The Streaming Wars Are Here ... But Who is Really Being Attacked?

Are we seeing the larger picture with the Streaming Wars? Play along with me here …

Would you allow a competitor to advertise on your platform?

Would you allow a competing media agency to put up a display in your lobby if they paid you?

If I ran CBS, would I let Netflix advertise on my shows?

Would I invite another experiential shop talk to my client at one of my events for a fee?

“Of course not!” is your likely quick response. It was mine. Yet that is what the TV industry is doing as the Streaming Wars are being waged. 

The titans of Disney+ vs Netflix vs Apple+ vs Amazon battling fills the headlines but players like Comcast, Hulu, HBO Max, Roku, etc. are also on the battlefield (or soon to be) whether they like it or not. It is a colossal fight for consumers to sign up for their services.

Netflix likely already has you as a customer. And you already love your HBO. Now Walt Disney has assembled their forces (Disney, ABC, ESPN, Marvel, theme parks, etc.) in a massive move that has thrust Disney + into the business and pop culture stratosphere. Disney has very openly targeted Netflix and their 139 million subscribers. It is war.  

It’s a very interesting and fast-moving chapter in entertainment and business.

But this article is not about who will win the Streaming Wars; it would be a very confusing answer to articulate. Plus I don’t really know who will win. Instead, I am thinking that the Streaming Wars combatants are waging another war not just against one another but against traditional entertainment. 

All of these players are dropping insane amounts of cash to advertise their streaming businesses. Where are they spending their money? A ton of it is with conventional TV. Because, duh, that’s where you advertise if you have unlimited media dollars and need to reach mass audiences very quickly.

So, to be clear, the ad-free streaming services that charge $ to watch are reliant upon old school paid advertising TV model to promote themselves.

But why, for example, would NBC run an add for Apple’s streaming service? Why would ESPN run a trailer for a new Amazon Prime Video show? Apple, for example, wants to change consumer viewing habits. Apple wants NBC TV-watchers to stop watching NBC, to unplug from old school TV and to use Apple for all their entertainment needs on their screens.

So why does NBC let Apple advertise? Well, we all know the answer—it’s because NBC wants the check. Getting advertising revenue is priority #1 at NBC. Yet I think the reasoning goes deeper than that.   

GroupM released a report stating that the ad industry is going to be boosted by these streaming services. “We expect the new and existing streaming video services to account for multiple billions of dollars in domestic advertising spending by the time these services are all operating at scale,” said Brian Wieser, global president of business intelligence at GroupM. To put this in a clearer light, Netflix spent nearly $2 billion on advertising in 2018 (!). But isn’t this short-sighted and toxic dollars? Bragging that a boom in TV spending driven by companies seeking to destroy TV is odd to me.

Which brings me back to my original question … would you let a competing business who is trying to steal your viewers and, essentially, end your company, promote themselves in your network? The answer is … YES, you should.

The reason why isn’t just for the immediate check you will receive from someone like Netflix. The other major reason is because you recognize that the Streaming Wars are changing the dynamics of the entire approach to viewing and consuming entertainment—thus, conventional rules need not apply. So take their money. Get paid. Where they end up or where you end up in 5 years is unknown. To play the long game with a mystery future and neglect immediate business needs is foolish. All of these streaming players have so much money that it is impossible to bleed them dry.

The Wall St Journal reported that Walt Disney Co. ran national television commercials for Disney+ more than 5,000 times since September, according to TV ad-measurement firm iSpot.tv Inc., and Apple Inc. ran national spots for Apple TV+ more than 4,200 times.

If you don’t take their money, do you really think you can slow the inevitable change that is coming? No. You, me and most other consumers have embraced screaming. But my rationale goes beyond just taking what you can now. My theory is that the TV companies know damn well old school paid TV is dying and they are changing their own business models while still grabbing whatever revenue they can. Whereas Netflix spends billions to make and market shows with a small trickle of incoming revenue, someone like CBS will both pivot in a new direction while also having their fingers in Netflix’s wallet. It might not be a perfect strategy but it makes sense.

Disney, though, has a different answer. They have decided NOT to accept Netflix advertising anymore. Disney imposed a ban on advertising for Netflix shows across its entertainment networks, including ABC, FX and Freeform (though ESPN will continue to accept such spots—which is likely because ESPN charges insanely high rates that only live sports can command, so that $$$ was too good to pass up). They are in a war and they have Netflix targeted.

The ad industry should have mixed feelings about the Streaming Wars. The quick and easy dollars gained from competitors won’t last long. Fine, they can brag about increased revenues for now. In 5 or 10 years, as viewership plummets and ad avoidance spikes, their ad revenue is going to nosedive. Do you believe in 5 or 10 years that consumers will still want to watch ads on TV when so much better, ad-free content is available on streaming services? You already know that answer.

The Streaming Wars isn’t just about Disney vs Netflix … it is about using old school TV to kill off old school TV. Now that’s what I call a brutal and brilliant war strategy.