How did we get to what seems like an era of a thousand streaming services? – by Brent Allred, Ph.D.

Do you still remember what it was like to actually go to your local video rental store to pick up a VHS tape of the “New Release” to watch on Friday night? I recently drove past a building that had been a Blockbuster Video and while the sign had changed to the new business, it still had the outline of the ticket stub that was so iconic that it helped make Blockbuster one of the most recognizable brands in America. This is now a distant memory and more and more people will never know the joy of late fees and getting in a car to pick up a video to watch (I realize Redbox still provides this experience, but it is not the same). Although our consumption of digital entertainment continues to increase, what we consume and the means by which we consume it has steadily evolved.

Netflix has emerged as the dominant player in this space. Over 33% of US peak and 15% of total global internet traffic is attributed to Netflix. Netflix recently raised it prices and saw its stock jump 6.5% that day. It is estimated that it will spend $12 Billion on content this year alone, which is almost exactly what the total US/Canada box office was for movies in 2018. Even given this dominate position, it seems like we are moving to an era of a thousand streaming services. We may have cut the cord from cable TV, but now need separate subscriptions for Netflix, Hulu, Amazon Prime Video, Sling TV, YouTube TV, HBO Go, etc. to watch the shows we want to. Along with others, Disney is set to enter the fray by year’s end, meaning it will be the only place to go to get Disney, Pixar, Marvel, and Star Wars content.

So, what does this all mean? I don’t have a definitive answer. As with the music industry, the evolution of the video streaming business has had significant implications for consumers, content creators, distributors, and even government regulators. Businesses and business models will come and go, so while it is interesting to look at the stack of CDs and DVDs in your house, it is even more interesting to consider the broader strategic implications. Blockbuster disrupted the way we consumed entertainment and then Netflix redefined it, with binge-worthy shows and instant access. Earlier on, pundits said that we would never shift our viewing habits to a tablet or smartphone, but many people consume almost all their entertainment that way. I noticed the many college dorms and apartments no longer offer TV as standard furniture. Instead, high-speed internet is the necessity, so that each individual can access what they want to watch, and when.