Netflix, YouTube, Amazon Rule Streaming

Whrn it comes to streaming video content, consumers like to stick to the familiar, and for media companies eager to gain a foothold in the market, that could be a problem.

data shows that Netflix
, YouTube, Amazon Prime
, Hulu, and Disney
+ and Hulu accounted for 84 percent of streaming time spent on connected TV devices in July 2020.

HBO, which is still viewed mostly on set-top boxes, scored in the “very low-single digits,” followed by many apps, including Spotify, Pandora, Tubi, and Vudu, according to a report released today by Lightshed Partners.

Investors and the press would lead one to believe that there was an intense streaming war underway with the new entrants utilizing their vast libraries of content, lower prices (sometimes even free with ads) and cross-marketing scale leveraging their other portfolio assets to take share from streaming incumbents,” the media research firm says.

Disney + is a case in point. It was introduced last year and attracted 60 million subscribers worldwide, including 30 million in the U.S. My family and I signed up for a trial of Disney+ to watch Hamilton but later canceled it. We weren’t alone. Comscore data shows that the service accounted for only 5 percent of streaming time.

Indeed, streaming isn’t an easy business.

“The goal is to create habitual behavior, where you and your family members are continuously using the service to mitigate the risk of churn and to increase pricing power.” Lightshed writes. “Now think about HBO Max, Peacock, Paramount+, etc. Netflix has been streaming content for 13 years, so while new streaming services benefit from consumer adoption of streaming technology, they have all waited far too long to complete. To truly scale engagement, streaming services such as Disney+, HBO Max, Peacock, Paramount+, and others will need to spend far more than they currently want to on programming (both original and licensed), not to mention marketing and technology.”

Netflix, in particular, will be hard to catch. Shares of the entertainment colossus have surged more than 50 percent this year thanks in part to the coronavirus pandemic shutting down movie theaters and the production of traditional televisions shows.

“With so little fresh content on TV and without sports for several months, consumer adoption of streaming hit warp speed,” according to another LightShed note. “Once consumer behavior shifts, it is very hard to shift it back, especially when the “experience” of streaming TV is so far superior to linear live TV (on-demand, little-to-no ads, smart interfaces that learn/suggest, etc.). More time spent on streaming will lead to lower churn and greater pricing power. “

LightShed raised its 52-week price target on Netflix shares from $375 to $630. They currently trade around $500. It expects the company to have more than 300 million global subscribers by 2023, roughly 100 million more than it has now, and more than 400 million by 2026.

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