streaming live content

How might the streaming wars escalate?

For the first time in 12 years, Netflix is facing real competition. How will the streaming wars escalate? We suggest three compelling options, which spell opportunities for startups in entertainment tech.

With its $135 billion market cap, Netflix has approximately 159 million subscribers globally and the best streaming tech. Today, content is king and Netflix has a big chunk of it (see our post on Entertainment as the new Oil).

But for the first time in 12 years, Netflix is also facing real competition. Disney+ successful debut with 10 million subscribers on day one showed the market that it’s possible to compete, if you have the content arsenal, and with the Disney catalog, Marvel, Star Wars and ESPN, they certainly do and they are offering it at a lower price.

Source: Data: Axios research; Chart: Axios Visuals

According to Scott Galloway, that competition is a mere distraction for now, as Netflix will maintain their lead in the US for a while, and the battle is in international growth.

At Netflix, content is the main course, and consumers, for now, think of other streaming services as side dishes. Netflix is less vulnerable to the Allied forces invading their shores in force, as it will likely hold its subscriber base in the US, and will live or die by international growth.

Source: Scott Galloway, No Mercy, No Malice
Source: Stream On

Galloway breaks down the competitors in the streaming wars, which is worth a read. Looking at 2020 trends reports from Deloitte and Accenture, two consistent trends are (1) the rise of ad supported streaming services, free to the consumer and (2) a ‘subscription fatigue’ on the user side, which will probably bring further bundling and consolidation of content.

Vanity Fair published an in-depth piece on Netflix putting the current competitive landscape into context:

Now that we live in a media environment of multiple, competing Netflixes—Disney+, HBO Max, Amazon Prime Video, etc.—we’re going to see how other media companies will use big data, weaponize volume, and foster talent too. Netflix’s unique advantage of being first with its popular, accessible technology has mostly eroded.

Vanity Fair – The Decade of Netflix

Where do we go from here in streaming?

In a recent interview to the Wall Street Journal, Liontree CEO Aryeh Bourkoff, said:

“Companies with popular video-streaming services might try to buy companies that attract subscribers in other ways, like audio streaming or video gaming…
Once you hold the consumer’s attention in the form of a subscription service, in order to maintain that consumer engagement and also maintain pricing power around that consumer, a more innovative, diverse set of offerings will be required than just straight video”

Source: Expect Fewer Big Media Deals Next Decade, Says Top Deal Maker

So how can Netflix, Amazon and Disney extend their services to monetise the consumer attention? I suggest three new segments that might be part of the future of streaming

  1. Live content
  2. Commerce
  3. Interactive/Immersive content

Live content

Where are streaming platforms going next? some potential directions (image by Remagine Ventures)

This could be a premium feature on your typical streaming subscription, replacing, or at least biting deeper into linear TV. This is not entirely new as YoutubeTV has been offering a non-cable TV subscription for $49.99 a month for quite a while. However, we can already see Amazon and Netflix getting into this space.

The two most imminent areas for market entry:

Sports (regular programming and pay per view) – a lucrative area of content requiring expensive rights. Sports is quite high on the agenda of Amazon is already offering 20 live Premier League games. The Yankees signed a deal with Amazon as well and 3 days ago Amazon announced it has acquired rights to air the Champions League. Disney is naturally positioned to lead in this space with ESPN. Imagine watching the next boxing match in Vegas or a UFC title match as a pay per view on Netflix.

Amazon Premier League

eSports – Amazon leads this space today with Twitch streaming for gamers. Mixer, Caffeine, Youtube and Facebook will continue to fight for market share. Traditional media companies are taking closer looks at eSports with broadcast quality. Tournaments will probably be first, but live streamers might not be far off.

As Diana Berman points out on Twitter, the future is already here:

Commerce

The convergence between commerce and content is already in full force. This is not just product placement like you see on Stranger Things. Image recognition tech like Syte.ai (disclaimer: Remagine Ventures portfolio) can help fans shop the products they see in the shows, using their phone. The obvious player positioned to the commerce angle this is Amazon. By leveraging the data on content consumption Amazon will be able to suggest relevant products, both physical and digital (i.e. because you watched every season of Game of Thrones, you might like our Fan Special t-shirt and new mobile game).

As Axios’ Sara Fischer points out, several companies are already using streaming to sell products:

  • Disney will use streaming to promote its biggest franchises, like Star Wars, Marvel and Pixar, so that it can sell more tickets to cruises, theme parks and merchandise.
  • AT&T will use streaming to sell wireless plans.
  • Comcast will use streaming to sell internet and Pay-TV plans.
  • Amazon uses streaming to sell Amazon Prime Memberships
  • Apple uses streaming to sell phones.

Immersive content

This category can include AR/VR/gaming/virtual goods/immersive worlds where users can interact more with their favourite entertainment characters and shows. It can also include interactive storytelling like Bandersnatch, enabling users to decide how the story changes. Will media companies start buying gaming studios? it remains to be seen.

For startups, these changes mean opportunity. As Daniel Ek, founder of Spotify, pointed out in a recent podcast episode of invest like the best, three trends globalisation, digitalisation and automation, mean that the large companies will keep getting bigger, but also that these companies are creating new niches that can be very profitable.

Commercial break: At Remagine Ventures, we believe that entertainment tech has many of those niches. If you’re a founder in this space looking for feedback, don’t hesitate to get in touch.

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Co Founder and Managing Partner at Remagine Ventures
Eze is managing partner of Remagine Ventures, a seed fund investing in ambitious founders at the intersection of tech, entertainment, gaming and commerce with a spotlight on Israel.

I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.

I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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