Who’s Coming Out on Top?

Good question.

We may (or may not) be at the midpoint of the COVID Crisis. The economy is not going to snap back in place like a rubber band. A good economy is dependent on momentum and that momentum is going to have to take time to build up again. Zero to sixty instantly isn’t possible.

What usually happens in circumstances like this is that the businesses that were weak before the Great Gulp came will fail. The strong will be hurt but survive and more intriguingly the businesses that appeared to be strong but had fundamental problems will have those shortcomings revealed. The reverse, some companies had hidden strengths that are now coming to the fore.

Streaming has suddenly hit a very interesting crossroads. Before the WuFlu blew into town Netflix looked to be a strong horse with weak ankles. Sure it was the biggest name in streaming for the longest time, hell it basically invented the market but…

“The thing is that Netflix’s biggest draws aren’t movies they are TV shows. That’s what people are binge-watching. And the problem is this. The most popular shows on Netflix, ain’t owned by Netflix!

All of the major studios have been gobbled up by super corporations or in the case of Disney became one themselves. All of them now have the financial wherewithal to start their own streaming services, which is exactly what they are doing. And all of them are about to pull their shows off of Netflix.

Netflix owned 100% of the streaming market, which means anyone getting into the streaming business is going to be cutting into Netflix’s market share. They just posted their first quarterly loss of customers since their price hike debacle and it wasn’t a small one. Disney, Amazon, Apple, Warner Media, MGM (yeah they still exist), YouTube Red, CBS and (now that Disney has muscled them out of Hulu), NBC-Universal will all have streaming services next year. And this isn’t even counting small fry streamers like Funimation and Shudder. Hell, there’s this guy who runs a far-right blog and he’s gotten into streaming with this thing called Unauthorzed.TV (Give the link a click. It’s worth a look, trust me on this point).

2020 is going to be a watershed year for Netflix… Or rather a customer shed year. Twenty-five of their top fifty shows are going to be gone and everybody is going to be eating their lunch.”

What a difference a plague makes. Disney and Universal had looked like a better bet in the streaming race due to their diversity. However, that diversity turned out to be skin deep. Both of those companies had an Achilles heel, in that they were completely dependent on large groups of people being in one spot. Disney in particular is a badly wounded giant. According to Macroaxis, Disney’s odds of declaring bankruptcy is now sitting at 75% (take that with a grain of salt but still). While Netflix is currently having to dial back streaming definition to keep up with demand. The big N has not yet released it’s new subscriber numbers but I would lay money that their base went up in a serious way.

However, Netflix’s long term fundamental problems remain unchanged. They still don’t own enough of their own content.

The companies in the best shape to win the streaming wars are the ones with genuine diversity. And not just in the products the company produces but what the streaming service brings to the party beyond streaming.

I don’t see anyone making it long term UNLESS they are offering a cloud DVR service along with streaming content.

Hulu has good market share for the moment but Disney has paid so much for it, that it can’t turn a profit for years. And that was before the crisis. Hulu comes with live TV streaming. Their DVR service has a fairly anemic 50 hours of storage and doesn’t have ad-skipping. You can upgrade for ten bucks (ad-skipping and 200 hours of storage total).

AT&T is in a very powerful position. They own Warner Brothers outright and are about to launch HBOmax next month. Their DVR service comes with a whopping 500 hours of storage and incudes ad-skipping. They have live TV streaming as well.

Now Hulu does not have a time limit on its DVR storage, which is a point I have to give them. Whereas AT&T has a 90 day limit on content recorded (if you recorded a movie 91 days ago it’s gone.)

YouTube TV is the dark horse in this lineup. While they aren’t really an entertainment company, they do have the power of Google’s all-knowing algorithm behind them. Live TV streaming and DVR service is included in the subscription and comes with ad-skipping at no extra charge. Most importantly YouTube TV’s DVR comes with unlimited storage (nine-month time limit).

Last and least is Apple TV Plus. Not an entertainment company and no entertainment subsidiary. No live service, and no DVR. Although Apple products do work with Plex (which does get you a live service plus DVR).

Beloved Reader: Cataline, why did you include Apple TV Plus? Who would use it?

Answer: Zoomers and late Millenials. Apple TV+ (currently) comes free for a year with the purchase of any Apple product. Plex only costs $5.00 a month which means college kids might be willing to actually pay for it rather than go pirate. And the younger demographic is more likely to watch TV on their small screens in the first place.

The other reason I included Apple TV Plus is that it’s owned by Apple. While they are the weakest in this race currently, that could change overnight if they decide to acquire Disney. I admit this seems unlikely on the face of it. Integration would be long and messy particularly since Disney hasn’t finished digesting Fox yet. It would however allow Disney to ride out the COVID Crisis intact and it would (eventually) raise Apple’s income by about 30%. But that said, it’s risky for Apple.

Summary: I don’t see the benefit outweighing the risk for Apple. But then I didn’t see the benefit of them getting into streaming original content in the first place and Disney hasn’t been this vulnerable since 1937. So maybe.

Stay tuned the Popculturacalypse continues.

4 thoughts on “Who’s Coming Out on Top?

  1. How much cash does Apple really have though? They’ve been taking on debt for the past few years because the money guys told them it was the smart thing to do. After the Wuhan Flu debacle, they might decide it’s smart to not overextend.

    Another question is how important is cloud DVR? I don’t know much of anything you can’t stream later after a live broadcast.

    Hulu was such a wasted opportunity. The broadcast guys should have stuck together on that one. Had Hulu become the defacto place for live broadcasts, delayed viewing, old shows, and some new content, it would have been the heavyweight.

    I have no idea who will come out on top. All I would predict is that the current fracturing of the market, and production of thousands of useless series and movies can’t continue.

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    1. According to Motley Fool, Apple has about 105 billion in cash. Not enough for an outright purchase but they could leverage a buyout of Disney, albeit not without risk.

      As to the importance of having a cloud DVR service, the answer is VERY important. Sure, you can eventually stream a big chunk of the content that is broadcast. But where? Netflix? Everybody is pulling their content from the Big N, in order to run it on their own competing streaming services. Once the early loss-leader discounts end, they are all going to be charging around $15 a month.

      How many services is the average person going to subscribe to? Would it be cheaper, a lot cheaper, just to have cloud DVR service? Admittedly, that won’t get you everything but nothing legal will.

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      1. I don’t disagree with that as current analysis. But how long before the broadcast nets make it prohibitively expensive for services to stream their live broadcasts? That would seem to be the move to drive users to their services. Or, run shows in broadcast for a year and if they are a hit, move them to streaming only. Pretty soon, live TV will be news and weather only on a loop.

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  2. I am a bit confused what are you dvring? If you didn’t watch it live what is the difference from dvring it and watching it on the streaming service?

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