WORLD WAR STREAM: Inside Netflix's Battle To Remain Cable's Heir Apparent
Up until now Netflix has enjoyed a well-deserved ride as market leader of the streaming world. But last month the world’s infamous innovators made it loud and clear that they too will be claiming a stake in the land of streaming. Amazon announced that it has budgeted $4.5B for content creation, Google budgeted $3M per episode on one drama show alone, and Apple not only budgeted $1B for original content, but also poached two of Sony’s most powerful executives. Gunning to stay on top, Netflix will invest an astounding $6B on content next year; the list goes on with Facebook, HBO, and Hulu. But when you take a closer look at the direction of the streaming industry one interesting conflict appears, winning this war may not be about having the best content. In fact, content is just the beginning
Content Is King? Not Exactly
In most industries the competitor with the best product or service has a good chance of winning. So for the streaming industry this would mean that whoever can produce the best content takes home the biggest audience. But the truth of the matter is, they can all produce good content. With enough resources Game of Thrones could have been made by Netflix, or Apple, or Amazon. Moreover, we aren’t loyal to the platforms because of their brand name or identity. If Apple produced Breaking Bad there is a good chance that it would have sparked the same response. Creating good content comes down to resources: does this company have the time, money, and network to source good creativity? With budgets in the billions, all of these companies do. And there is more than enough “good creativity” to be sourced. Between the existing creatives looking for a platform to house their content, the potential creatives who simply lack the resources, and the creatives newly becoming available as the cable industry comes to an end, we can guarantee that there will be no shortages when it comes to the ability of these tech giants to produce good content. And let’s be honest, we expect to be wowed by at least a few shows on whichever platform we choose. We expect good content.
So if each platform is going to wow us with content, how do we choose?
The Trillion Dollar Algorithm
The decision can actually be turned into an equation:
Amazing Content + X= Total Value Offering; where highest X wins.
Providing amazing content is the constant, the minimum a network must offer to even be considered. If you aren’t spending billions on content you can almost guarantee that you won’t make the cut. The true competition lies within variable X: what else can you give me for choosing your platform? By choosing Amazon you get access to free two-day delivery on all Amazon products. Amazon just bought Whole Foods, by choosing Amazon I am getting good content and my groceries for the week. By choosing Apple, for $10 a month I am getting access to good content and Apple Music, as well as any other competitive feature Apple chooses to include. The networks that can’t offer us more than content will fall behind. So what does that mean for Netflix who is spending $6B on content this year? I am sorry to break the news Netflix, but that just won’t cut it. Besides, the pockets of corporate giants like Apple and Google can reach far beyond a $6B budget. They aren’t spending that much because they know they don’t have to.
So Who Will Reign Supreme?
My predictions are to follow the resources (money, time, information) as they relate to the equation. Who’s investing in X? Because Facebook is competing with a unique data set I think it will use that to its advantage and break away from the pack, investing its $3B budget to offer a niche experience. Leveraging its data empire of social media habits after tracking our social behavior for the last 10 years, Facebook will provide us with content that both amplifies and aligns with our experiences on social networks. Think about all of the videos that you have liked and re-shared on Facebook and Instagram, that data is going directly to Facebook’s content department. It’s already stated that creating short-form content, like The Bachelor, that can be viewed in segments while scrolling is a lane where it imagines itself. This is a calculated decision. When it comes to solely content-based platforms like HBO and Hulu, acquisition by corporate giants may be likely in the near future.Unfortunately I will not be putting my money on Netflix. I think its astronomical investment in content will keep it afloat for the near future, but it’s not sustainable, especially because Netflix relies on investor money as it has yet to make a profit. It may also be acquired.
So who does that leave us with? Not surprising, our infamous tech giants: Apple, Amazon, and Google. Google, like Facebook, has a unique opportunity to break away from the pack through its market leading platform, YouTube. I think Google will stay on the outskirts of scripted content, producing the odd hit series, but focusing on YouTube as a platform that can be used in addition to other networks to avoid directly competing with the Netflix/HBO/Apples of the world. Consumers value YouTube’s “candid and unscripted” content, and are ok with acceptable levels of advertisements (this is a unique spot to be in). I wouldn’t be surprised if YouTube extended its offering of unscripted content into the world of sports and news streaming, or leveraged its YouTube-made stars to make content; these would be powerful brand extensions. The true fight for your remote will come down to Apple and Amazon. Amazon has made some incredible moves this past year. It has truly won when it comes to platform leveraging (leveraging its position in retail to further advance its position in entertainment, and vice versa). But there is one large problem, its biggest and more profitable competitor, Alibaba, is gearing up for full market entry into North America. This may drastically change the game for Amazon. Although all of these companies could surprise us, my bet lies with Apple, the tech giant that has proved it can do just about anything it imagines.