The Streaming Wars Enter a New Phase
A battle for streaming supremacy between Disney and Apple presents new questions, ideas & possible models
|the b|e note||Oct 9, 2019|
a Trendency Feature
This fall two of the world’s most recognized and well-known American companies, Disney and Apple, will launch their digital streaming services. Both companies say they will be spending billions on their new services, including the development of original content. And while both have money to burn and are projected to lose an equal amount of money out of the gate, this clearly marks the beginning of a new era.
Before you think this is episode one, season one – it’s not. This “new model” has been around for a while with Netflix, Hulu, YouTube and others that have paved the way for cord-cutters and those looking for content that does not have to conform to the norms of standard television. Stranger Things, The Handmaid’s Tale, and The Man in the High Castle – all major bets by streaming services - have helped increased their number of subscribers and developed a loyal following of viewers waiting for the next binge-worthy show.
With all that being said, and before we anoint a new successor, cable is still the most common avenue for entertainment in the U.S., although probably not for long.
According to our Trendency data, adults watch cable 55 percent of the time compared to 45 percent of their viewing time dedicated to streaming services. Considering that Netflix started its streaming service in 2007, the fact that cable has lost close to half of its market share in about a decade is astonishing. And it’s only going to get worse for cable companies. Adults under 45 years old, according to our data, are already spending most of their time (59 percent) on streaming services and just 41 percent on cable. The good news (or bad news depending on how you want to spin it) for cable is the bottom hasn’t completely fallen out.
Cutting the cord (i.e. ditching cable subscriptions entirely) is a popular discussion in the office or neighborhood gatherings, but it hasn’t translated into action quite yet. Sixty-one percent (61 percent) of adults under 45 said they have cable packages, compared to 66 percent of all adults. Again, good news for cable until we ask the follow-up question: “what are the chances you cut the cord in the next year?” Then two-thirds of those who have not cut the cord yet say there would be at least some consideration of doing so.
While younger adults are an obvious driving factor for the shift towards streaming services, they are not the only ones. Trendency found that women, by a 2 to 1 ratio, make up the shift towards streaming services, with 28 percent of women under 45 exclusively watching entertainment through streaming services. If the future is indeed female, then companies shouldn’t be running towards streaming services – but building a one-way, high-speed pipeline.
Trendency Projects 9.5 Million US Subscribers for Disney+ in 2020.
Given these numbers, it is not surprising to see Disney and Apple making this move. Disney is projecting 60 – 90 million subscribers worldwide by 2024, with US subscriptions making up a third. In June, Morgan Stanley analyst Benjamin Swinburn said these are likely conservative projections, and pegged Disney+ to be closer to 130 million in five years with 13 million at the end of 2020 (again, worldwide). Based on the responses from our panelists, Trendency projections may still be too conservative – at least with regards to the U.S. subscribers. Indeed, we are projecting 9.5 million US subscribers in 2020. For comparison purposes, Netflix has around 60 Million U.S. subscribers, and in 2018 added 5.7M new subscribers.
So what does Disney+ have that others in the market do not (besides the Avengers and Luke Skywalker)?
Potentially, a stronger male audience. And it’s not just Disney+. Significantly more men indicated they are highly likely to subscribe to Apple TV+ than women. This data surprised us, so we decided to dig further into what is happening.
As we looked at self-identified subscribers of the other services, we see a marginal gender gap between Hulu, Netflix, and Amazon Prime—all streaming services that have been in the market longer and enjoy a significant audience size. While less-established services like CBS All Access and HBO NOW, tend to skew towards male users. Ultimately the long-term success of Disney+ and Apple TV+ to reach their ambitious goals lies not with men who are likely to sign up out of the gate, but women who appear to be happy with their choices as of right now, and are less willing to be early adopters.
Now take a step back and think about the promotion and marketing we’ve seen for Disney+ and AppleTV+. Disney has put at the center of marketing campaign Marvel Studios and Star Wars, two franchises that, despite significant efforts to make gains among female viewers, tend to have predominately male audiences. Apple, on the other hand, has gone the other direction featuring Jennifer Aniston, Reese Witherspoon, and Oprah at the top of their lineup. It’s pure speculation, but given our findings – it is possible that Disney is making a push for early adopters to drive up their numbers. Meanwhile, Apple is going straight for the long-term play.
So, Who’s Going to Win?
Like any good binge-worthy show, this is going to be captivating to watch. Of identified Netflix subscribers, only 12 percent said they would highly likely subscribe to Disney+, and a similar 10 percent are highly likely to join Apple TV+. This level of openness is similar to both Hulu and Amazon Prime Video subscribers. As for the male-dominated CBS All-Access and HBO, we see these numbers nearly double across the board. Twenty-six (26 percent) of CBS subscribers say they are very likely to join Disney+, and 22 percent say they are highly likely to join Apple TV+. Among HBO NOW subscribers, 21 percent are very likely to join Disney+, and 20 percent very likely to join Apple TV+
While the current data points to the fact that there is room for several streaming options, these new services are going to have to strike an interesting balancing act. They are going to have to keep their early adopters happy, who are mostly going to be men, while also working to attract female viewers over time. If Disney and Apple can pull this off, the subscriber numbers discussed earlier could indeed be conservative estimates.
While it would be easy for any research to say, “We intend to follow-up”, Trendency has the built-in advantage of being able to regularly check-in with our panelists. This will allow us to identify shifts in perception over time to see if Apple and Disney are winning over women and if projections are likely to be over- or understated. Stay tuned.