March 20, 2022
Photo: Nicolas J Leclercq/Unsplash
Your five-minute guide to the best of Protocol (and the internet) from the week that was, from the state of the streaming wars to the future of climate tech to the Starbucks App Effect.
The streaming business is a simple one. To win, all you need is a never-ending river of spectacular shows and movies that appeal to a massive global audience that spans every demographic, an app that works perfectly on every platform and a great relationship with the other content makers and platforms you’re also trying to destroy. You have to make money even though a lot of your users will share passwords, and god help you if you charge more than about $10 a month. Like I said, simple!
This week’s news included a couple of industry-shaking streaming moves. Discovery announced that when it merges with Warner Bros., it also intends to merge Discovery+ with HBO Max, turning the two services into a formidable combined player. Meanwhile, Amazon’s $8.45 billion purchase of MGM was approved — or, more accurately, half-heartedly waved through — by regulators around the world.
To understand the lay of the streaming land, I called Julia Alexander, a senior strategy analyst at Parrot Analytics and a longtime writer on the streaming wars. She told me there are basically three paths to a successful streaming service. You either have to be so big that everyone subscribes and so good that they never cancel; small and nimble, a la Shudder or Marquee TV; or run by a tech company, like Apple TV+ or Amazon Prime Video. “I always say, we cannot talk about Apple and Amazon in the same way we talk about any other company,” Alexander said. “For them, $8.5 billion is … whatever.”
Most of the streaming companies we talk about — Netflix and Hulu and Paramount+ and Disney+ and Peacock and whatever the Discovery/HBO thing is called — are engaged in the fight to be the biggest. In some ways, that’s the only safe bet. It’s increasingly clear that while many people will pay for streaming services, they won’t pay for an infinite number of them, and the only safe thing to be is the default first choice.
For years, Netflix has occupied that first slot on the streaming dial relatively unopposed. And it’s still the clear leader, don’t get me wrong. But the growth of Disney+, thanks to the catalog of Disney and Marvel and Star Wars and Pixar stuff that seems to come faster and faster all the time and is miraculously almost all really good, seems to put Netflix under real threat. And Alexander told me she sees Discovery/HBO as another possible party-crasher: “It makes the most sense of all the M&A happening,” she told me, “if what they’re trying to do is create ‘cable light’ but for a cord-cutting audience.” It has everything from the prestige shows to the complete Guy Fieri oeuvre, which means there’s pretty much always something for everyone.
Speaking of cable: The next phase of the streaming era may look awfully familiar to cord-cutters. (Frankly, the current phase does, too; nobody’s fooled by YouTube TV and Hulu with Live TV and Sling. It’s just cable, folks. And it’s not even much cheaper!) Alexander told me she expects there to be much more consolidation in the coming years, as the big players try to become Too Big To Cancel. “You’re already seeing it overseas,” she said, “where you have Paramount and NBC making SkyShowtime because that’s the only way they can take on Disney and Warner and Discovery.”
The next few years are going to look a lot like the last few, with more shows than any human could ever watch coming to more services than any human could ever afford or even remember. But as the big players get bigger, they’re also taking on new problems, like Netflix deciding to finally make moves against the password-sharers of the world. They’re also going to have to continue working on discovery and recommendations, or risk users opening up HBOvery+ to watch “Euphoria” and instead getting a screen full of Fieri, or the other way around, which is decidedly not a good user experience. In general, Alexander said, don’t lose sight of the fact that this is still early days. Most people still have cable, the world’s a big place, and there’s a lot left to figure out.
If you’re looking for a wild card option in the fight, though, start with the tech giants. Apple and Amazon can afford to amass huge amounts of content and users, subsidized by selling iPhones and cloud services, and then figure out the landscape as it changes. Right now, as my colleague Janko Roettgers pointed out, the MGM deal may be most useful in service of growing Amazon’s ad business, while Apple is happy to subsidize TV+ for people who buy Apple products.
Everything you really need to know about the Big Tech streaming strategy you can learn by opening the Prime Video app. Which sucks. It’s just a wall of movies in no particular order! But that’s the thing: Amazon doesn’t really need to make it great. It just needs to have the right content — hence the MGM deal — and be ready whenever we figure out what “great” actually means. And then they pounce.
We asked you to tell us your No. 1 streaming service, and you responded! Many of you picked Netflix, as we figured, but your loyalties varied more than we would have guessed. Here are a few of our favorite answers:
“I have two kids, between the 3yo's nonstop reruns of Encanto and the 8yo's Star Wars obsession, 90% of all our monthly streaming use is Disney.” — Kate Cox
“YouTube Premium. Not quite sure how it happened but I now spend too much time on Youtube so the value of having it ad free is much more than what Premium costs. And Spotify's emphasis on exclusives is a terrible thing for podcasts IMO, so Youtube Music (which is included in Premium) replaces Spotify!” — Tom
“I find that most of what I end up watching is on Amazon Prime - but most of the content comes through secondary subscriptions to BritBox, Acorn, and Masterpiece. I watch relatively little American programming (though I am enjoying the second season of Upload).” — Oren Sreebny
“Netflix seems like a must-have, but it's also the one with content I can probably do without (that's neck and neck with Hulu, but Hulu is a good cable replacement, whereas with Netflix we have to wait for the current season of a show to be totally done airing before it goes live on the platform). Content-wise, HBO Max is by far supreme, with the trade-off being less-than-ideal UI/UX.” — Gina Gacad
Then Gina followed up: “Actually on top of my note re: favorite streaming services, here's a funny tiktok that basically sums it up.”
“My must-have streaming services:
I cut the cord about 6 years ago to ‘take charge.’ I now wish there was a streaming version of a cable package. I'm probably paying more, watching less, and am more frustrated trying to remember which service has which shows.” — Tamara Dull
“Paramount +. Just to get rid of the commercials.” — J Mark Burns
How to read a tech company climate plan, by Brian Kahn
The open EV charging network we need might finally be on the way, by Lisa Martine Jenkins
An Uber crash derailed this rider’s life. How much should Uber pay? by Issie Lapowsky
The grassroots giant: How Google became a lobbying powerhouse, by Ben Brody
Meet Raycast, the remote control for your work life, by Lizzy Lawrence
Mark Zuckerberg: NFTs are coming to Instagram before the metaverse is a thing, by Nat Rubio-Licht
‘It’s the right thing to do’: the 300,000 volunteer hackers coming together to fight Russia — The Guardian
The workaday life of the world’s most dangerous ransomware gang — Wired
Six months in, El Salvador’s bitcoin gamble is crumbling — Rest of World
What happened to Starbucks? How a progressive company lost its way — Fast Company
How California is building the nation’s first privacy police — The New York Times
Taking stock — Real Life
"Trying to make every deal as big as possible often adds complexity and extends sales cycles. To accelerate growth, sellers should focus on landing faster, and then expanding, and expanding again. Getting customers into your solution sooner helps you solve their initial problems, then later, you can grow together." - Michael Megerian, Chief Revenue Officer at Yello
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