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A Sternberg Report Sponsored Message
Advertise here to reach thousands of media and advertising decision makers. Contact steve@thesternbergreport.comThe Sternberg Report ©2020
January 2020 #81
The 2020 Streaming Wars
By Steve Sternberg
It's hard to believe that it was just seven years ago, in February 2013, that Netflix released thefirst streaming hit, House of Cards (Its first original series, Lilyhammer, debuted a year earlier). It was
the first streaming series to receive major Emmy nominations (56 over its six-year run). Since then,
Netflix has dropped a string of successful new series every year on its way to drawing about 160million subscribers worldwide (roughly 67 million in the U.S.). Being first out of the gate with spending
levels that rose from about $3 billion to $15 billion per year (projected to be $17 billion in 2020) helped
give Netflix a lead in the streaming wars it may never relinquish. Some of Netflix's more notable original series successes include, Orange is the New Black, BoJack Horseman (2014); The Unbreakable Kimmy Schmidt, Grace & Frankie, Narcos, Bloodline, Marvel's Daredevil and Jessica Jones, Sense8, Master of None (2015); Fuller House, The Ranch, Stranger Things, Black Mirror, The Crown, The OA (2016); Dear White People, GLOW, Ozark, Mindhunter, 13 Reasons Why, Marvel's The Punisher (2017); Altered Carbon, Lost in Space, The Chilling Adventures of Sabrina, Narcos: Mexico (2018); The Umbrella Academy, Russian Doll, Dead to Me, When They See Us, The Politician, Unbelievable, and The Witcher (2019). _____A Sternberg Report Sponsored Message
Great deals on sponsorships, monthly or quarterly. Contact steve@thesternbergreport.com for details. e Sternberg Report ©2020January 2020 #81
In addition to its high volume of original scripted series, Netflix plans to release around 90 original
movies per year (it had 50 in 2017). That's an extraordinary number - more than three times as many original movies released in theaters by the top two box-office leaders, Disney and Warner Bros., combined. Six original movies ranked among Netflix's most popular shows of 2019 - Murder Mystery,6 Underground, The Irishman, Triple Frontier, Extremely Wicked, Shockingly Evil and Vile, and The
Highwayman.
While many of Netflix's movies are not top tier, some are of the highest quality, as the streamer makes
periodic pushes for Oscar gold. Roma debuted in 2018 in theaters for two weeks before airing onNetflix, and was nominated for an Academy Award for best picture. It didn't win, partly because this
practice is controversial and goes against what many theater owners and Academy members think of as traditional theatrical movies eligible for awards. They want minimum three-month theatrical windows. Netflix led the way this year with more than 20 Oscar nominations.Netflix's new original movie, Martin Scorsese's The Irishman, starring Robert De Niro, Al Pacino, and
Joe Pesci, has been nominated for several Academy Awards - even though many theaters in the U.S., Canada, and Europe refused to run it in the short window Netflix insists upon. Another well- received movie in 2019, Marriage Story (starring Adam Driver and Scarlett Johansson), has also been nominated for numerous awards as well. Both are nominated for Best Picture this year. _____The Sternberg Report ©2020
3Netflix has been gradually raising its prices over the past few years - a necessity since the streamer
spends significantly more than its competitors on original content and steadfastly refuses to acceptadvertising. It currently has three pricing plans: Basic ($8.99 per month - you can only use one screen
at a time and resolution is limited to SD, equivalent to pre-HDTV); Standard ($12.99 per month - you can use two screens at a time in HD); Premium ($15.99 per month - you can use four screens atonce in HD or 4K Ultra HD if available). T-Mobile has also been offering free Netflix to its broadband
and wireless customers who have multiple mobile lines.While Netflix's growth in the U.S. has slowed, due primarily to increased competition in the streaming
wars, it continues to see strong growth internationally. Over the past two years, Netflix's subscribers
have grown from 58.4 million to 67.1 million in the U.S. and Canada (+15%). During the same period, it has increased from 26 to 47.4 million in Europe, the Middle East, and Africa (+82%), from 19.7 to29.4 million in Latin America (+49%), and from 6.5 to 14.5 million in the Asia Pacific region (+123%).
Amazon Prime Video followed close behind Netflix (in timing, if not volume). In February2014, just about a year after Netflix debuted House of Cards, Amazon released the award-winning
Transparent, which was the first original streaming series to win a Golden Globe for Best Comedy. It
aired for four seasons. In 2017, The Marvelous Mrs. Maisel, and the numerous awards it has received, further raised Prime Video's profile. While Amazon Prime Video does not have nearly as many original scripted series as Netflix, it has had at least one high-profile success every year since 2014. They include, Transparent, Bosch, Mozart in the Jungle (2014); The Man in the High Castle, Sneaky Pete, Red Oaks (2015); Goliath _____The Sternberg Report ©2020
4 (2016); The Marvelous Mrs. Maisel, Absentia (2017); Tom Clancy's Jack Ryan, Homecoming (2018); Hanna, Good Omens, The Boys, Modern Love, and Carnival Row (2019). Amazon increased its spending on content from $4.5 billion in 2017 to more than $6 billion in 2019. Roughly one-third reportedly went into originals. Amazon recently secured the rights to The Lord of the Rings universe, which will include a new TV series adaptation (at an estimated cost of $200 million). It is also jumping into the live sports arena, with subscribers being able to stream NFL Thursday Night Football telecasts for the past two seasons. Amazon has also made major deals with English Premier League soccer and UEFA Championship League for Germany, both of which have led to increased subscribers in those markets (its two biggest outside the U.S.).I've seen predictions that over the next five years, the amount Amazon spends on originals could rise
to $8 billion or more, as it will need to compete not just with Netflix, but an array of deep-pocketed
new entries into the streaming arena. Amazon Prime Video says it has more than 100 million subscribers globally, about 45 million in the U.S. Amazon membership costs $119 per year ($12.99/month) and includes Amazon Prime Video, free 2- day shipping on Amazon purchases, and access to exclusive shopping deals. You can subscribe tojust Prime Video for $8.99 per month. Most subscribers initially got the service for the shopping and
free shipping, and saw Prime Video as a bonus. Hulu started out in 2011 and was originally owned by Disney (ABC), 21st Century Fox (FOX), and Comcast (NBC), each of which had a 30% ownership. Time Warner owned the remaining 10%. Soon _____The Sternberg Report ©2020
5 after Disney purchased the FOX assets, Comcast sold its ownership stake in Hulu to Disney. The deal will take five years to complete, but Disney now has complete operational control. Hulu did have some early scripted series success, with East Los High in 2013, Casual in 2015, andThe Path in 2016, each of which ran for multiple seasons. But it initially focused more on reruns from
the libraries of its major owners, and airing broadcast network series from its parent companies shortly
after their linear runs. It was not really in competition with Netflix. In 2017, Hulu developed its first
signature hit with the award-winning A Handmaid's Tale. The same year, it released Harlots, Marvel's
Runaways, and Future Man. Hulu followed those well-received series with The Looming Tower,Castle Rock, In the Dark (2018); PEN15, Shrill, Catch 22, Ramy, and Reprisal (2019). Hulu will soon
have an FX hub, containing current and original new series developed by the cable network (which is now also owned by Disney). FX series will be available on Hulu after they air on FX.Providing current season series episodes shortly after their initial broadcast run does appeal to many
viewers. From 2016 to 2019 Hulu grew from 12 to 29 million subscribers in the United States -impressive, but still less than half of Netflix's U.S. subscriber base (Hulu is not a global service).
Hulu's premium tier (no commercials) costs $11.99 per month, while its basic service (with ads) is $5.99 per month. With the debut of Disney+, subscribers can bundle Disney+, Hulu, and ESPN+ for$12.99 - the same price as Netflix's most popular tier (but for now only the Hulu version that contains
commercials is included). Hulu limits show interruptions to 90 seconds. This essentially has removed more
than half of the commercial time that had previously run in programming on the streaming service. Hulu also
has a live TV bundle for $45 per month ($37 if you already subscribe to Hulu's basic streaming service), containing about 60 channels, including the Big Four broadcast networks, Turner, A&E, andScripps, and the cable networks they own.
_____The Sternberg Report ©2020
6 CBS launched CBS All Access in 2017 with CBS Studios' and the network's extensive library, recent episodes of current CBS broadcast shows, and two new high-profile original dramas, The GoodFight (a spinoff of CBS's The Good Wife) and Star Trek: Discovery (the sixth live action TV series in
the franchise), as well as a comedy series, No Activity. A new historical drama, Strange Angel was added in 2018 (but only lasted two seasons). In 2019 CBS All Access released a new version of The Twilight Zone and a dark comedy-drama, Why Women Kill.CBS All Access has grown from only 100,000 subscribers at its start, to roughly 4 million in 2019 (with
about 4 million subs to its Showtime streaming app). CBS just announced that the combined subs have now passed 10 million (it doesn't break them out separately). The company expects this to growto 25 million by 2022. I think 15-20 million is more likely. This growth will be spurred no doubt by the
expansion of the Star Trek franchise, with Star Trek: Picard debuting this January (and alreadyrenewed for a second season) as well as an adult animation series, Lower Decks, slated for later this
year (with more Trek series reportedly to follow). The expensive Star Trek: Discovery is co-fundedby Netflix, which has the international rights to the series. Amazon Prime Video, however, will stream
the new Picard series internationally 24 hours after its U.S. release. CBS All Access costs $9.99 per month for the commercial-free version and $5.99 per month if you don't mind putting up with ads. Disney+ joined the streaming wars in November 2019. With its popular existing franchises (Star Wars, Marvel, Pixar) and its cross-promotion machine (which includes Disney World, Hulu, ESPN, and FX) Disney may be best positioned to actually compete with Netflix. On the other hand, the Disney brand might make it more niche than one might think. Disney+ started out with only two _____The Sternberg Report ©2020
7original scripted series, The Mandalorian, which takes place in the Star Wars universe and is already
a hit, and High School Musical: The Musical: The Series. More series, using Disney franchises, are on the way, but most won't debut until 2021. It has 100 recent and 400 classic Disney movies on tap as well.The Marvel universe will likely be a big initial draw, as Disney+ rolls out original series featuring The
Vision and Scarlet Witch (called WandaVision), which has been moved up to a 2020 debut, The Falcon and Winter Soldier, Loki, and Hawkeye (starring the ori ginal actors from The Avengers movies), as well as series featuring lesser-known Marvel characters - She Hulk, Moon Knight, and Ms. Marvel. Disney+ is also now the exclusive SVOD home for all 30 seasons of The Simpsons.Disney + plans to spend about $1 billion on original content in 2020, which will increase to about $2.5
billion by 2024 (when they expect to become profitable). This is still only a fraction of the amount
Netflix spends each year, so it's clear that Disney will be relying on its existing franchises and extensive library more than de veloping new orig inal scripted serie s. A re cent Hollywood Reporter/Morning Consult poll indicated that the most viewed content by Disney+ subscribers so far are Disney Classics (22%), Star Wars (21%), Marvel (15%), and Pixar (14%). Disney+ originals wereat just 2%, but as more come online, that is sure to grow (but will remain a relatively small part of the
streaming service's portfolio). Disney expects Disney+ to have between 60 and 90 million subscribers by 2024, two-thirds of them outside the U.S. This seems reasonable. Disney+ reportedly topped 10 million sign-ups (includingfree trials) on its first day of operations. Disney's deal with Verizon to provide a year of Disney+ for
free to its customers contributed heavily to this strong start. A survey from market research company,
Sensor Tower, reported that Disney had more than 35 million downloads of its app in Q4 2019 (these _____The Sternberg Report ©2020
8 app downloads are install only, not actual paying customers, but that's still a lot). Credit Suisse estimates that Disney+ had 20 million subscribers at the end of 2019. Disney + currently costs $6.99 per month, and you can get it bundled with Hulu and ESPN+ for $12.99per month (the same price as Netflix's standard tier). This will initially only include the Hulu version
with commercials. Right now, Hulu's ad version costs $5.99 per month and ESPN + costs $4.99 per month (with 3.5 million subscribers). So, the bundle essentially gives subscribers ESPN+ for free.Ironically, if viewers flock to this bundled service, it could result in a fair amount of cord cutting, which
would hurt Disney's main media business. Apple TV+ also joined the mix in November 2019. It's available on the Apple TV app on iPhones, iPads, Macs, Apple TV set top box, and on other platforms such as Amazon Fire TV and Roku, as well as Smart TVs. Unlike many other streaming services, Apple TV+ does not have an existing library of TV shows or movies, but it is working on around 20 original series for the next year. Some Apple TV+ original series are produced by such stars as Steven Spielberg, J.J. Abrams, Reese Witherspoon, and Octavia Spencer. Apple debuted several new dramas that have already been renewed for a second se ason - The Mornin g Show (starring Jennifer Anisto n and Reese Witherspoon), For All Mankind, See, and Servant - as well as a comedy, Dickinson, which has also been renewed. Other new series on Apple TV+ include, family mystery, Ghostwriter, and legal drama, Truth Be Told. Oprah Winfrey has brought her Book Club to Apple TV+, which will air every two months, where she interviews authors of her chosen books. The streaming service has the animated series, Snoopy in Space, with the Peanuts gang exploring the moon and beyond. Julia Louis-Dreyfus(Seinfeld, Veep) has signed a deal to develop, produce, and star in projects for the streaming service.
_____The Sternberg Report ©2020
9Apple TV+ will be occasionally following the Netflix model for movies. Its first original film, The Banker
(starring Samuel L. Jackson and Anthony Mackie) will hit theaters on March 6 th , and then debut onApple TV+ two weeks later.
At just $4.99 per month, Apple TV+ is the least expensive streaming option out there. Rather than competing with Netflix, Amazon Prime, or Disney+, it seems like something consumers will either addto their current mix or not, rather than replace anything. Apple TV+ will eventually be available in 100
countries. In an effort to quickly build a large subscriber base, Apple is offering a year of free Apple
TV+ to anyone who buys a new iPhone, iPad, Apple TV, iPod Touch, or Mac computer. With that many potential customers receiving free Apple TV+, it could easily have more than 10 million paid subscribers by the end of 2020 as it spends about $6 billion on original content. HBO Max is the name chosen by AT&T-owned WarnerMedia for its new streaming servicescheduled to launch in May 2020. There will be several new scripted series, but the initial focus will
be more on library and current content. One of HBO Max's selling points is that there is something for everyone in a household. In addition to HBO's archive of hits, such as Game of Thrones, The Sopranos, The Wire, Sex and the City, Veep, etc., HBO Max will rely heavily on WarnerMedia's library (including Warner Bros., New Line, DC Entertainment, TNT, TBS, Tru TV, CNN, Turner ClassicMovies, Cartoon Network, and Adult Swim).
HBO Max will be the exclusive streaming home for Friends (it reportedly cost $425 million over fiveyears to get the show back from Netflix), The Big Bang Theory (at a cost of $500 million for five years,
plus $100 million to keep the cable rights at TBS), and South Park (which sources also peg at around $500 million). _____The Sternberg Report ©2020
10The new streaming service will also have The Fresh Prince of Bel Air, and Pretty Little Liars, as well
as Warner Bros.-produced series airing on The CW network starting this season (such as Batwoman, and Riverdale spinoff, Katy Keene). Previous CW series, such as Arrow, The Flash, Supernatural, and Riverdale, will continue to be available on Netflix for a few more years before coming to HBO Max. It also made a deal with the BBC for all 11 seasons of Doctor Who in the U.S. (Season 12 will be available after its cable run). Subscribers will also have access to the extensive Warner Bros. film library, which includes Batman, Wonder Woman, and the Harry Potter series (eventually - WarnerMedia's 20 16 deal giving NBCUniversal the film rights through 2025 is still in effect). A number of shows available on WarnerMedia's DC Universe streaming service may also air on HBO Max. It is also planning a three- part animated Aquaman miniseries. Greg Berlanti will be producing a Green Lantern TV series for HBO Max. Five new seasons and annual specials of Sesame Street will air on HBO Max starting in2020 (it will continue to air free on PBS Kids), and in a new content partnership deal, its 50-year library
will also be available. HBO Max will reportedly cost $14.99 per month (the same price as HBO Now), and will not contain commercials. This would make it the most expensive streaming option, which could be a problem attracting customers who don't already subscribe to HBO. A commercial tier at a lower cost will be introduced about a year after HBO Max debuts, although ads seem to go against the HBO brand. HBO currently has 140 million subscribers worldwide, mostly through pay TV services such as DirecTV and Comcast. About 10 million current HBO subscribers on AT&T distribution platforms will receive HBO Max for free. Unlike its wireless competitors, AT&T owns broadband/mobile services and a streaming service, and plans to have a number of bundling options designed to maximize subscriptions. _____The Sternberg Report ©2020
11 Peacock is Comcast-owned NBC Universal's entry in the streaming wars, scheduled for a July2020 national launch (April for Comcast customers). It will come with advertising (less than 5 minutes
of commercials per hour - significantly less than linear broadcast or cable networks, which typically
have more than 15 minutes per hour when you combine national and local ads). There will also be a commercial-free option. Peacock will have a huge inventory of past hit series, such as Parks and Recreation, Cheers, Everybody Loves Raymond, Brooklyn Nine-Nine, Downton Abbey, Friday Night Lights , House, Parenthood, Will & Grace, Monk, Psych, Royal Pains, Married...With Children, Frasier, Two and a Half Men, and The George Lopez Show, as well as every season of Saturday Night Live. It also gained the rights to Paramount Network's hit drama, Yellowstone. In 2021, The Office will join Peacock. In an exclusive five-year deal, NBC Universal shelled out $500 million for domestic rights to get it back from Netflix (its most viewed show in 2018). Peacock also made a non-exclusive dealwith Dick Wolf, reportedly in the $300-400 million range, for domestic rights to more than a thousand
episodes of its Law & Order and Chicago franchises - Law & Order, Law & Order: Criminal Minds, Law & Order: SVU, Chicago Fire, Chicago Med, and Chicago P.D. Included at launch will be a library of film titles from Universal, Dreamworks Animation, and FocusFeatures (although not on an exclusive basis). Peacock will also look to some of its film franchises
to create new TV series. Unlike other streaming services. Peacock will also feature live and breaking news coverage from NBCNews and MSNBC, in addition to live sports.
_____The Sternberg Report ©2020
12 Peacock's slate of original scripted dramas will include a reboot of Battlestar Galactica, Dr. Death (starring Alec Baldwin, Jamie Dornan, and Christian Slater), Brave New World (with Demi Moore), and a music-themed comedy from Tina Fey. Comedies will include a reboot of Saved by the Bell (with several original cast members), a Punky Brewster sequel (with Soleil Moon Frye reprising her role), Rutherford Falls (starring Ed Helms), Straight Talk (starring Jada Pinkett Smith), and formerNBC series, A.P. Bio.
During the 2020 Summer Olympics (opening and closing ceremonies will be streamed live), the entire NBC Unive rsal family (NBC, Telemundo, USA, SyFy, E!, Bravo, CNBC, MSNBC, NBC Sports, Universal Studios) will have a massive marketing campaign promoting Peacock, with original series premiering soon after the Games. Peacock will also contain more than 3,000 hours of content from NBCU's Spanish language network, Telemundo. Peacock will not initially be a global service.Three pricing tiers will be offered:
• Peacock Free will have more than 7,500 hours of NBCUniversal content with commercials, including full seasons of vintage series, next-day reruns of current first-year NBC shows, sports, and news. It will also have select episodes of Peacock original series. • Peacock Premium will provide a more robust library of ad-supported content for $4.99 per month (free if you have Comcast or Cox cable bundles). It will have everything the free version has, plus a lot more (about 15,000 hours of content). It will include next-day repeats of nearly all NBC broadcast series, more sports, including Premier League Soccer, and early access to late night shows (The Tonight Show Starring Jimmy Fallon and Late Night With Seth Meyers will stream at 8pm and 9pm EDT, respectively, before their linear NBC runs). This will likely _____The Sternberg Report ©2020
13 not sit well with NBC affiliates, which pay fees for the rights to air NBC shows. The late night shows will not stream early on the free version. • Peacock Premium can be upgraded to a commercial-free option for $9.95 per month. Peacock could have a starting base of more than 20 million potential viewers (from Comcast and Cox cable systems). The Peacock experience will more closely resemble linear television than itscompetitors, in that a video will start as soon as viewers sign on to the service, similar to turning on a
television. Given the impact Netflix and other streamers have had on broadcast and cable ratings, ad-supported streaming is obviously something advertisers crave and will support. Peacock will have four initialsponsors at launch - Eli Lilly, State Farm, Target, and Unilever. And given the relatively low cost,
there's no reason why Peacock can't cut out a strong piece of the growing streaming pie for itself, with 20-25 million paid subscribers (and more than 75 million users) in five years.What's in Store for 2020?
Roughly 70% of U.S. TV households subscribe to at least on SVOD platform, with the average subscriber getting 3.4 services (at a cost of about $30 per month - still less than one-third of theaverage cable bill). By the end of 2021, SVOD subscribers could hit 75% of the U.S., with the average
subscriber getting 4 services. _____The Sternberg Report ©2020
14 Streaming services are spending a lot of money on original content - estimates for 2020 include,about $17 billion for Netflix, $6.5 billion for Amazon Prime Video, $3 billion for Hulu, $6 billion for
Apple TV+, $1 billion for Disney+, $2 billion for HBO Max, and $1 billion for Peacock (no numbersavailable for CBS All Access, but it's got to be close to $1 billion). That's more than $35 billion per
year on original content that did not exist just seven years ago (or even five years ago), which is probably more than the fi ve broadcast networks spend com bined each ye ar on non-sports programming.There are a lot of new original scripted series coming to streaming services this year. If you look at
new and returning original scripted series slated for 2020, as well as those pending renewal, there will be more than 60 on Netflix, roughly 30 on Amazon Prime Video, close to 30 on Hulu, roughly 20 apiece on Apple TV+, HBO Max, and Peacock (those are just the ones I know about). This is more than the number of total series on the five broadcast networks. And that doesn't include 50 series that no longer produce first-run episodes, but have well over 100 seasons available for viewing (or bingeing) on Netflix, Amazon Prime Video, and Hulu.The following charts summarize the original scripted streaming series tentatively scheduled for 2020.
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