If there is one industry in the world that cannot complain about COVID-19 is the video streaming sector. Taking aside the obvious tragedy that still haunts all of us, the giants of entertainment prepared themselves for a year that would set the stage – or define the battlefield – for the so-called video streaming wars. And so it happened. The pandemic surprised everyone and those who based their business on technology saw their revenue increase almost instantly – that’s the case with Netflix, a leader whose advantage over the adversaries seems to grow on a daily basis.
But before we explain the reasons behind Netflix’s growth, it’s worth noting the first big defeat in the so-called streaming wars: Quibi. The short premium video service recently announced that it will shut down its operation in early December, before completing one year online in the U.S. Although it had an attractive proposal in the eyes of investors (the company was able to raise more than $1.75 billion) and it fit the trends of Generation Z (both TikTok and Snapchat were a big influence in this regard), the public did not accept the idea of a $7.99 subscription for the content produced by the platform, even with young Hollywood stars like Liam Hemsworth and Sophie Turner diving into the project.
Quibi started big, in April, betting high in a premium format that could possibly be adopted by a public that shows every day that does not care much about high-quality production for a small screen – timing, authenticity and sharing potential are among the most valuable assets on a successful video these days, especially on social media.
But even when we talk about Latin America, known as one of the biggest markets for mobile devices, people still prefer to watch premium production on a big screen, according to a recent research made by FGV (Getulio Vargas Foundation), Research and Markets e Conviva and reported by Exame that shows that 62% of the video streaming consumption in Brazil comes from traditional TV. Of course, that’s not the only reason for Quibi’s failure but sure shows a way to understand why its fall came so fast.
On the other hand, Netflix took advantage of the quarantine and reached 195 million subscribers in this year’s third quarter – 20 million of those only in Brazil, the biggest market in Latin America, and one of the most important ones for Netflix. The blow that COVID-19 delivered in theaters not only helped to boost Reed Hastings’ company but also managed to change its focus on the new competitors: Disney’s Disney+ and WarnerMedia’s HBO Max.
The first one arrives in Brazil in November, and the second one did not figure it out yet when exactly it will start its international expansion – Latin America is set to be HBO Max first market after the U.S., starting sometime in 2021. And even though Amazon‘s Prime Video registered a huge surge in subscribers numbers, it remains the underdog as the core business of Amazon is e-commerce, and we know how much that vertical grew in 2020 for obvious reasons.
The tech DNA that Netflix carries remains as one of its great advantages and allows the company to take time to figure out what’s the next step went it comes to entertainment behavior. Maybe that’s the main reason why Netflix seems to have an everlasting first place in the streaming wars, as its competitors face different moments.
The first one to lose the war tried to predict a future that may not occur, others are trying to manage their business legacy and struggling to crack how to be a tech company and an entertainment one at the same time, while the current winner is looking to the future with a hit and miss culture inherent to its DNA.
It’s a war, yes, but with many different battles going on – and we can rest assured that 2021 will expand that notion even more.