The Future Of The Video Streaming Industry

 

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Overview

The business of streaming video content has been expanding rapidly with an increasing number of companies, both large and small, joining the competition.  With 27% of Americans now streaming TV shows and movies, up from 16% in 20101, it is of little surprise that cable giants are facing the pressure of cord cutting as consumers realise the benefits of opting for streaming services over cable subscriptions.  Netflix, Hulu, and now Amazon, offer subscription models while others like Apple, Walmart, and Best Buy run on a pay per view basis.  The future of the video streaming business looks bright and offers many opportunities for players in this industry.

Comparison of Services: Netflix, Amazon, Apple, Hulu

A review of the streaming services that several of the major competitors provide is shown in Figure 1.

Figure 1

Netflix is certainly ahead of the game so far and does have a head start over most of its competitors.  In fact, 61% of movie streaming from January and February 2011 came from Netflix; meanwhile, 8% came from Comcast Video On Demand, 4% from DirectTV, 4% from Time Warner Cable, and 4% from Apple2.  Netflix’s subscriber base was 12M in FY09, which marks a 67% increase; its FY09 revenue was $1.67B, which translates to a 29% growth rate.

While Amazon Prime’s library of just 5,000 titles pales in comparison to Netflix’s 20,000, note that Amazon already has strategic relationships with content providers through its Amazon Instant Video.  As outlined in Figure 1, Amazon Instant Video carried 90,000 titles.  Moreover, Amazon can direct its spending efforts on licensing more content by using its core business to drive the growth of its streaming segment.

 

Future

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