January 2020 #81 __________________________________________________________________________________________ _____ The 2020 Streaming Wars By Steve Sternberg It’s hard to believe that it was just seven years ago, in February 2013, that Netflix released the first streaming hit, House of Cards (Its first original series, Lilyhammer, debuted a year earlier). It was the first streaming series to receive major Emmy nominations (56 over its six-year run). Since then, Netflix has dropped a string of successful new series every year on its way to drawing about 160 million subscribers worldwide (roughly 67 million in the U.S.). Being first out of the gate with spending levels that rose from about $3 billion to $15 billion per year (projected to be $17 billion in 2020) helped give Netflix a lead in the streaming wars it may never relinquish. Some of Netflix’s more notable original series successes include, Orange is the New Black, BoJack Horseman (2014); The Unbreakable Kimmy Schmidt, Grace & Frankie, Narcos, Bloodline, Marvel’s Daredevil and Jessica Jones, Sense8, Master of None (2015); Fuller House, The Ranch, Stranger Things, Black Mirror, The Crown, The OA (2016); Dear White People, GLOW, Ozark, Mindhunter, 13 Reasons Why, Marvel’s The Punisher (2017); Altered Carbon, Lost in Space, The Chilling Adventures of Sabrina, Narcos: Mexico (2018); The Umbrella Academy, Russian Doll, Dead to Me, When They See Us, The Politician, Unbelievable, and The Witcher (2019). A Sternberg Report Sponsored Message Advertise here to reach thousands of media and advertising decision makers. Contact [email protected] The Sternberg Report ©2020 January 2020 #81 __________________________________________________________________________________________ _____ In addition to its high volume of original scripted series, Netflix plans to release around 90 original movies per year (it had 50 in 2017). That’s an extraordinary number – more than three times as many original movies released in theaters by the top two box-office leaders, Disney and Warner Bros., combined. Six original movies ranked among Netflix’s most popular shows of 2019 – Murder Mystery, 6 Underground, The Irishman, Triple Frontier, Extremely Wicked, Shockingly Evil and Vile, and The Highwayman. While many of Netflix’s movies are not top tier, some are of the highest quality, as the streamer makes periodic pushes for Oscar gold. Roma debuted in 2018 in theaters for two weeks before airing on Netflix, and was nominated for an Academy Award for best picture. It didn’t win, partly because this practice is controversial and goes against what many theater owners and Academy members think of as traditional theatrical movies eligible for awards. They want minimum three-month theatrical windows. Netflix led the way this year with more than 20 Oscar nominations. Netflix’s new original movie, Martin Scorsese’s The Irishman, starring Robert De Niro, Al Pacino, and Joe Pesci, has been nominated for several Academy Awards – even though many theaters in the U.S., Canada, and Europe refused to run it in the short window Netflix insists upon. Another well- received movie in 2019, Marriage Story (starring Adam Driver and Scarlett Johansson), has also been nominated for numerous awards as well. Both are nominated for Best Picture this year. A Sternberg Report Sponsored Message Great deals on sponsorships, monthly or quarterly. Contact [email protected] for details. e Sternberg Report ©2020 __________________________________________________________________________________________ _____ Netflix has been gradually raising its prices over the past few years – a necessity since the streamer spends significantly more than its competitors on original content and steadfastly refuses to accept advertising. It currently has three pricing plans: Basic ($8.99 per month – you can only use one screen at a time and resolution is limited to SD, equivalent to pre-HDTV); Standard ($12.99 per month – you can use two screens at a time in HD); Premium ($15.99 per month – you can use four screens at once in HD or 4K Ultra HD if available). T-Mobile has also been offering free Netflix to its broadband and wireless customers who have multiple mobile lines. While Netflix’s growth in the U.S. has slowed, due primarily to increased competition in the streaming wars, it continues to see strong growth internationally. Over the past two years, Netflix’s subscribers have grown from 58.4 million to 67.1 million in the U.S. and Canada (+15%). During the same period, it has increased from 26 to 47.4 million in Europe, the Middle East, and Africa (+82%), from 19.7 to 29.4 million in Latin America (+49%), and from 6.5 to 14.5 million in the Asia Pacific region (+123%). Amazon Prime Video followed close behind Netflix (in timing, if not volume). In February 2014, just about a year after Netflix debuted House of Cards, Amazon released the award-winning Transparent, which was the first original streaming series to win a Golden Globe for Best Comedy. It aired for four seasons. In 2017, The Marvelous Mrs. Maisel, and the numerous awards it has received, further raised Prime Video’s profile. While Amazon Prime Video does not have nearly as many original scripted series as Netflix, it has had at least one high-profile success every year since 2014. They include, Transparent, Bosch, Mozart in the Jungle (2014); The Man in the High Castle, Sneaky Pete, Red Oaks (2015); Goliath 3 The Sternberg Report ©2020 __________________________________________________________________________________________ _____ (2016); The Marvelous Mrs. Maisel, Absentia (2017); Tom Clancy’s Jack Ryan, Homecoming (2018); Hanna, Good Omens, The Boys, Modern Love, and Carnival Row (2019). Amazon increased its spending on content from $4.5 billion in 2017 to more than $6 billion in 2019. Roughly one-third reportedly went into originals. Amazon recently secured the rights to The Lord of the Rings universe, which will include a new TV series adaptation (at an estimated cost of $200 million). It is also jumping into the live sports arena, with subscribers being able to stream NFL Thursday Night Football telecasts for the past two seasons. Amazon has also made major deals with English Premier League soccer and UEFA Championship League for Germany, both of which have led to increased subscribers in those markets (its two biggest outside the U.S.). I’ve seen predictions that over the next five years, the amount Amazon spends on originals could rise to $8 billion or more, as it will need to compete not just with Netflix, but an array of deep-pocketed new entries into the streaming arena. Amazon Prime Video says it has more than 100 million subscribers globally, about 45 million in the U.S. Amazon membership costs $119 per year ($12.99/month) and includes Amazon Prime Video, free 2- day shipping on Amazon purchases, and access to exclusive shopping deals. You can subscribe to just Prime Video for $8.99 per month. Most subscribers initially got the service for the shopping and free shipping, and saw Prime Video as a bonus. Hulu started out in 2011 and was originally owned by Disney (ABC), 21st Century Fox (FOX), and Comcast (NBC), each of which had a 30% ownership. Time Warner owned the remaining 10%. Soon 4 The Sternberg Report ©2020 __________________________________________________________________________________________ _____ after Disney purchased the FOX assets, Comcast sold its ownership stake in Hulu to Disney. The deal will take five years to complete, but Disney now has complete operational control. Hulu did have some early scripted series success, with East Los High in 2013, Casual in 2015, and The Path in 2016, each of which ran for multiple seasons. But it initially focused more on reruns from the libraries of its major owners, and airing broadcast network series from its parent companies shortly after their linear runs. It was not really in competition with Netflix. In 2017, Hulu developed its first signature hit with the award-winning A Handmaid’s Tale. The same year, it released Harlots, Marvel’s Runaways, and Future Man. Hulu followed those well-received series with The Looming Tower, Castle Rock, In the Dark (2018); PEN15, Shrill, Catch 22, Ramy, and Reprisal (2019). Hulu will soon have an FX hub, containing current and original new series developed by the cable network (which is now also owned by Disney). FX series will be available on Hulu after they air on FX. Providing current season series episodes shortly after their initial broadcast run does appeal to many viewers. From 2016 to 2019 Hulu grew from 12 to 29 million subscribers in the United States – impressive, but still less than half of Netflix’s U.S. subscriber base (Hulu is not a global service). Hulu’s premium tier (no commercials) costs $11.99 per month, while its basic service (with ads) is $5.99 per month. With the debut of Disney+, subscribers can bundle Disney+, Hulu, and ESPN+ for $12.99 – the same price as Netflix’s most popular tier (but for now only the Hulu version that contains commercials is included). Hulu limits show interruptions to 90 seconds. This essentially has removed more than half of the commercial time that had previously run in programming on the streaming service. Hulu also has a live TV bundle for $45 per month ($37 if you already subscribe to Hulu’s basic streaming service), containing about 60 channels, including the Big Four broadcast networks, Turner, A&E, and Scripps, and the cable networks they own. 5 The Sternberg Report ©2020 __________________________________________________________________________________________ _____ CBS launched CBS All Access in 2017 with CBS Studios’ and the network’s extensive library, recent episodes of current CBS broadcast shows, and two new high-profile original dramas, The Good Fight (a spinoff of CBS’s The Good Wife) and Star Trek: Discovery (the sixth live action TV series in the franchise), as well as a comedy series, No Activity.