We’ve got multi-billion dollar behemoths going head to head in the streaming wars. In this battle, there is no David, just a bunch of Goliaths. So who will win?
The streaming war that had been brewing is officially upon us. Disney + launched and 10 million people signed up on day 1!
From a business standpoint, it makes sense for multiple streaming platforms to exist since they are showcasing unique content e.g Stranger Things is only on Netflix and The Avengers will only stream on Disney+
To use my “MBA lessons”, product differentiation does exist. The interesting difference between the streaming wars and the rest of the convenience driven businesses such as ride share & food delivery is that this actually makes a bigger dent in the customer’s pocket. These businesses have used discounting as a way to gain market share, and continued to offer discounts to keep their customers largely due to little or no product differentiation.
The streaming industry is being built on the premise that for compelling content, the audience will fork over the cash. Billions of dollars are being spent on creating original content.
It’s a sound argument and at a price point of $7-$15 a month, it’s too much of a small ticket item to prompt users to get off the platform. However, as a customer, these costs add up - one subscription at a time. Add to this, the inconvenience of having to switch between platforms to watch the content you want to. Also, keeping tabs on the platform that hosts the content you want to watch is annoying.
It doesn’t seem like too much of a hassle but we live in an age where customer’s lives have gotten easier than ever before. Every additional touchpoint can break the business and move your customers away.
So then who wins this war? Netflix? Disney +? One of the many streaming services slated to go live soon?
The answer : Piracy
There will come an inflection point where the customer will tire of paying for multiple services and the effort of remembering where their favourite content is and go back to pirating it from the various free streaming websites that exist. Just type in the name of the show/movie you want…and it’s there!
Eventually, users will only subscribe to 1 or 2 services and just illegally stream the rest of the content they want to watch it. It’s ironic given that platforms like Netflix actually played a huge role in reducing piracy.
I would love to hear your thoughts and opinions in the comment section.
Shomik Roy is a Toronto based revenue expert specialising in scaling up revenue and operations in Toronto’s exciting startup ecosystem. He stops to pet every dog he meets because he thinks it is absolutely crucial to do so.