We need to talk about Netflix... and the Streaming Wars.

It's a very interesting time for the video streaming industry: new players are entering the market that Netflix has arguably dominated for a very long time. Conglomerates like Apple and Disney are on the move, both launching their streaming services as we speak. With Netflix's stock price taking a hit recently, there has been an unprecedented amount of predictions on how Netflix - previously sole ruler of the streaming lands - is now under siege.

At the moment of writing this post, most analysts approach the advancement of the impeding war for consumer dollar on numbers mostly, with only a few exceptions claiming otherwise. A popular opinion is that since the new entrants (Apple TV+ and Disney+) can afford to offer their services at a lower price, Netflix will simply lose part of its subscription base to cheaper, equally attractive alternatives. Why can the big players do that? Apple, for instance, has many business legs and can afford to spill tons of cash into the development of its new products and services. Netflix, on the other hand, is a service with a singular revenue model (subscriptions = $$$). Netflix needs to borrow cash upfront for developing its new content and is still relying on its subscriptions to make gains. This way, the narrative goes, Apple could win the long term race for the dominance of the streaming market. Apple could quickly grow its streaming offer in order to come out on top: offset costs, get the subscribers in and retain them with a competitive subscription price. That would leave services like Netflix vulnerable to this slow-burning, high-cost marathon to the consumer's pockets.

Monitoring the stock prices and looking at quantitative data might not be enough to announce a winner just yet.

But is this really all there is to it? Monitoring the stock prices and looking at quantitative data might not be enough to announce a winner just yet. Beyond the hard facts, there is other important aspects affecting how the streaming wars could play out. I would refer to them as brand considerations, cultural relevance, and the myth of "one another".

Brand Considerations.

1. Brand category.

First off, the streaming video market is not a commodity market. A commodity, as per one Merriam-Webster dictionary definition is “a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (such as brand name) other than price.”

The current popular approach would only make sense if we were looking at a commodity product category. If the streaming platforms offered the exact same content (exactly the same shows and films), then a price comparison would suffice to announce a winner in the long term. Meaning, if you had to choose between getting Stranger things on your iPad for $4,99 and getting Stranger Things for $12.99, you would obviously go with the first option. But this is simply not true yet. Streaming content is not telcom market. Every service comes with its own unique bundle of flavours, genres, shows, movies. Considering the diversity of content, the viewer's decision on a platform is not going to be based on price only.

The streaming video market is not a commodity market. Every service comes with its own unique bundle of flavours, genres, shows, movies.

2. Emotional disposition towards brands.

Beware Apple, your ecosystem branding might backfire. Brand loyalty comes first.

I am not sure how everyone feels about Apple products. But for the design and arts community, Apple is simply perceived as some sort of "necessary evil". You can absolutely not do without their products (they are just the best in their category with almost nonexistent competition), but deep down, you know that Apple is Skynet. You are just too tired of giving it full authority over your life; or burn your hard earned cash every time Apple "upgrades" its iPhone sockets and you need to buy new adapters. The truth of the matter is that Apple has done a great job at enraging its customers with a clear long term strategy of blunt and derisive profit chasing. The company constitutes every previous line of products redundant, not in the name of innovation, but for cash. That does not inspire much sympathy for any brand. Consumers are becoming more aware of where they spend their money on. Companies with a great ethos, clear value propositions and consumer centric approach will eventually gain traction over money-thirsty behemoths, even for a sub-par service.

Consumers are becoming more aware of where they spend their money on. Companies with a great ethos, clear value propositions and consumer centric approach will eventually gain traction over money-thirsty behemoths, even for a sub-par service.

How does that affect streaming wars? Well, let's say that Netflix got its brand right. Netflix is a one-thing-brand only, and pretty good at it. The service has been honing its brand carefully within its niche, from the very beginning. They are entertainment purveyors and put their customers at their very core. They have done nothing but increasing the value of their service for their subscribers, year over year. They optimise their digital platform constantly and discreetly and have never jumped into abrupt cashing out strategies (introducing ads for example). They have given the world entertainment options never before thought possible or made financial sense to produce (e.g. the animated anthology "Love, Death & Robots") and made a tasteful impact with their original content, like Stranger Things and Black Mirror, hitting home-runs with a fanatic following. Their iconic sonic branding and intro sequences, signal the beginning of fun for the viewer, with no negative biases attached to them whatsoever.

Now, does Apple share the same position in our hearts? Can anyone claim that upon encountering the conglomerate's various brand manifestations gets the same amount of butterflies? No?... Did not think so.

Cultural Relevance.

Netflix has changed entertainment and viewer culture forever. Binge-watching went mainstream in 2013 because of Netflix's simultaneous episode releases. "Netflix and chill" is currently a popular internet slang term, used to describe activities beyond just watching Netflix.

What's most important, Netflix is on a mission: Netflix "wants to entertain everyone and make the world smile". This commitment runs a bit deeper than just pleasing the consumer. Netflix has developed a company culture that stands by its promise. Their organisation is a reflection of their shows and movies offering. They have an international culture, based on inclusion and diversity, just as they have truly international selection of shows and movies. They respect their people's voices for their authenticity, just as they place their American productions on equal grounds with their European productions. Only the viewer will decide what is popular and what isn't.

Binge-watching went mainstream in 2013 because of Netflix's simultaneous episode releases. "Netflix and chill" is currently a popular internet slang term, used to describe activities beyond just watching Netflix.

Furthermore, Netflix vouches to create content that is best suited for consumption within each of their markets. That is why they are also changing the traditional movie making model, by building bridges of production with each country they get to exist in. While they disrupt the entertainment scenes of their local markets, at the same time, they leverage foreign language shows and movies to millions of viewers worldwide, exposing audiences to film-making flavors they could not have experienced before on such scale. They can claim they took Spanish cinema mainstream, with hit shows like "La Casa De Papel". The German science fiction thriller series "Dark" has captivated millions of viewers. This exposure to culturally diverse content opened the audience's eyes to notions, accents, languages, sentiments and film making devices that felt outlandish but yet so intimate and relevant. Netflix made people feel closer to one another, regardless of which country they live in. This is democratisation of film making and distribution in a nutshell.

This exposure to culturally diverse content opened the audience's eyes to notions, accents, languages, sentiments and film making devices that felt outlandish but yet so intimate and relevant.

For somebody like myself, who has grown up forced to believe Hollywood movies are bigger, better and cooler than all other movies in the world, the Netflix state of things came as a refreshing break on that cultural imperialism. For decades, there has been a one-sided monologue of what the big American studios want to impose on the rest of the world. The "cool" American hero was saving the day, with his "cool" American accent, accompanied by his "cool" American hit song from the blockbuster soundtrack. The average south European viewer for instance, whether living in Greece, Spain or Italy, would have limited choices when it comes to their viewing pleasure: the big American film, the locally produced soap opera and a few indie films, most inherent for their recognition in film festivals like the Cannes. There has been a decades-long lack of any middle ground for the average viewer. And then along came Netflix... And all of a sudden a Spanish show is mainstream and has the globe humming to the lyrics of the ultra popular song "My life is going on" from its opening titles.

For somebody like myself, who has grown up forced to believe Hollywood movies are bigger, better and cooler than all other movies in the world, the Netflix state of things came as a refreshing break on that cultural imperialism.

Don't get me wrong. American cinema is undoubtedly one of the most important entertainment scenes globally and it will remain to be so. But the cultural polyphony that was introduced by Netflix, can only be considered a good thing.

Now, when we look at the contenders's plans for streaming television, there is no broader plan for any cultural shift. Disney + 's variety of family friendly content includes their heavy-weight lineup of productions from major studios like Walt Disney Animation Studios, Pixar, Lucas Film, Marvel Studios and the like. While the offer includes titles that have gained fanatic following around the world (I am a big fan of MCU and Star Wars myself), the model is still based on the established regime of one-sided western supremacy tales. Thus, Disney and Apple's new services signal nothing more than the ambition to capitalise on a relatively new technology, with no deeper links to cultural change.

The myth of "one-another".

While the popular predictions reiterate the price comparison narrative, concluding that the cheaper service has better chances at winning, the reality of consumer behaviour will most probably prove them wrong. For a household that can afford at least a couple of mobile devices - prerequisite to run any streaming service - the price difference of a couple of dollars is not going to affect their choice of streaming platform. Again, the price comparison rhetoric is limited to pitting the alternative services against each other as they were identical. Since they are not, the average consumer, will most probably save elsewhere in order to afford having the streaming service mix they desire. People will not quit Netflix to get Apple TV+ for $4.99. They will reduce their latte consumption by that amount to afford both services. That is the price of a Starbucks we are talking about. Considering the increasing significance streaming television plays in our daily lives, this can only hold true.

Reed Hastings, Netflix CEO, could not have said it better here. There is more demand for streaming content today than ever before. According to a study carried out by Deloitte, the global monthly streaming content consumption skyrocketed from 2,6 exabytes in 2014 to 26 exabytes in 2019. This, not only signifies a change in the global viewing behaviours, but also a change of prioritisation in the consumer spending. Streaming services are now more important than other house hold expenses. And considering the value they bring (hours long sheer joy), they most probably stand to substitute other vices like excessive coffee drinking, random app downloading, that Zumba class one signed up for with no intention of attending.

The price comparison rhetoric is limited to pitting the alternative services against each other as they were identical. Since they are not, the average consumer, will most probably save elsewhere in order to afford having the streaming service mix they desire.

Conclusion

So, to summarise: yes, the streaming market gets denser with Apple and Disney entering it with guns blazing. The streaming content market is not a commodity market and therefore brand loyalty and affection will influence buying decisions. Netflix is miles ahead in terms of leveraging more than just content, like culture, inspiration and a solid brand story. The big corporations might find it harder to instil this level of commitment, due to their overall brand perception and ulterior motives. And finally, the price comparison is unfounded, since the consumers might cut back on expenses in other areas, in order to afford more streaming.

A parting thought: Since Netflix's singular income stream is still a major limitation to the pace witch which the streamer produces content, its long term success will lie in its ability to leverage its brand in other segments and markets, breaking out of the streaming industry mould. It will have to develop parallel business legs in order to capitalise on its brand equity. That is to say, maybe the "Netflix phone" (a hypothetical device that only streams Netflix and bypasses Android and Apple store cuts) is not the way to go, but there is a great amount of opportunity in other areas.