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Streaming Wars and the Winners are....

Just came back from relaxing vacation in Kauai and surprisingly we did not even turn on TV during all of vacation. That must be some kind of personal record given the countless choices we have in world of streaming with Netflix, Prime Video, Hulu, HBO, Cinemax, Hotstar and so on! And given this week's announcement of upcoming bundle of Disney+, Hulu and ESPN+ coming in Nov 2019, more choices are coming! Not to be left alone, AT&T is going to launch HBO Max. Viacom and CBS are talking about combining their content. And each of these are offering some high quality content to watch almost on daily basis. What started as a small experimental stream by Netflix about decade back is turning out to be a flood-gate. By some counts combined spend on streaming content would exceed total US  movie box office collections (which was around $11B on annual basis). Netflix alone plans to spend over $12-15 Billion on content - majority of that would be on creating original "Netflix" original content. It has spent $150 million on Martin Scorsese directed "The Irishmen" starring Robert De Niro and Al Pacino. And Netflix subscribers would get to watch from their own home without paying any additional money! Disney+ would make all Star Wars, Marvel and Pixar movies available as soon as their theatre run is over (within 3-4 months). HBO Max, Apple TV, Prime Video...I can keep on going. And then of course you have sports to watch! So it feels like streaming wars are on with all these companies fighting for subscribers,  their entertainment time and monthly subscription $$.

So who are the winners in these streaming wars?

  • Netflix and Disney are going to be leaders when it comes to content. Each of them would have over 200 million subscribers in next 10 years. And most of them won't mind paying $15 per month to consume quality content every day for less than price of movie ticket!
  • Content creators: There is real war going on in acquiring content and signing up top-notch content creators. Prime video paid over $250M to acquire rights of "Lord of the Rings" TV series. Netflix signed Game of Thrones creators David Benioff and D.B. Weiss for nearly $300 million over 5 years. 
  • Subscribers: You get to consume quality content from your home for significantly less than what it would cost to subscribe to linear TV and movies in theatre. And you get significant diversity in content from all over the world anywhere in the world!
  • Roku: This is not-so-obvious winner. But here is my hypothesis. To stream any of the channels mentioned, you must have a "streaming" device to connect to your TV. And Roku is most popular device with significant market share lead over Amazon Fire, Apple TV and Google Chromecast. The Roku device is like gateway to streaming world. Roku company has complete data on your streaming habits. It also has free aggregate channel "Roku Channel" on which it provides access to free movies, TV shows as long as you are willing to watch some ads.  It has over 30 million "subscribers". It also licenses Roku OS to TV manufacturers. No wonder it's stock is on fire in 2019 rising over 300% from under 30 at start of 2019 to trading above $120 now. And relatively speaking it's still cheap at $13 Billion valuation. And this was one of the stock I recommended as 2019 pick in "Best of New Year 2019"
With every war, someone is losing. And in this case, linear TV and broadcast and cable channels are the losers. Do you remember Blockbuster. Hollywood and RedBox? Those were the early victims of streaming wars.
That's all for now.. Time to check what's new in streaming world today....After all I am back from vacation!
/Shyam



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