Facebook and Disney join Amazon on quest to dethrone streaming king Netflix

[Len]

In 2007, a dot-com era rebel by the name of Netflix launched an online streaming platform — and with it, a revolution to overthrow dynastic institutions in the video entertainment industry. Audiences gleefully embraced the new order Netflix established but the shakeup also inspired countless competitors to launch their own streaming products and challenge the status quo.

Hulu, HBOGo, and Amazon Video emerged as direct rivals but Netflix also competes for eyes and attention spans with YouTube and social media sites. This week, two more formidable challengers emerged that could threaten Netflix’s shaky sovereignty.

On Tuesday, Disney cut ties with Netflix, ending a distribution deal to pave the way for its own branded streaming service coming in 2019. Disney also plans to debut an ESPN service early next year.

Wednesday brought another blow, with news of Facebook Watch, a more formal version of the social network’s video feature, with live and recorded shows that “follow a theme or storyline.” Although Facebook Watch competes more directly with YouTube, the company is investing in a handful original series as Netflix began doing a few years ago.

Last year, Netflix reached 75 percent of homes with at least one non-cable streaming service, according to comScore data. YouTube was viewed in 53 percent of households, and Amazon reached 33 percent. Hulu trailed behind at 17 percent. HBOGo hovered at around seven percent but it isn’t clear whether or not that includes viewers who watched HBO programming as part of their cable bundle.

Competitors may be catching up to Netflix, however. As Netflix acknowledged in its own quarterly letter to shareholders, “YouTube is earning over a billion hours a day of consumers’ time with one type of entertainment, while we are earning over a billion hours a week with our type of entertainment.”

Disney and Facebook’s investments in streaming video also have consequences for Amazon. Analysts estimate that the Seattle e-commerce giant is will spend $4.5 billion on video content this year, in a bid to catch up to competitor Netflix, which has a budget of $6 billion for the year.

In addition to spending on original content, Amazon has been trying to exploit a weakness in Netflix’s armor: sports. Amazon reportedly paid $425 billion to livestream 10 Thursday Night Football games next season. Amazon also has eSports streaming giant Twitch in its arsenal, thanks to a $970 million acquisition deal.

But Amazon isn’t the only video platform eyeing live sports — an area that has lagged behind other content in the streaming revolution. The company had to outbid Google, Facebook, and Twitter for its Thursday Night Football deal, according to reports. Major League Baseball is broadcasting one game per week on Facebook — a series that will be migrated over to Facebook Watch. Now that Disney is launching an ESPN streaming service, the race to video dominance is becoming more crowded and complicated.

Netflix, for its part, is focused on commercial-free, on-demand video and is not pursuing live sports streaming at this time. The company also says it’s not as worried about competition as you might think.

Here’s how Netflix describes the landscape in its letter to shareholders:

"The competition for entertainment time is always intense, but the silver lining is that the market is vast and diverse … Linear TV is still huge, piracy still substantial, and there are thousands of firms and approaches around the world earning some fraction of consumers’ entertainment time. The entertainment market is so broad that we’ve grown from zero to over 50m streaming households in the US over the last 10 years, and yet HBO continues to increase its US subscriptions. It seems our growth just expands the market. The largely exclusive nature of each service’s content means that we are not direct substitutes for each other, but rather complements."