Three new players are in the process of going up against the “usual streamers” – Netflix, HBO and Hulu. Disney, AT&T’s Warner Media, and Apple are all coming out soon with their streaming services and are currently in the process of preparing shows that cost as much for a season as a big budget movie, or, around $150 million.
Using massive casts, exotic filming locations and numerous special effects, the budgets for these productions encompass amounts once unknown for a TV series. The driving force appears to be that the new productions are to be offered up along with theatrical films – and the transition needs to be seamless between the two categories – without the possibility of the TV films appearing like B-material next to the movies (ref WSJ). One of Apple’s productions is costing $15 million per 60-minute episode. In traditional network-television series, the net revenue produced could be immediately arrived at by looking at the ad revenue that was generated from their broadcasts. As of now, however, the return for producing a mega-show for a streaming service is seen as more difficult to establish. That, of course, will change when the streaming service is up and running and other sales avenues, as well as the streaming, are pursued for the new productions. In addition to going all-out to produce new productions, the three new competitors are also ratcheting up the competition by removing some of the biggest favorites on Netflix – such as Friends and The Office – from being shown on Netflix. The series that are owned by Warner are being reclaimed and run exclusively on Warner while Disney is removing all of its movies from Netflix – a major blow to the company. As evidence of the coming difficulties to be faced by Netflix is the news that has just been learned that the company ended the second quarter with fewer subscribers than expected, sending shares sliding. Netflix had projected adding 5 million new subscribers for the period and fell far short of that goal, adding only 2.7 million paid streaming subscribers (ref WSJ). It’s interesting to note that the three new streaming services are also planning on engaging subscribers in paying for their streaming services.