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Wednesday, June 09, 2021

Streaming Wars: It's All Good For Cinemas

 We don't want to get over-excited, as cinemas are just getting back to some form of normalcy, but the streaming war is raging and that can only be good for the movie exhibitors ... here's why!

The competition between content streamers is immense and vicious. The Players (big tech and big media) daily battle for subscribers and continue to grow by consuming every content producer no matter the price. The latest victim, MGM, was bought by Amazon for $8.4b last week. When asked how this purchase would impact Amazon, its CFO stated, "the purchase has no material impact to our financials or current operations as the transaction cannot be viewed as significant". Hey, it's only $8.4B. In Amazon-think the MGM content portfolio is significant
and historic and they get a solid production studio to boot. 

In addition to Amazon (which also manages Amazon Prime), there is Netflix (the most significant streamer), Hulu, HBOMax, Disney+, Apple+, Paramount+, VerizonWB, and over 50 other entertainment streamers from National Geographic to Acorn. At the moment, all of these competitors have made streaming very affordable entertainment, several offer subscription rates of only $4.95 per month.

What's at stake for all of the streamers is eyeballs. 70% of all viewed in-home content was through a streaming service - millennials streamed 60% of that content. The DVD industry is all but dead as the streamers allow subscribers to hold purchased content in their 'lockers'.


                                              The Battle for the Viewership

The current score on subscribers is as follows:

Netflix - 210m, Amazon Prive - 175m, Disney+ - 104m, HBOMax - 85m, Hulu - 41m, Paramount+ - 36m, Apple+ - 34m. This doesn't take into consideration the large Chinese streamers like TenCent and iQlyi and at least 50 more worldwide some with subscription bases as low as 100,000.

Content is king. For example, for Amazon, snapping up MGM - which has more than 4,000 movies and 17,000 TV shows in its catalog - is an easy and relatively cheap way to supercharge its Prime service with a slew of well-known titles. Which include franchises such as The Pink Panther, Rocky, and the Bond films.

Amazon's purchase of MGM came right after AT&T announced its decision to spin off  WarnerMedia and combine it with Discovery Network. 

Why This Is Good For Movie Theaters

The streamers know that they need to keep their subscription prices low, at least into the foreseeable future, to remain competitive. To counter the low subscription price, several - Hulu, Paramount+, Discovery+ - are now including paid advertisements with their content streaming. So, we're back to the old game that the cable companies played. Charge a low monthly fee to start, then introduce ads, then raise the monthly fees as the situation permits. The problem is: that scenario doesn't work when consumers would need to purchase 4 or more streaming channels to get the content they desire. This can get very expensive when you consider that the household needs WiFi to get the streaming service delivered and may still want cable for broadcast TV content.

Current Cost of Streamed Content

Netflix $9/mo, $13/mo. HD

Amazon Price $9/mo. or included w/Prime $119/yr.

Apple TV+ $5/mo.

Hulu $6/mo. (ads), $12/mo. (w/o ads)

Paramount+ $6/mo. (ads), $10/mo. (w/o ads)

Disney+ $6/mo.

HBOMax $15/mo.

Everyone knows that the very top of the content barrel will be the Hollywood-produced tentpole films, and these will be exhibited in cinemas with an exclusive 45-day window (for the most part). If consumers want the very best in content they will have to go to the movies, or wait and view it on ???  If you don't have a subscription to Amazon Prime you're not going to see the latest James Bond film. The streamers will horde their content and stream it only on their channel.

This scenario provides cinemas an opportunity - as they, and they alone, will be able to exhibit content from all producers. 



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