A Reason to Stream

The OTT streaming wars are now a fully joined battle royale, with fire incoming from all points: Netflix, Amazon Prime, Disney+, Hulu, Apple TV+, HBO Max, Quibi, Peacock, CBS All Access and more.

But some of that crossfire is proving to be less effective than anticipated.

Quibi, as I’ve noted here before, was a misfire from the start.

HBO Max is scrambling to get out of the line of fire from its own friendly forces. After confusing everyone by branding multiple distinct services “HBO,” WarnerMedia last week announced it will pare the number of HBOs to two (I think): plain old HBO and HBO Max.

Now that HBO Max has launched and is widely distributed, we can implement some significant changes to our app offering in the U.S. As part of that plan, we will be sunsetting our HBO GO service in the U.S. We intend to remove the HBO GO app from primary platforms as of July 31, 2020. Most customers who have traditionally used HBO GO to stream HBO programming are now able to do so via HBO Max, which offers access to all of HBO together with so much more. Additionally, the HBO NOW app and desktop experience will be rebranded to HBO. Existing HBO NOW subscribers will have access to HBO through the rebranded HBO app on platforms where it remains available and through play.hbo.com. HBO Max provides not only the robust offering of HBO but also a vast WarnerMedia library and acquired content and originals through a modern product.

Got that? As they say in politics, if you’re explaining, you’re losing.

NBCUniversal’s Peacock has launched and is being advertised heavily. But the stampede to sign up has yet to gather detectable force.

Apple TV+ is out there, but has yet to gain significant traction with consumers.

What all those efforts have in common is a strategy developed from the top down and a lack of compelling reason for consumers to sign up. With the exception of Apple TV+ they were built by media or old-line telecom companies to chase tech company stock-price multiples without really grappling with current OTT market realities.

Netflix was an OTT first-mover, and it has benefited from all the advantages that typically accrue with that distinction. But it had also already built a substantial direct-to-consumer subscription business that addressed a genuine consumer pain point at the time: the annoyance of having to return DVDs to the video store or face late fees. When it moved into streaming it reduced that friction further by eliminating the need for DVDs at all.

Hulu succeeded on the heels of Netflix thanks to very good execution, at least in the beginning, and because it filled a real need in the OTT market for more TV content at a time when Netflix was still mainly focused on movies.

Amazon Prime came with free shipping.

Disney+ got off to a fast start by filling the same market niche that Disney DVDs, and even VHS cassettes did back in the day. It is the ultimate on-demand babysitter, now with a broader range of content to appeal to a broader range of age groups. It also benefited enormously from the Covid-19 lockdown by providing deliverance for stressed-out, working-at-home parents.

What is HBO Max’s consumer proposition? We have a HBO and a bunch of other stuff.

But HBO has been widely available to anyone willing to pay for it for a long time. Now that HBO Max is available at the same price there’s no reason why a current HBO subscriber shouldn’t make the switch. But if you’re not already committed to HBO, what’s the allure?

WarnerMedia has a deep catalog, but as a recent analysis by streaming guide Reelgood shows (h/t Techhive), HBO Max is out of its weight class trying to compete with Netflix, Hulu and Amazon.

Source: Reelgood
Source: Reelgood

Quibi? We have expensively produced short-form content for your phone and we’re working on letting you watch it on your TV, too.

There’s no shortage of short-form content available to watch on our phones. But with Quibi’s three-month subscriber numbers coming in at less than 30% of its goal, there is a clear shortage of evidence the expensive production values are a difference-maker.

Peacock’s proposition? We have a bunch of stuff that used to be on Netflix and Amazon, but with ads.


HBO Max exists because AT&T wants it to exist, not because of any clear market opening or because it’s particularly suited to purpose. It exists because AT&T thinks that becoming a media company will persuade investors to assign it a higher valuation.

Quibi exists because Jeffrey Katzenberg was able to charm, badger, wear down or blackmail his Hollywood contacts into throwing money at it. Were there no Katzenberg there would be no Quibi, which is not a great selling point for Quibi.

Peacock is basically a glorified TV Everywhere offering at a time when cord-cutting is making the TV part less relevant.

That’s not to say there isn’t or won’t be quality programming available on the new collection of services. Of course there will be.

But consumers have a lot of choices these days for how to spend their entertainment time and dollars, and that time and those dollars are not infinitely elastic.

Emerging evidence, in fact, suggests consumers’ appetite for new streaming services is already flagging.

According to a new report by Visual Objects (h/t Streaming Media), 76% of consumers who subscriber to streaming services subscribe to three or fewer, and they pay less than $50 a month for them.

“It is essential for streaming companies to be in the top 3 most popular services,” writes the report’s author, Emily Clark.

With Netflix, Hulu and Amazon already crowding onto the couch, and with Disney+ in the side chair, there’s not a lot of room left for new entrants.

Simply throwing a lot of stuff over the top and expecting that will attract subscribers, or drive shareholder value for that matter, is no longer a viable strategy.