By Amol Sharma and Joe Flint
A new era is dawning in the entertainment world and you're about
to get a whole lot more choices -- for better or worse. The
streaming wars are here.
Titans of media and technology are wagering billions that
consumers will pay them a monthly fee to stream TV and movies over
the internet. Walt Disney Co. is launching a $6.99-a-month service
next week, following Apple Inc.'s entry earlier this month.
AT&T Inc. and Comcast Corp.'s NBCUniversal next year will mount
their own challenges to streaming juggernaut Netflix Inc.
The combatants are fighting on the same battlefield, all seeking
to lure in subscribers, but they have radically different
motivations -- and some have far more at stake than others.
Legacy giants like Disney and AT&T's WarnerMedia are racing
to reinvent their core media business, which is under assault as
consumers turn away from traditional broadcast and cable TV. For
them, selling streaming subscriptions to consumers has to work --
and has to be profitable. For Apple, while streaming can advance
its business, failure is an option.
Consumers will have choices to make as new entrants join the
fray: Americans are willing to spend an average of $44 monthly on
streaming video and subscribe to an average of 3.6 services,
according to a survey of over 2,000 people in recent days by The
Wall Street Journal and the Harris Poll. That is up roughly $14
from what most people pay now.
But with so many existing players already in the market --
Netflix, Hulu, Amazon Prime Video, CBS All Access and ESPN+, among
others -- not everyone can emerge victorious. "This market is going
to have to shake out -- it doesn't feel like all these players can
continue to play this game forever," said David Wertheimer, a
former president of digital products at Fox Networks Group who is
now a media and tech investor.
Netflix is in an enviable position with a big head start, but
may be in for some turbulence. Nearly one in three Netflix
subscribers said they would likely cancel the service in the next
three months to make room for a new entrant, according to the
Journal-Harris Poll survey. Some 43% of parents with kids under 18
said they were likely to cancel, as did 44% of men ages 18 to
34.
Their stated intentions may not translate into an actual
cancellation. There are currently 158 million Netflix subscribers
globally.
Netflix, like any subscription business, has regular customer
turnover, and some of those who cancel eventually return. "Like the
competition, polls come and go," a Netflix spokesman said. "But
years of experience have taught us that consumers want control over
when and how they watch -- and a wide choice of quality stories
across every genre. And that's what we've always focused on
providing."
Shots have already been fired, with Apple and Disney setting
ultracompetitive prices and lavish spending by all parties to stock
their services with the hottest programming, whether that is
originals from a coveted producer or reruns of a 20-year-old TV
classic. The explosion of options risks confusing consumers. Which
service has the "The Office," which has "Seinfeld" and which has
"Friends"? How do you sign up?
"The next 18 months are going to be the most interesting in the
history of the entertainment business -- the grounds are shifting,"
said Hollywood veteran Steve Mosko, chief executive of the
production company Village Roadshow Entertainment, which is
developing projects for multiple streaming outlets.
Franchises and Oldies
Disney surprised the media world with a low price for its
Disney+ streaming service that is nearly half of Netflix's most
popular $12.99 monthly plan: Some 47% of survey respondents were
likely to subscribe to Disney+. Many were especially enthusiastic
about its big franchises -- Star Wars and Marvel, for example -- as
well as its large catalog of children's classics, from "Cinderella"
to "Aladdin" to "Moana." Disney acquired 21st Century Fox
entertainment assets last year for $71.3 billion.
Disney is making a land grab for users now and worrying about
profits later on -- it expects to break even on the service in
2024. "They were brilliant thinking through the pricing. This is
about aggregating consumers," said analyst Michael Nathanson.
Disney's direct contact with its customer base has come mostly
through theme parks, Mr. Nathanson said, and the streaming service
will allow "a deeper set of connections." Disney could market its
consumer products, cruises or theme parks to streaming customers,
some media executives said.
A Disney spokeswoman declined to comment.
Hulu, which is now controlled by Disney, will become the home to
more adult and edgier fare. Disney announced earlier this week that
its FX Networks would also produce original shows for Hulu.
Comcast is taking a different path from its peers, reflecting
its identity as not just a content owner, but as the country's
leading cable distributor. Peacock, the streaming service from its
NBCUniversal unit, is set to launch next April, featuring a bevy of
classics like "The Office," "Frasier" and "Cheers," plus originals
from talent in NBC's stable. An ad-supported version will be free
to people who subscribe to Comcast's cable TV or broadband
services. If the company can reach deals with other cable
providers, it could be free to their customers, too.
To some observers, that suggests Comcast wants to protect a
traditional cable business that is still lucrative, even if
cord-cutting is siphoning customers gradually. "The streaming
business puts them in a conflicted place," said Gary Newman, a
former chairman of Fox's television group. "It's hard to be in on
streaming without being fully in on streaming."
People close to Comcast said the company is deeply committed to
the streaming business and is simply taking a different
approach.
Comcast is debating various ways to sell Peacock to those who
can't get it through a cable provider. One idea is to offer a
limited, free version with ads meant to draw users in -- it might
not have various hit shows or might limit the number of episodes
available, people familiar with Comcast's deliberations said. A
second tier would charge a modest subscription fee and would make
all content available, with ads, while a third tier would charge a
higher subscription fee with no ads, the people said.
NBC's prime-time broadcast shows now stream on Hulu. At launch,
Peacock will be able to share much of that content, and in
September 2022 NBCUniversal will be able to terminate the deal and
have most NBC shows exclusively on Peacock, if it chooses, people
familiar with the agreement said.
AT&T will be the last of the major entertainment companies
to enter the fight, with its HBO Max service slotted for a May 2020
launch. Its biggest challenge: It will be at the top of the market
at $14.99 a month.
HBO is in the name, and the service has its entire current and
past lineup. But the goal is to have something much broader, for
just about everyone -- cartoons, superhero movies from the DC
franchise (Batman, Superman, Wonder Woman), "The Lord of the Rings"
movies, and one of the largest and most popular catalogs of
re-watchable TV shows, notably "Friends" and "The Big Bang
Theory."
Some 41% of survey respondents said they would be likely to
subscribe. But brand and service confusion might be an issue. The
company will encourage people to switch from HBO Now, a different
service offering just HBO programming at the same cost, over to HBO
Max.
What about people who get HBO on TV? AT&T hopes to get them
onto HBO Max by cutting deals with cable and satellite TV
providers. If HBO Max pulls in all existing U.S. HBO subscribers,
it would have some 35 million subscribers -- and from there, would
try to build on its base.
900 Million Reasons Why
Apple's TV+ service, which launched Nov. 1, is part of a broader
push into services -- including subscriptions and credit cards --
as it tries to offset declining sales of iPhones.
The tech powerhouse is charging $4.99 per month for TV+. Its
biggest advantage is a base of over 900 million mobile phone users
globally. Apple is building a TV ecosystem where it can sell you
subscriptions to its own original programs on TV+, plus the ability
to add on streaming services run by others -- Showtime, HBO and CBS
All Access, for example.
The glaring challenge is that TV+ has just nine shows at launch,
and no library of past hits, putting a lot of pressure on the
company to find a successful show in the early crop.
Other streaming services including Amazon have found it hard to
create a hit out of the gate. "There is a lot of pressure on them
because of the quality of Apple products," said Francis Lawrence,
an executive producer of "See," an Apple show about a world where a
virus has left mankind blind.
In addition to the giants, startup Quibi next spring plans to
launch its own streaming service, which will be tailored to mobile
phones and feature short-form content from Hollywood talent.
Six in 10 consumers think the new streaming options are a good
development, according to the Journal-Harris Poll survey. Still,
those who cut the cable TV cord to save money may very well find
themselves paying as much by signing up to multiple streaming
services, said TV producer Mike Royce, whose credits include
"Everybody Loves Raymond."
"It's going to be cable again in five years, except it will be
streaming services," Mr. Royce said.
Newcomers
APPLE TV+
Price: $4.99 per month
Launch: Nov. 1
Identity: Would you like some new TV shows with that iPhone?
Portfolio overview: Apple is offering a handful of shows at a
low price (or free for a year to those who buy a new device) as
well as access to other programming platforms such as HBO and
Showtime.
Total programming: Launched with nine programs and plans to drop
several more and some original movies in coming months.
Originals of note: "The Morning Show," starring Jennifer Aniston
and Reese Witherspoon; "For All Mankind"
Classic movies: none
TV to rewatch: none
Biggest asset: access to 900 million potential customers (Apple
device owners)
Biggest risk: Apple won't be able to lean on a library of past
TV and movie hits. No pressure, Jen and Reese! Apple's new shows
are getting mixed reviews.
DISNEY+
Price: $6.99/mo
Launch: Nov. 12
Identity: Darth Vader meets Elsa
Portfolio overview: TV and movie programming from across
Disney's brands, Pixar, Marvel and Star Wars, including originals
and a deep library of animated classics
Total programming: 7,500 TV episodes, 500 movies
Subscriber target: 60 to 90 million by September 2024
Originals of note: Star Wars's "The Mandalorian," "High School
Musical," "Lady and the Tramp" remake
TV to rewatch: 30 seasons of "The Simpsons"
Movie classics: "The Little Mermaid," "Aladdin," "Frozen," "Mary
Poppins" and more
Biggest asset: built-in fan base for popular franchises
Biggest risk: Original programming doesn't meet superfan
expectations.
PEACOCK
Price: Free for Comcast cable and broadband customers;
subscription pricing not announced for non-cable customers.
Launch: April 2020
Identity: We are NOT the cable guy.
Portfolio overview: originals from NBC's best-known creators,
plus a big library of classics
Total programming: over 15,000 hours
Subscriber target: None disclosed yet.
Originals of note: "Battlestar Galactica" reboot; "Brave New
World" featuring Demi Moore; comedy from Jimmy Fallon
TV to rewatch: "The Office," "Parks and Recreation," "Cheers,"
"Everybody Loves Raymond," "Brooklyn Nine-Nine"
Movie classics: "ET," "Jaws," "Back to the Future"
Biggest asset: rich library of classic programming
Biggest risk: Being late to the game; motivating customers to
drop Comcast's traditional cable service.
HBO MAX
Price: $14.99/mo
Launch: May 2020
Identity: It's not HBO. It's...HBO Max!
Portfolio overview: all HBO content; collection of programs and
movies across Warner Bros. and cable networks including TNT, TBS
and Cartoon Network
Total programming: 10,000 hours
Subscriber target: 75 to 90 million by end of 2025
Originals of note: "College Girls," a comedy from creator Mindy
Kaling; "Strange Adventures," a DC superhero anthology from
producer Greg Berlanti
TV to rewatch: "Friends," "The West Wing," "The Big Bang
Theory"
Movie classics: "Casablanca," "When Harry Met Sally"
Biggest asset: the HBO brand
Biggest risk: Consumers may find the price too steep; will shows
like "Big Bang Theory" and "Friends" fit easily under the HBO
brand?
Incumbents
NETFLIX
Price: $12.99 for most popular tier
Launch: streaming since 2007
Identity: Catch me if you can.
Portfolio overview: With a vast library of TV shows and movies
and a growing number of popular originals, Netflix doesn't want to
replace one channel. It wants to replace them all.
Total programming: 1500 TV shows, 4000 movies
Subscribers: 158 million world-wide
Originals of note: "Stranger Things," "The Crown," "The
Irishman"
TV to rewatch: "Breaking Bad," "Mad Men" and, coming soon,
"Seinfeld"
Classic movies: "Rebel Without A Cause," "Rocky"
Biggest asset: A giant head start
Biggest risk: Lower cost rivals eating into its subscription
base; programming costs rising.
HULU
Price: $5.99 with limited ads; $11.99 with no ads; $44.99 for
60+ live channels as well as ad-supported Hulu
Launch: 2008
Subscribers: 28.5 million paid subscribers; majority owner
Disney projects 40 million to 60 million subscribers by fiscal
2024.
Identity: Disney after dark
Portfolio overview: Primarily adult dramas and comedies that are
too risqué for family-friendly Disney+ or just aren't a good
fit.
Total programming: more than 86,000 TV episodes and 2,000
movies
Originals of note: "The Handmaid's Tale," "Castle Rock,"
"Shrill," "The Act" and "Little Fires"
TV to rewatch: "This Is Us" "Lost," "ER," "Rick and Morty"
Movie classics: "Hoosiers," "Mrs. Doubtfire," "Fatal
Attraction"
Biggest asset: Only streaming service that offers live TV and
on-demand all in one place.
Biggest risk: Its strategy gets muddled under Disney's control.
It recently lost bidding wars to keep reruns of "Seinfeld" and
"South Park."
AMAZON PRIME VIDEO
Price: $8.99/month, or included for those who pay $119/year for
Amazon's Prime shipping service.
Launch: Streaming since 2011
Identity: Thank you for purchasing the book. Would you like to
see the movie?
Portfolio overview: A growing slate of originals, plus a huge
library of older shows and movies. The tech company's video
offerings are like the rest of the site: labyrinthine.
Total programming: Amazon doesn't disclose this statistic. A
Barclays 2016 report estimated Prime Video had over 18,000 movies
and nearly 2000 episodes of TV shows.
Originals of note: "The Marvelous Mrs. Maisel," "Jack Ryan"
Classic movies: "True Grit," "To Catch a Thief"
TV to rewatch: "Family Ties," "Roseanne"
Biggest asset: Amazon Prime has over 100 million members, a huge
potential audience.
Biggest risk: Dabbling in entertainment when its competitors are
going all out against each other.
CBS ALL ACCESS
Price: $5.99 (with limited commercials), $9.99 (commercial
free); both include live stream of CBS network
Launch: 2014
Identity: This isn't your father's streaming service ...
really!
Portfolio overview: a large library of current and older TV
shows, a smattering of movies and a growing number of originals
Total programming: 12,000 TV episodes; currently 36 movies
Originals of note: "The Good Fight," "Star Trek: Voyager," "The
Twilight Zone"
Classic movies: "An Officer and A Gentleman," The Graduate,"
"Moonstruck"
TV to rewatch: "The Brady Bunch," "Cheers," "Frasier," "I Love
Lucy."
Biggest asset: experience, having been in the market for
years
Biggest risk: Being able to keep pace with bigger competitors
while also providing programming to Netflix and other streaming
rivals.
(END) Dow Jones Newswires
November 08, 2019 23:14 ET (04:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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