The State of TV Streaming in 2021

Posted 10.02.21

It has been said before but the TV streaming market is one crowded space right now and the back-end of 2020 saw the competition only getting tougher.

Warner Media announced that their entire movie slate for 2021 will be landing on HBO Max at the same time as any potential theatrical releases, Disney+ has seen huge subscriber growth, and have a growing slate of hard to beat titles from Marvel, Pixar and beyond, and with Netflix boldly claiming to be releasing a new film every week on the platform consumers have never had so much choice.

But who will win in this growing streaming wars and what should we be looking out for in 2021?

HBO Max comes of age
December 2020 was a defining month for Warner Media and their streaming platform, HBO Max, which until this point had a luke-warm start to life. Confusion over the brand name with the existing HBO NOW and HBO Go services and a lack of availability through established devices like Roku and Amazon Fire had hampered its roll-out.

However, things have picked up quickly with the service now available on more devices and with the launch of Wonder Woman 1984 on Christmas Day, the first in a year-long experiment for Warners where they’ll be dropping film releases on the platform day-and-date with any theatrical exhibition. Subscriber numbers shot up from around 4million to over 12.6million in early December and ended the year at over 17million users, more than double the number it had started Q4 with.

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Combined, HBO and HBO Max had 41.5 million U.S. subscribers as of the end of 2020, compared with 61M US Netflix subscribers. This relative success in the US for HBO MAX is dwarfed though by the competition when looking on a global scale with Netflix surpassing 167M global subscribers as of the end of 2020 and Disney+ reporting over 74M subscribers and over 137M direct-to-consumer subscribers when you combine with this Hulu (with now over 38M subscribers) and ESPN+ (with over 11.5M). HBO clearly has some work to do globally to reach the levels of Netflix and Disney but WarnerMedia is confident they can catch up and fast.

John Stankey, CEO of parent-company AT&T said: “The release of Wonder Woman 1984 helped drive our domestic HBO Max and HBO subscribers to more than 41 million, a full two years faster than our initial forecast”. The company is reportedly rolling out an ad-supported version in the coming months and plans to accelerate the international roll-out with Stankey suggesting that these moves will help the fledgeling platform gain greater momentum saying “Our expectations are that we will start to hit our stride as we get into the second quarter.”

Not the only game in town
It was not only HBO posting impressive subscriber figures and growth in 2020. The Comcast-owned Peacock also saw strong growth with an announcement in late December that the platform had reached 33 million sign-ups.

Comcast chairman and CEO Brian Roberts said Peacock appeals to “just about every demographic” and that is a threat to Netflix. With a planned investment of more than $2billion next year Peacock is certainly building on what Roberts described as “an exceptional start”.

In the UK Amazon Prime video [APV] continues to defy critics where it grew faster than Netflix in Q4 2020, thanks in large part to it’s live Premier League football and live rugby offering and the wider Prime bundle, a must-have for so many especially during the festive season.

Prime Video attracted nearly 50% of all new paid-for streaming subscribers in the UK in the run-up to Christmas, almost 3x as many as Netflix, it’s the nearest competitor showing the power of the Prime offering and the lure of Christmas sports in the UK as a huge ratings winner.

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This follows the impact Disney+ had earlier in the year capturing almost 50% of new subscribers in Q1 as the UK went into its first lockdown. However, momentum slowed for Disney as the pandemic wore on, attracting just 15% of new subscribers in the final quarter. Over the entire year, Disney+ secured almost 40% of new pay-for streaming subscribers in the UK, with APV taking 25% and Netflix accounting for 19%.

Disney has laid out an ambitious plan to maintain that strong momentum in the coming year with the launch of 22 Marvel and Star Wars projects coming to Disney+ this year. Whilst Amazon will continue to leverage the power of the Prime bundle to drive people to its streaming offering and its well-timed foray into live sports will continue to see it hit unbeatable subscriber growth in Q4.

Is Apple TV+ DOA?
Despite 2020 being a bumper year, with estimates suggesting video-on-demand services have seen more growth than at any other time in their history, it wasn’t all good news, namely for Apple TV+.

Some have reported Apple TV+ to have more than 30M users, whilst some post that number closer to 10M. Whichever is correct the numbers don’t look good for Apple when you consider the service is being given away for free to anyone who buys a new Apple device. Research suggests Apple sold 15 million iPhones in the US alone in Q2 of 2020. That could by all reasonable estimations equate to the entire number of Apple TV+ users globally. The numbers are made worse when estimates suggest that only half of those who have signed up are using the service and it’s estimated that less than 3% of the US market watched Apple TV+ last year, less than half of newcomer Peacock.

Without a deep catalogue, Apple doesn’t seem to have the stickiness of other streaming platforms and despite spending big on A-star vehicles it has had to extend its free trial period to subscribers until July, despite having already offered 12 months free up until February of this year.

Apple TV+ is available for $4.99 per month or included with the current Apple One subscription offering but this feels lightweight and many are accessing the service for free by purchasing a new iPhone, iPad, Mac, or Apple TV.

It remains to be seen whether Apple can turn their TV+ offering into a must-own service but in order to do so, I think the tech giants need two things: firstly to strike meaningful deals to acquire a catalogue of compelling content, and secondly to amass two, three of four break-out hits in a row that ensure the new titles really stand out and become a draw for consumers.

Without either of those two things, it currently feels like an undifferentiated offering, not an issue Apple have been used to in the past.

Netflix; THE global streaming behemoth
Netflix is still the dominant streaming platform and 2020 was a big year for the company. Netflix now boasts 193 million paying subscribers globally and is not only crushing the streaming competition but it is also now dominating traditional TV broadcasters. As the change towards smart TVs has proliferated the use of app-based watching a recent Neilsen study found that Netflix accounted for over 30% of all streaming to TVs in the US, beating every other service.

“Make no mistake, the proliferation of on-demand streaming services is the most profound media disruption of the last half-century,”
Peter Katsingris, Senior VP of Audience Insight, Nielsen.

To maintain this position of dominance Netflix announced it was launching a new movie every week on the platform across 2021 with the platform estimated to be spending upwards of $19billion this year on content (up from 2.4billion 8 years ago when it first embarked on original content). Compare this with Disney who announced it would not be until 2024 until their spending would hit close to half of this amount, having spent an estimated $1.7billion on content in 2020.

Netflix is now balancing a huge production demand with curating a “fresh” catalogue of film and TV — 60% of its TV content is from the last 3 years, compared with just over 20% from APV. Not only that but Netflix is increasingly looking outside of the US for its audience in the shows and films, it produces. The US only accounts for about one-third of Netflix’s 193 million paying subscribers and more than 50% of the company’s revenue, in the first half of 2020, come from outside of North America.

International hits like “La Casa de Papel” (also known as “Money Heist”) from Spain and Germany’s “Dark” have shown the streamer that audiences are open to new stories from across the globe. Netflix is now producing local-language originals in more than 20 countries around the world with production hubs in Madrid and London. Netflix is tapping local talent across the globe to tell more intuitive and authentic stories that have the potential to reach much bigger audiences thanks to the platform’s incredible scale. “Queen Sono” is the platform’s first script-to-screen African original series and shows Netflix is thinking beyond the Hollywood bubble.

“When you look at ‘Blood & Water’ [or] you look at ‘Queen Sono’ from South Africa — this isn’t the way that Hollywood has been telling African stories about Africa,” says Bela Bajaria, Head of Global TV at Netflix. “It’s African storytellers telling their story. It’s not the Hollywood lens. It’s the local lens actually telling that story.”

In the second quarter of 2020, the share of non-English content viewing rose by 33% in the US from the previous year and shows the extent of the change in viewing behaviour driven by the success of Parasite at the Oscars and the hype around shows like Money Heist. Netflix clearly sees a huge opportunity to continue this growth. Estimates suggest the platform has just 12% penetration in the APAC region, compared with around 60% in the US. To make ground in these areas Netflix is betting big on a combination of high-profile global shows and movies, as well as local and regional productions.

Where Disney is relying on the ubiquity and market penetration of its brands and stories, Netflix is taking a much more local approach and it seems that few are able to match it’s speed to move on new opportunities and find new audiences.

2021 Predictions
So what does all this mean for the year ahead? Well, I think three things are likely to happen.

Firstly, we are going to see a continuation of the explosive viewing numbers we saw last year as we slowly move past the COVID pandemic. It is unlikely however we are going to see vast changes in habits until beyond the mass roll-out of vaccinations which, realistically looks like the second half of 2021 at best. In 2020 we saw a sharp decrease in viewings during the summer months as many countries relaxed restrictions on movement and many people got outside for the first time in months. This year we are likely to see a slower lifting of restrictions as nations manage the vaccination roll-out process and ensure they don’t see any further spikes in cases. All of this will be good news for streaming platforms as productions have now found a way to resume. As more content drops we’ll have at least one more reason to stay indoors and watch.

We are yet to see any evidence of the suggested streaming fatigue; in fact recent Neilsen data suggests that up to 93% of people will either increase or keep their existing streaming subscriptions. Going somewhat against expectation more people said they would add a new service at an additional cost (38%) rather than swap out one they already had (27%). We are seeing entertainment and pay-TV subscriptions as a luxury that many feel is worth investing in particularly at a time when our options are limited.

Not only that but we are also going to see wide-spread industry acclaim going to the streamers with the Academy Awards and others filled with streaming releases, given the on-going challenges with theatrically releasing a film in the US and beyond. This will further cement the value of these streaming platforms as a must-have expense in the minds of their growing global audience.

Secondly, this isn’t a zero-sum game. As the data from Neilsen suggests we are going to see multiple winners emerge in this area. I expect to see Disney+ go from strength-to-strength taking the opportunity to move beyond Netflix in terms of its reach and audience size based solely on the global nature of its brands. One thing I would like to see is better bundle opportunities for ESPN and Hulu globally. Even a paired down catalogue across sports, entertainment and movies as part of a subscription package could help maintain momentum. Disney has taken the first step here with the launch of Star, the company’s international answer to Hulu, which is rolling out at the end of February throughout Europe, Canada, and New Zealand and will be integrated into Disney+, as the sixth brand tile within the app. If Disney can add a sports offering here from ESPN this could become a huge challenge to Netflix’s current market dominance.

I would also bet on both HBO Max and Peacock to continue to grow in audience size and relevance in the coming year. Peacock could see a huge global boost should the Olympics go ahead even without an audience in attendance. HBO Max has more than 50 original shows and movies set to arrive in 2021 and a slew of returning favourites hitting the platform. Key to the success of HBO Max will be its launch into new markets, with an expected European rollout starting in Q2 of this year. Similarly, Peacock is set to become available through Sky across Europe sometime this year and both will help drive increased subscriber numbers throughout the second half of 2021.

Lastly, I expect we may see some casualties along the way; namely AppleTV+. Apple has been cagey to share any data but audiences don’t seem to have taken to the tech giants offering. A JustWatch study suggested that AppleTV+ was last amongst all available streaming platforms in the US in Q4 of last year, with just 3% market share.

Few times would it seem like betting against Apple is a good idea but I wrote a piece two years in the Drum entitled “Why I think Apple won’t make it in TV” and my belief then was that their intention “to create culture” though well-intentioned felt a bit antiquated coming from the company that decided we all needed to own a U2 album but didn’t think it needed to tell us all in advance.

Apple’s stance of launching original shows with Hollywood A-list royalty on the surface sounds like a winning approach to creating a must-own global streaming platform but in reality, trying to become the gate-keepers of a culture entertainment company means trying to create content that works for everyone which often means creating it for no one, just ask Jeffrey Katzenberg.

Tom Jarvis – CEO

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