to blow up: Apple will release Apple TV+ on November 1, few days before Disney+

Early this month, in a flashy event in California, Apple gave more details of its upcoming streaming service. The service, which will be known as Apple TV+, was announced earlier this year but details remained vague.

In the event, the company said that the product will be launched on November 1 and will be priced at $4.99 a month. Apple customers who buy the recently unveiled phones will receive the service for free for one year. At launch, the product will have slightly above ten shows, which will include The Morning Show, See, Ghostwriter, and Helpsters.

Unlike Netflix, which releases all episodes at once for binge watching, Apple will release a new episode per week.

The new service comes as the streaming industry gets more competitive. In recent years, many cable companies have been forced to the drawing board after the tremendous success of Netflix, which has more than 150 million active users. The company is valued at more than $150 billion and has been credited for the so-called cord-cutting.

Cord-cutting is the process in which people cancel their cable tv subscription with the goal of slashing their monthly payments to cable companies. This cable-cutting has led to a significant decline in the revenue of cable operators like AT&T, Charter, and Comcast.

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The (Disney) Empire Strikes Back

Walt Disney, which was recently the biggest content supplier to Netflix announced that it was launching its own streaming service, which will be known as Disney+.

Investors believe that Disney, with its huge catalogue of products will be the biggest competitor to Netflix. This is because the company owns some of the best-known franchises in the industry like Pixar, Fox, Star Wars, and Lucasfilm among others.

As such, while Apple will have a library of slightly more than 10 movies and series, Disney+ will have hundreds of materials. In addition, Disney also owns Hulu, which has more than 25 million subscribers.

It also owns ESPN, which is the most popular sports brand in the country. Therefore, a bundled product could lead to significant penetration.

Other companies are getting to the industry. AT&T, the giant cable and telecommunication company, will launch its own product later this year. The product will mostly have content from its recent acquisition of Time Warner.

Comcast too is in the process of launching its service.

Amazon too has its Prime Video service, which is bundled within its Amazon Prime product.

And, maybe, one other competitor will come from the CBS-Viacom Merger.

Can the market become satured?

All this competition and growth presents risks to Netflix, which has enjoyed a near-monopoly status in the industry. In the most recent quarter, the company announced that it had lost more than 100k customers from the United States. This was the first time its subscribers in the country declined and it came shortly after the company increased prices.

This saw the company’s stock price drop as shown below.

Netflix chart q2 2019

While the industry is doing well, the cost of developing content has been moving up. This year alone, Netflix will spend more than $15 billion on content. Apple has announced that it will spend more than $5 billion on content.

This means that content developers will be the biggest beneficiaries in the streaming war.

It is however unclear whether Apple TV+ will be profitable. At the current pricing, the company will make $6 billion in a best-case scenario where the company is able to get 100 million subscribers.

This is peanuts for the company, which makes more than $200 billion a year. The cost of content development will be much higher than the $6 billion.

External resources about streaming war

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