The Race to Build the Perfect Streaming Service

As old and new OTT contenders battle for subscribers, 'There's no SVOD rulebook'—especially during a pandemic

Original and library content is key to a streaming service's success, but these platforms are "so much more than just a URL and some content," says Hulu's Craig Erwich.
Photo illustration: Dianna McDougall; Sources: Getty Images, Apple TV+, Amazon Prime, Disney+, Hulu, HBO Max, Netflix, CBS All Access

Key insights:

Many businesses have been left reeling by the novel coronavirus, but there’s never been a better time to be in the streaming space.

Once an oddity for the technology-advanced and well-connected, streaming video is now sitting squarely at the center of TV’s future. Consumers are spending nearly one-fifth of their total TV time streaming, according to a February report from Nielsen, a proof point for early entrants like Netflix that their streaming bet was on the nose. For legacy businesses slow to adapt to an on-demand world, the steady growth is evidence that the time to march into the streaming wars is now.

Consider the numbers. Streaming time spent the week of April 13 topped 154.6 billion minutes, nearly double the amount of time U.S. users were spending a year ago, Nielsen said, and Netflix’s most recent earnings reflected 15.7 million more global subscribers, nearly double recent quarterly growth.

“Clearly, streaming services are having a moment,” says Catherine Sullivan, Omnicom’s chief investment officer, North America. “Even though all media is seeing a surge in usage right now, their surge is so much larger than what we’re seeing in other places.”

Streaming’s old guard, including Amazon Prime Video, CBS Access, Hulu and Netflix, are focused on rounding out and perfecting their services to capitalize on a populace ravenous for new content. New kids on the block such as Disney, NBCUniveral and WarnerMedia are working with a truncated timeline to get their own offerings right. Before transitioning from Disney CEO to its executive chairman, Bob Iger called Disney+ “the most important product” from the company in his nearly 15-year tenure, a sentiment that has only intensified in meaning as most of Disney’s other businesses have ground to a halt due to coronavirus lockdowns.

Here's how old and new streaming services stack up.

ViacomCBS recently announced that “major changes” were coming to CBS All Access this summer, as streaming properties enjoy record interest. Meanwhile, upstart entrants like WarnerMedia’s HBO Max and NBCU’s Peacock, which will premiere nationally on May 27 and July 15, respectively, are hoping they can cut themselves a big slice of a growing pie.

“These are all noble experiments, and they’re all necessary, because we don’t really know what the future consumer is going to want until we’ve tried out a few and find out what they adopt and embrace,” says James McQuivey, vp, principal analyst, Forrester Research.

While each company’s approach and strategy varies, the goal is strikingly similar: They want to build, perfect and market a service that appeals to as many consumers as possible for years—if not decades—to come. At the same time, each service must remain different enough from the other offerings that it can stand apart. But how does a company actually go about accomplishing all of that? There’s no perfect formula, and streamers old and new are learning that navigating this space is far from easy.

“These are extraordinarily difficult businesses to run,” says Craig Erwich, svp of originals at Hulu. “It’s not just programming. You have to master data, analytics, technology, product, customer service and billing, to name only a few. It’s so much more than just a URL and some content.”

That tall order is made all the more challenging by the fact that the industry is shifting every day—especially since Covid-19 shut down the country in March. “The scaling and the rewriting of rules on the fly is an enormous challenge,” says Kevin Reilly, chief content officer of HBO Max and president of TBS, TNT and truTV. “There’s no SVOD rulebook.”

Leading with the library

Save for Apple TV+ and new mobile streamer Quibi, which is designed primarily for mobile devices, almost every major streaming service available is defined to some degree by its library, the foundation of its offerings.

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