How Many Streaming Video Choices Are Too Many With Netflix, Amazon, Apple, Disney — And More?
Consumers broke the pay-TV bundle by cord cutting and switching to streaming TV services like Netflix (NFLX). Now they must face the consequences.X
To get the content they want, they'll have to take on the daunting task of assembling their own bundles of entertainment services from a myriad of video streaming choices.
The explosion of choices has created a mess for TV fans. Not only do they have to decide which video services they'd like to watch, but also how many are worth the price of admission. And the number of choices coming out this week and in the next several weeks is dizzying.
Consider science-fiction lovers. To see "Lost In Space," they have to subscribe to Netflix. To watch "The Boys," they must get Amazon (AMZN) Prime Video. To view "Star Trek: Discovery," they need CBS (CBS) All Access. They will need additional subscriptions to watch "Star Wars: The Mandalorian" on Walt Disney's (DIS) Disney+ and "See" on Apple (AAPL) TV+. That's before considering Hulu and a host of other current and upcoming video streaming services.
Consumers who dreamed of the a-la-carte TV future might soon wish for a return to the good old days when cable and other pay-TV services packaged channels of programming for them. Plus, a bunch of those services together can ring up to a substantial bill. Today the average monthly pay-TV bill — including cable, satellite or telco services — is about $110, according to Leichtman Research Group.
"We're about to test the consumer limit on streaming video services," said Brett Sappington, senior research director and principal analyst at Parks Associates. "The number of services per household continues to go up. We've been watching the number of households that gets three or more services and it's gone up every year."
Average Streaming Video Accounts
The top three services today are Netflix, Hulu and Amazon. New entrants include Apple TV+, which debuted Friday, and Disney+, which premieres on Nov. 12. Early next year will see the launches of HBO Max from AT&T's (T) WarnerMedia and Peacock from Comcast's (CMCSA) NBCUniversal.
Analysts trying to gauge the consumer appetite for new video services have had to adjust their models higher.
The share of U.S. households with multiple internet TV subscriptions has surged since 2014, according to Parks Associates. Today, 46% of U.S. broadband households subscribe to two or more Internet TV services. That compares with 33% subscribing to multiple services in 2017 and 20% in 2014, Parks says.
The average number of over-the-top TV services per household that subscribes to at least one was 2.6 in the third quarter, Sappington said. That's up from two a year ago, he said.
TV watchers will see their monthly entertainment bills balloon as they take on additional streaming video services. So much for those expected cost savings from cord-cutting.
Consider the price of some of the top video streaming subscriptions.
Streaming TV Services Prices
- Netflix standard streaming plan, $12.99 a month.
- Hulu ad-free service, $11.99 a month.
- CBS All Access commercial-free service, $9.99 a month.
- Amazon Prime Video, $8.99 a month.
- Apple TV+, $4.99 a month.
- Disney+, $6.99 a month.
- HBO Max, $14.99 a month (starting May 2020).
Those are just the big guys. There are scores more niche streaming TV services.
Still, the monthly price for a subscription video-on-demand service is considered pretty reasonable for many households, Sappington said.
People who get both traditional pay-TV service and streaming video services are "content lovers" and won't mind adding another new service or two, he said. More than half, 53%, of U.S. broadband households that subscribe to at least one video streaming service also get pay-TV service.
On the other end of the spectrum are cord cutters. They're more likely to go cheap and switch from one subscription service to the next to save a few bucks.
People forced to make their own video bundles also can add free over-the-air broadcast channels and ad-supported streaming services like the Roku (ROKU) Channel and Amazon's IMDb TV.
'Streaming Wars' Will Frustrate Consumers
Wall Street analysts have dubbed the heightened competition in internet TV the "streaming wars."
The streaming wars are likely to frustrate consumers, said Tom Anderson, a partner at consumer insights firm The Langston Co. A Langston survey of 1,264 U.S. adults found that consumers are frustrated about losing beloved shows and about the rising costs and inconvenience of subscribing to multiple services.
"A lot of people complained it can take 30 minutes to choose a Netflix movie on a Friday night," Anderson said. "Now take that and multiply by three or four. You're dealing with additional friction: first, which streaming service and then, what to watch."
That could lead to heavy subscriber churn. Based on its projections, Langston expects Netflix to lose 12% to 17% of its U.S. subscriber base after Disney+, HBO Max and Peacock launch. Similarly, Hulu could see a 15% to 19% subscriber haircut.
"People told us 'I know I'm going to be subscribing to Disney+, so I might not do Netflix.' Or, 'I've already seen everything on Netflix,' " Anderson said.
New Video Services Bundles
Tech and communications firms see an opportunity in the streaming chaos to offer video bundles to entice consumers. Some bundles include music streaming, live TV, cellular and other services.
The business motivation behind service bundles is to make consumers less likely to cancel. That's important because canceling a month-to-month, subscription video-on-demand service is a lot easier than canceling a pay-TV service, which typically involves home installation, hardware rentals and longer-term contracts.
The same goes for starting a video service. Consumers can turn on a new video streaming service quickly as opposed to the hassles of setting up cable TV service.
Barclays analyst Kannan Venkateshwar thinks internet service providers, or ISPs, could be the most successful bundlers of video streaming services.
"Bundling streaming with broadband couples demand for both these products a lot more closely than the legacy bundle," he said in a recent report to clients. "We are likely to see a mix of price and product bundles from ISPs which include multiple OTT (over-the-top TV) services attached to a broadband connection at one price point."
Comcast Seen As 'Premier Bundler'
Comcast is leading the charge. It already offers Netflix, Amazon and Hulu through its X1 service. Plus, it is putting its Peacock service front and center on its streaming video platform, Flex.
"Comcast might be the premier bundler," said Bruce Leichtman, president and principal analyst at Leichtman Research Group.
Amazon and Apple also are well positioned to be natural aggregators. Both companies already offer rival streaming channels on their video platforms, Leichtman said.
Apple reportedly is considering bundling Apple TV+ service with its Apple Music service. It is giving a year free of Apple TV+ to people who buy an iPhone, iPad, iPod Touch, Mac or Apple TV device.
Disney has put together what it hopes will be a cord-cutter's dream. It is bundling Disney+, ESPN+ and Hulu services for $12.99 a month.
AT&T, T-Mobile, Verizon Bundle Video, Wireless
Major wireless carriers are bundling video services with their mobile phone plans.
T-Mobile (TMUS) gives certain wireless subscribers Netflix at no extra charge. Verizon (VZ) is offering Disney+ free for one year to wireless customers on unlimited-data plans. And AT&T will offer HBO Max for free with some phone and broadband services.
One benefit of cross-company bundling is exposure, Sappington said. The two companies can share marketing costs to get noticed by consumers, he said.
"Consumers are hard pressed to find all of the services that are out there," Sappington said.
The proliferation of internet TV services has weighed on Netflix stock. Netflix shares are down over 30% from its all-time high of 423.21, reached in June 2018. The competitors are touting original content and familiar reruns and movies.
Roku stock has benefited from the confusion as it serves as a platform to accessing all the various streaming TV services. It makes streaming devices and software for smart TVs. Roku stock is about 16% below its record high of 176.55 on Sept. 9. It has formed a cup base, setting up a potential new buy point of 176.65.
YOU MIGHT ALSO LIKE: