From TIMEWELL
This is Hamamoto from TIMEWELL Inc.
A Week of Streaming Earnings Reports
Over the course of one week, earnings reports from companies competing in the streaming market were released one after another. As major media companies including Disney, Warner Bros., and Paramount face the shared challenge of declining linear TV businesses alongside expanding streaming operations, the strategies and results of each company are drawing close attention.
Analyst Laura Martin analyzed these companies' earnings reports and pointed to key considerations for predicting the direction of competition in the streaming market. This article, drawing on Martin's perspective, examines the current state and future of the streaming market.
- Streaming growth is nearing the point where it offsets linear TV decline
- Amazon and Apple's entry is intensifying competition in the streaming market
- "Scale" and "bundles" are the keys to survival
- Summary
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Streaming Growth Is Nearing the Point Where It Offsets Linear TV Decline
According to the earnings reports, the linear TV businesses of major media companies are declining across the board, while streaming businesses continue to grow steadily. Disney and Warner Bros. are approaching the point at which their streaming businesses have expanded enough to offset the decline of linear TV, and Paramount is reportedly approaching its own inflection point.
Martin Predicts Streaming Becomes the Primary Business by 2025
Martin predicts that "by 2025, the streaming businesses of these companies will have reached sufficient scale to fully compensate for the decline in linear TV." In other words, the day when streaming becomes the backbone of the TV business is rapidly approaching.
However, she warns that this will require substantial investment and time, and that efforts toward content creation and customer acquisition cannot be neglected. In particular, as competition for sports content intensifies, rising content costs may squeeze the profitability of streaming businesses.
Amazon and Apple's Entry Is Intensifying Competition in the Streaming Market
Another key point Martin raises is the full-scale entry of major tech players like Amazon and Apple into the streaming market. Backed by enormous financial resources, these companies may be positioned to gain an advantage in content acquisition and price competition.
Amazon's Bundled Model Creates an Unmatched Pricing Advantage
In fact, Amazon offers Prime Video as part of its Prime membership benefits, enabling a monthly subscription fee that is overwhelmingly lower than competitors. Apple is also investing heavily in content production, leveraging its substantial resources — and its future moves are closely watched.
Meanwhile, established players like Netflix and Disney are also responding with various strategies, including introducing ad-supported lower-priced plans and bundling with other services. Martin notes that "steering users toward ad-supported plans has the effect of increasing user options and reducing churn."
The Keys to Survival Are "Scale" and "Bundles"
What does it take to survive in the fiercely competitive streaming market? Martin points to "scale" and "bundles" as the keys.
Netflix's Market Cap vs. Its Competitors
On scale, Netflix's market capitalization stands at approximately $250 billion, while Paramount is at $8 billion and Warner Bros. at $26 billion. Martin raises the question: "Can companies below $100 billion compete with giants like Amazon and Apple?"
On bundles, Disney is employing a strategy that leverages its own strengths — combining streaming services with theme parks, and offering Hulu and Disney+ together as a package. Amazon also bundles Prime Video as part of Prime membership benefits, giving it an advantage through bundling.
Martin observes that "bundles have the effect of reducing churn, and larger companies have an advantage." For Paramount and Warner Bros., how to achieve bundling looks set to be a key challenge.
As competition in the streaming market intensifies, content, price, and scale appear likely to be the factors that separate winners from losers. While streaming businesses are growing to the point where they offset the decline of linear TV, there is also the risk that rising content acquisition costs will squeeze profitability.
Amazon and Apple Will Intensify Competition Further
Competition is expected to intensify even further with the entry of Amazon and Apple, but established players are countering with ad-supported lower-priced plans and bundling strategies. With scale and bundles holding the keys, the possibility of industry consolidation is also emerging.
The battle for streaming supremacy — centered on content, price, and scale — looks set to continue with developments that cannot be taken lightly.
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