The Rise Of Streaming

A decade in review...

If you were to ask people what were the most prominent brands of the last decade, you’d hear names such as Apple, Disney, Amazon, and a bunch more tech companies that have cemented their place on both the stock market and our lives. But the one I’d put above them all is Netflix. For many, Netflix represents the most fundamental shift in consumer behaviour of this past decade…that is the rise of streaming!

When you think Netflix, you think streaming. The two words are synonymous with each other, as it was Netflix who led the way in terms of streaming video online directly to consumers. Spotify comes to mind for music, but in streaming Netflix is king…well it has been so far. At the start of the last decade, Netflix expanded their DVD rental business, introducing the option to stream video directly to users for a monthly fee. No one knew whether Netflix’s model would work – but it did, and changed entertainment forever, offering consumers more freedom and choice with their viewing experience. Now at the beginning of the new decade streaming is everywhere, and every company in the technology or entertainment business wants a piece of the lucrative market.

Broadcasters had dabbled in streaming video content to consumers, especially in terms of catch-up TV. In the UK for example, BBC iPlayer was an amazing addition, but you’d still be encouraged to watch programs traditionally live on TV, as you’d sometimes have to wait a certain period of time before shows became available on the service, and they were only available for 7 days when the platform first launched. Of course now programs on iPlayer are accessible for months, but Netflix were smart when they decided to offer consumers content directly to their devices. For the first time ever, users could choose what to watch, when to watch it, and how long they watch it for. The era of “binge watching” began and being honest, binge watching shows is a pretty great experience. As I mentioned earlier, it was the freedom and ownership of the viewing experience which users really loved, and is what I believe propelled the business (and the concept of streaming) to the heights we see today. All the major studios licenced out content to Netflix meaning users had such a wide array of content to choose from. This first mover advantage allowed the company to grow into one the biggest companies in all of entertainment. Championing a user first approach, whilst adapting to the age of mobile and portability, their product was just simply too good not succeed. At present, they have over 180 million subscribers worldwide and are valued at almost $200bn.

Now...everyone wants in on streaming. The major studios, broadcasters, and tech companies all know the future lies in streaming media, and the market is lucrative for those that can succeed. Throughout the decade just gone, companies began to come up with ways to compete with Netflix. Amazon entered the streaming business midway through the 2010’s, adding to their ever expanding empire by launching Amazon Prime Video, a competitor to Netflix offering films and TV shows. What made it such a good product though was that it was included as part of Amazon’s “Prime” service meaning users could get access to free next delivery as well as the video content (and later music too). And Amazon wasn’t the only one to get into the streaming market – Sky launched Now TV, CBS launched CBS All Access, Disney launched DisneyLife in Europe, and so on.

Netflix however remained the go to platform for direct to consumer content, and the reason? Brand recognition for one, but mainly it was content. The deals they had in place with studios meant they offered the largest and most comprehensive amount of exclusive content compared to rivals, and they also had their original programming! It’s easy to say now that it was predictable the streaming market would be what it is today, but Netflix were the only ones who truly acted on this. Their senior management were smart and knew that eventually the major studios would one day get into the streaming market themselves, which meant it was unlikely Netflix could secure exclusive access to their most popular content. Moving into producing original content (or “Netflix Originals”) in 2012 was genius, as it gave the company high quality content which it would actually own, knowing that one day they would need to rely on original content to compete with established studios. Their first series – House Of Cards – was amazing and the company hasn’t looked back since, producing a string of high quality shows which are well known today e.g. Orange Is The New Black, Narcos, Stranger Things, 13 Reasons Why, The Crown, Money Heist, and the list goes on. In recent years they have even started producing original films including The Irishman (Martin Scorsese) and Roma (Alfonso Curon). Licenced content still makes up over 70% of all viewing on the platform, but their library of original content is constantly growing and increasing in terms of share of viewing. Netflix’s CEO famously said that they needed to become HBO before HBO becomes Netflix – visionary thinking I’m sure you’d agree. And they were right because the streaming wars have only just begun. I know I’ve talked a lot about Netflix (and rightly so), but there are so many more players in the market which is going to change the dynamics going forward. In addition to Netflix, Amazon Prime Video, and Hulu, we now have (or will have) the following services:

• Disney+
• CBS All Access
• Apple TV+
• HBO Max
• Peacock
• Hot Star
• Brit Box

An impressive list for anyone’s viewing. Consumers want content which is easily accessible and of a high quality, and with such a plethora of options it won’t be hard to find what you’re looking for. Studios like Disney, WarnerMedia, and NBCUniversal have the advantage of owning thousands of hours of beloved content, both original and from popular IP, which makes them such a force to be reckoned with. Disney+ - having launched in November 2019 – has already amassed 50 million subscribers worldwide, and being the home of Disney animated classics, as well as films from Pixar, Marvel, and Star Wars, it’s no surprise they’ve done so well in such a short space of time.

It’s clear there has been a shift in media consumption throughout the past decade, but the impact this has had on traditional businesses – cinema, broadcast television, advertising, and more – cannot be understated. Viewing of linear TV has fallen dramatically, whilst cinema-going has become infrequent and unreliable at best. Adaption is key, but sometimes there is only so much a business can adapt. The convenience of streaming has meant that staying home and watching Netflix has become a legitimate alternative to going to the cinema. Cinema chains have rightly been proactive in trying to protect their business, investing heavily to improve the customer experience e.g. Odeon Luxe. Although the last couple of years have seen record levels of box office revenue, it is largely down to the more high-profile films of recent years (Avengers: Endgame, Star Wars, etc), whilst original films or those from lesser known IP don’t draw in the audiences they once did. Cinema owners feel very strongly about the negative impact streaming has had on their business, which has made the relationship between them and streaming companies tense to say the least.

And not only cinemas, traditional broadcasters such as ITV, Channel 4, Sky, and more have felt the impact of streaming. Gone are the days of prime time television viewing, where families gather around the TV eagerly anticipating the line-up of entertainment. They can watch the latest episode of Dr Who on iPlayer instead of Sunday night, or they may rather want to binge watch the latest series of Stranger Things. TV viewership has been declining for years which is only bad for business. Although TV ad-space is still by far the most valuable, ad-revenue from digital platforms and social media is on track to eclipse TV in the future, meaning legacy broadcasters need to adapt. The BBC reluctantly closed the BBC 3 channel and moved it online in order to cut costs, whilst Channel 4 recently made ad-inventory available through Sky’s AdSmart platform, creating a better advertising product for marketers to use. It’s also important to remember that many players entering the streaming market already have a broadcast business which they cannot completely ignore. NBC’s Peacock is the most intriguing service, as it offers a free, ad-supported version, along with an ad-free paid for subscription. Offering the ad-supported option allows NBC to incorporate their current business model (which relies on ad-revenue) into the future of the company i.e. streaming.

It’s not as though users don’t watch TV at all, or hate going to the cinema, but just that they have other options to choose from now. As more players enter the streaming market, it will be interesting to see which platform is the most popular in 10 years’ time. The likes of Disney, WarnerMedia, and NBC have decade’s worth of beloved programming which can only work in their favour, whilst Netflix are streaming royalty and have the advantage of being a household name. With so much choice, consumers are going to pick their favourite service/s as they aren’t going to pay £80+ a month for every single one. I believe users will be drawn to platforms with the most variety, which is where Disney could come out on top. With Disney+, Hulu, and ESPN+, Disney can bundle their streaming services into one single offering, meaning there is something for everyone to enjoy i.e. family entertainment, mature content, live sports. With their ad-supported service, Peacock may also be a fantastic move on NBC’s part, as it is currently the only major service to offer a "free" product. The streaming market is evolving, and soon not only entertainment, but sports and gaming will adapt too. This new decade is going to belong to streaming, and regardless of who ends up on top, I’m sure the journey is going to be just as fun!

This piece is part of a series of blog posts reviewing the decade in film. Click here to discover more posts in this series.