Apple has pledged to spend billions on original content. Photo / Getty Images
Apple has pledged to spend billions on original content. Photo / Getty Images
Tech and media giants are going to war, pouring billions into competing streaming services. Apple and Disney are both about to enter the market, taking on established players such as Netflix and Amazon.
Next year will see even more new entrants. In the clamour and confusion, viewers may rue theday their traditional television and cable packages were "unbundled".
The spending is immense. Apple has committed more than US$6bn for original content, including movies and series such as The Morning Show, starring Jennifer Aniston, Reese Witherspoon and Steve Carell.
In this expensive pivot to video, the iPhone maker is racing to catch up with Netflix, which already spends US$15bn a year on content, including the US$500m it just dropped on Seinfeld, a 30-year-old sitcom.
Some investors are already concerned. Netflix has been playing this game for 12 years and secured an impressive slice of the world's population — but still fails to generate positive free cash flow.
Now the market leader is losing some of its best content, as new rivals such as Disney hoard it for their own services. Meanwhile, Apple can afford to outspend anyone and undercut them on price; the Apple TV Plus service is only $4.99 a month. Everyone has the potential to lose lots of money.
The most obvious investor backlash in the sector is at AT&T, where Elliott Management has taken a stake in the venerable telecoms group and told it to stop wasting money on deals in a vain effort to rejuvenate itself.
Included in AT&T's $80bn takeover of TimeWarner last year was HBO, which is, inevitably, launching its own new streaming service next year.
But even the sceptics might not be worrying enough. The danger is not only that the competing efforts cancel each other out. It is that younger audiences have zero interest in the stars from the 1990s, whom executives are so keen to sign up.
Many younger viewers barely care about premium content at all. Instead they are fixated on short clips of home-made material consumed on the likes of YouTube, Snapchat and TikTok.
Tech and media companies are competing for control of the living room. Photo / Getty Images
Netflix boasts 152m subscribers. On YouTube a single personality, PewDiePie, has 101m subscribers for his cheap and controversial content.
Some think this is a passing fad. Even Evan Spiegel, chief executive of Snap, a beneficiary of the boom in user-generated content, is betting on its decline.
He said this week that "some of the content that people are consuming today on social media may actually be less interesting than more premium content going forward". But he also thought we would all be wearing computerised glasses by now.
Equally short-sighted is Twitter, which acquired Vine, an early leader in short user-generated videos, in 2012. As then-chief financial officer Anthony Noto put it with breathless enthusiasm: "It's a great experience . . . It really hits a younger demographic. And we couldn't be more happy to have that brand, that asset and that user experience in video."
Four years after the acquisition, Twitter shut it down in a cost drive.
This all plays into the hands of China's ByteDance, which owns TikTok, and Alphabet in the US, which owns YouTube. The two user-generated content kings can sit back and watch their premium rivals torch money in a vain effort to win the streaming wars.
