The Future of Streaming Wars is a Bloodbath

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Entertainment is in a very ugly yet fascinating place in 2018. We see movie studios halting the theatrical releases of some of their bigger films and putting them on Netflix (looking at you Paramount), Disney is trying to swallow whole the entire film industry, TV is finding a more comfortable zone away from cable while even the Telecom companies are trying to get their hands on some of the biggest movie division studios. It seems the only industry not undergoing major changes is the video game one and I say so lightly given virtual reality in a decade or so will soon affect even this side of entertainment.

To add to the fuel we got multiple streaming services out. The one to start the whole craze was Netflix followed by Amazon Prime, Hulu, PlayStation Vue, CBS All Access, HBO Now, YouTube Red and soon to come, Apple and Disney putting their own in 2019. Anyone else? The entertainment bubble is about to burst in a way many don’t expect it to, but what if I told you I could give you a probability of where all this is heading. In fact, something like this already happened before and it’s called the Console Wars. Allow me to give you a detailed look into history which at first may tire you, however, it will pay off and give you a better understanding about what the future will come down to.

I will be putting checkmarks “[]” to help us track the main similarities.

A Little Background

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To do this we would have to go back to a time in the 1970s when video games first found their home in a place called the arcades. Kids after school would go to the arcades to insert coins into a machine and play games. You see, these can be our equivalent of cable TV [1]. Eventually, video game developers found a way to make it more convenient for the consumer (sound familiar?) and instead create a machine that can both sit in one’s home and play games. Enter consoles. The first break out console came out in 1977 that was known as the Atari 2600 created by Atari who were at the time considered the biggest American company [2]. The sheer idea made them rich so it was natural others followed. In the span of 5 years, fifteen more consoles were created [3]. ColecoVision and the Magnavox Odyssey 2 were the closest competition it ever got, but never truly reached it. By the time the 80s came, the video game market was about to crash, crash harder than the Hindenburg. Too many consoles have been out not to mention the games on the Atari 2600 were garbage compared to the quality of the arcades. Then one company swooped in and saved the entire. 1983 saw the release of the Nintendo Entertainment System and its legendary games such as: Super Mario Bros., The Legend of Zelda, Metroid, Super Mario Bros. 3, Kirby’s Adventure, Contra, Mega Man 2, Duck Hunt, Punch Out! and so many other classics which marked the beginning of a new era. The Golden Age of video games which proved that consoles can indeed, match or better, surpass the quality of arcades. [4]

Nintendo became the new household name, yet competition followed and it was strong. In 1988 SEGA came out with a console of their own, in the US called the Sega Genesis. Now, this competitor didn’t have as solid of a game lineup (don’t @ me) however it did have Sonic the Hedgehog under its belt which was marketed as this ultimate game that runs faster, smoother and is a pure example as to why it’s better than the competition. The only reason this rivalry was able to last so long was because Sega was brilliant at marketing. They even used silly empty terms like “blast processing” which was literally a made up term with no meaning, only created to brag about something even if that something doesn’t exist. Their ads would specifically reference Nintendo’s games in a more negative light. This drama got everyone excited to root for a side. If you think we’re getting off track, believe me, it will pay-off. Keep in mind other consoles also existed, it’s just that the spotlight was only directed at these two because they were the only viable products [5]. Atari was trying to come back strong with Atari 5200 and 7800, however, it found itself failing. In 1990 Nintendo clapped back with a new console called the SNES aka the Super Nintendo Entertainment System with superior graphical power, better performance, and more AAA titles. [6]

This had Sega in a tough spot. They decided to hit back in the worst way possible. [7] They created an add-on (in 1991) which you throw on top of your original Sega Genesis console. It’s supposed to be a boost in power, performance, however, didn’t find success. For some reason, Sega created yet another add-on (1994) that you throw on top of your add-on that’s supposed to be on top of the original console (seriosuly). It was a disaster and didn’t even have good games. These accessories came out every other year which wasn’t too friendly for anyone’s wallet. No wonder the sales were so bad. Sega clearly lost, trying to regain its position they created an actual new console Sega Saturn in 1994 however by then everyone gave up on a company that asked its customers to spend money on a console every 3 years. Nintendo was winning the so-called Console War. They themselves were developing a partnership with Sony to create their own add-on however for some reason they ditched the company for Phillips [8]. Sony found out about the betrayal at the same time Nintendo announced it to the public. Ironically enough their allegiance with Phillips resulted in a terrible product while Sony went out of their way to make the PlayStation. That’s right! Nintendo created their greatest enemy who would sell more units in every single gaming generation, but one since (as of now).

Atari was forgotten long in the late 1980s. Nintendo dominated. Sega competed yet lead to their own downfall. Sony entered the market with the PlayStation as a result of a mistreatment from Nintendo. Sega died with their final console, the Dreamcast, which had a rich gaming library, but it was already too late. Microsoft’s Xbox brought them to the scene. Skip to modern day we are left with only three consoles: Sony’s PlayStation 4, Microsoft’s Xbox One, and Nintendo’s Switch [9]. Now, where is this all heading?

The Future of Streaming Services

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The similarities are groundbreaking. Right now we live in an era where there are over 20 streaming services to choose from [3]. None of us really realized this until we do a quick Google search (for example here or here or here). Majority of these no one really cares for. All that matters are about the 6 choices that have found the biggest successes [5] and guess what, that circle will only get smaller because eventually, the market will hit a mark where the consumer is feeling overwhelmed with all the choices to a point of feeling frustrated. We’re already getting there and the divide will only grow with Apple’s and Disney’s confirmed decisions to come in. Just like with consoles there will be 20 to choose from, only 3-4 to actually matter until the market won’t be able to sustain even the 20 smaller ones. But how do companies ensure they aren’t on the cutting block? They give people what they want. Quality content [4]. It’s what made Nintendo such a break out hit which put them on top of the game for the longest time, some would say still. The only difference here is services have to prove their slate of shows and movies is better than the one of the others’.

Who is Safe?

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Netflix. Seems like an obvious choice no? They were the one who started it all, they already build up a huge library and brand recognition all over the world so they must be a safe bet. I wouldn’t bank on it yet. [2] I will remind Atari was considered one of the biggest companies in the US who also started a trend which they later found themselves at the bottom of. Now, unlike Atari, Netflix has a quality of materials to make up for this problem. Or do they? Despite what the ‘Netflix Originals’ tag may suggest, not everything on the interface is owned by Netflix. A lot of the shows and movies have been simply acquired to air on it (as shown here). For example, all the Marvel series will be soon pulled down from the network as they are owned by Disney. Netflix has doubled down on this, it seems they have realized what Red Wedding is about to come down and they are now $20 billion in debt (yes, that’s with a ‘b’) to spend on their original programming. It’s difficult if it will work out for them given they already are in so countries. The CEO is expecting a $15 billion return in 2018, which is still not enough to compensate for the debt nor is it certain they will hit a high mark. So as some may come to think, Netflix may not be so safe. As seen with Atari brand names can quickly lose their meaning especially with young ones like Netflix.

Amazon Prime. The current streaming service that seems to find itself in the safest spot is Amazon. In mid-2017 Amazon has also found themselves $16 billion in debt to make sure they stay strong in the game. Now, the only difference here is being an Amazon customer means you get access and privileges to almost anything you want. With Amazon, you can buy anything you want, read online books, comics. The company has even created their own movie studio for goodness’ sake. Also not to be the biggest horse in the game (streaming-wise) as of now also helps given a lot of the decisions made by competitors will mostly be aimed at Netflix to lower their significance to ease in access. True, Disney or Apple getting top-notch talent will also prevent Amazon from tapping into it however they aren’t their biggest worry. Out of the current Top 3 streaming services, Amazon Prime is a sure bet. [6] Amazon is in a position to make decisions that can deliver the customer’s needs. Hopefully, they don’t go the SEGA route and go the incoherent route with all the stuff they got access to. So stop with the Lord of the Rings TV Show idea. Please.

Hulu. This a dead horse and we all know it which is truly a shame because the service provides a lot of acclaimed shows, but the truth is it’s in a weird position. For one, it is co-founded by 4 companies: Fox (30%), Comcast (the guys who own Universal – 30%), Walt Disney Company (30%), TimeWarner (10%). With the pending Disney’s takeover over Fox, they will own 60%. Now, why would Disney create a streaming service of their own to then put out some of its content on Hulu? It makes no sense unless Disney wants to make it a new hub for their more mature offerings which might be the Marvel shows that will likely seize to exist on Netflix. If that’s what they decide to do then that’s fine, but if the company attention isn’t directed on Hulu, then chances are the service will die out. It’s kind of the reverse of the Nintendo-Phillips-Sony fiasco only with possibilities of going into the same direction [8]. In other words, nowhere. Really difficult to see any of this move into anything positive. Secondly, Hulu isn’t so big worldwide. Its main revenue is domestic so the 60% of the company that will have its focus shifted somewhere else might not be so eager to care much for its expansion.

Disney. The one who is going to be 100% more than safe. A library of Pixar, Marvel, Star Wars, Indiana Jones, live-action remakes and possibly even access to Avatar, X-Men movies, Alien and so much more! This is going to be the #1 place to invest in. Really difficult to actually find any problems the company might face. Disney will take away their shows and movies from Netflix, possibly minimize or completely lead Hulu to a grave (maybe take some of its programmings too) carving wounds into almost everyone. Nintendo is often compared to the Disney of video games so it’ll be nice to see the script flip. I actually see a case being made for many people canceling their previous subscriptions because of the brand name, recognition and guaranteed content Disney will provide. Star Wars shows are already on the move, Jon Favreau is going to be its head (the Star Wars fatigue is real, though).

Apple. Funny enough Apple already tried their go at the console market with the Apple Bandai Pippin (good times). They failed, but maybe with this trend, they can catch on. Apple already got M. Night Shyamalan to work on a thriller series which sounds interesting. Others include Damian Chezelle’s drama (director of La La Land and Whiplash), a mourning show drama with Jennifer Aniston & Reese Witherspoon, a reboot of Amazing Stories with Steven Spielberg in the helm, space drama from Ron Moore, and so much more. This slate sounds amazing and really has me going. Apple is also fighting for the rights to James Bond which will give those people a lot to look for. One big red flag that may ruin chances of Apple actually maintaining relevance is a mudhole Sega found themselves in. Of course, I am talking about the silly add-ons that stink of greed [7]. Obviously, Apple won’t want us to buy additional parts to get better quality on our screens, but they may very much drive the board in a way that encourages consumers to spend more on Apple products. It may give Apple product owners benefits for watching their movies or shows on their phone or tablet. The downside I see here is the public might actually not care enough because they are so blinded by Apple’s “innovation”. But who knows? Maybe people will wise up. So as long as they don’t pull off a ridiculous greed stunt they will find themselves in a more than welcome spot. Also if they want to they’ll buy what will be left of Netflix.

CBS All Access. It won’t live for long. HBO Now. I actually see this one surviving the bloodbath all other streaming services won’t manage to survive. Game of Thrones and Watchmen is enough to keep people interested and think of as its own thing. PlayStation Vue. Kind of in a weird spot. Going to die. YouTube Red. Targets a different demographic so let’s include it from our conversation. It will stay, but hopefully, I’m wrong. Others. Facebook will not invest here. yet.

In Conclusion

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[9] Musical.ly wins and kills everyone. You didn’t think I was serious, did ya? Let’s get serious. In a couple years, around the coming of Disney and Apple into the arena, the services will slowly seize to exist like similarly seen with the consoles. We will be left with 3 or 4. Those are Amazon Prime, Disney, Apple and HBO Now. These are my personal predictions if you see Netflix staying in then make sure to sign off in the comments below. I’m sure you have a strong opinion. As for cable? It will either dissolve like the arcades which I honestly hardly see happening (at least anytime soon), but only under the circumstance if they change in a big way. Movie theatres won’t die out as well, but the going audience will drop down even if MoviePass is taken into account (hopefully I’m wrong, again). Also, the monthly subscription fee will rise as the budgets get bigger and the companies will want to get their money back to gain a return from the debts.

P.S. No Netflix hate from my side. Only a prediction.

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