Streaming Explosion Creates New Dilemma: Too Many Choices
March 27 2019 - 10:48AM
Dow Jones News
By Benjamin Mullin
Apple Inc. previewed its long-awaited TV app on Monday, rolling
out a star-studded presentation featuring A-listers like Reese
Witherspoon, Steve Carell and Oprah Winfrey.
Missing from the glamorous production was a key piece of
information: How much the new TV service will cost.
As companies redouble their efforts to launch streaming services
and the cost of marquee offerings like Netflix Inc. climb steadily,
consumers are grappling with a difficult question: how to spend
their money and their time in an increasingly saturated media
landscape.
Already, consumers can choose between services like Netflix,
Amazon Prime Video, Hulu and ESPN+. Soon, they will have their pick
of new services from AT&T Inc.'s WarnerMedia, Walt Disney Co.
and Comcast Corp.'s NBCUniversal. And that is in addition to
so-called skinny bundles already offered by AT&T, Dish Network
Corp. and Alphabet Inc.'s YouTube.
Consumers who abandon pay-TV can afford to pay for several
streaming services before they eclipse the amount they paid for
traditional cable. According to data from Kagan, S&P Global
Market Intelligence, the average customer pays more than $90 for
their video subscription and an additional $57 for their high-speed
internet connection.
With $90 freed up from cutting the cord, the average video
consumer could pay for monthly subscriptions to services such as
Amazon Prime Video ($8.99 a month), Netflix ($13 a month), and Hulu
+ Live TV ($44.99 a month) and still have cash left over for
additional services.
Apple is betting that its new TV app, a central hub that will
allow users to view its original programming and purchase popular
services like AT&T's HBO, will augment the iPhone business.
Scheduled to launch in the fall, the Apple TV+ service will include
shows from Steven Spielberg and J.J. Abrams.
According to a survey of 2,000 people conducted by Magid
Research in 2018, streaming-video consumers are willing to pay for
a handful of services that cost a total of about $38. Those
consumers said they would be willing to subscribe to about six
streaming services, on average, the survey said.
Netflix, which counted 58.5 million U.S. subscribers in the
fourth quarter of 2018, is the most popular subscription streaming
service. Second-place during the same period was Hulu, the Walt
Disney-controlled video-streaming service, which had 25.2 million
subscribers.
"If you look at the market currently, the average consumer may
have room to add a service or two but the ceiling of what a
consumer will pay is soon reached," said Andrew Hare, senior vice
president of digital research and strategy at Magid.
Some streaming video subscribers just can't fit more TV into
their viewing schedule. Tres Dean, a freelance pop-culture writer
and author who already has subscriptions to five streaming
services, was left feeling exhausted by the presentation for Apple
TV+.
"I just can't fathom having the time to watch all those shows,"
said Mr. Dean, who watched a highlight reel featuring the boldfaced
names on Monday. "I just got physically tired looking at it."
Rich Greenfield, an analyst for BTIG research who has been
critical of the traditional cable bundle, said streaming services
are easy to cancel, which makes them particularly susceptible to
consumers who binge their favorite show and then churn out.
Despite the churn, both Amazon Prime Video and Apple TV+ will be
sustained by distinct advantages, said Matthew Ball, a media and
tech analyst. Apple's TV app will be installed on millions of
phones, which gives it immediate scale, and Amazon Prime Video is
part of its popular Prime offering.
"I would argue that Apple and Amazon are almost inevitably going
to be successful as long as they put the capital in and stay
committed to the space," Mr. Ball said.
Write to Benjamin Mullin at Benjamin.Mullin@wsj.com
(END) Dow Jones Newswires
March 27, 2019 10:33 ET (14:33 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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