Technology giant FANNG's ambitions, the turning point of streaming media

Technology giant FANNG's ambitions, the turning point of streaming media

Li Si

On November 7, Disney's acquisition of Twenty-First Century Fox was formally approved by the European Commission. Without accident, the $71 billion 300 million acquisition will be completed by June 2019.

Among the acquisitions already under way are AT&, the US Telecom giant, and Time Warner, the parent company of HBO, which is worth $109 billion. The expected deal also includes Apple's consideration of acquiring iHeart-Media, an American radio giant, to boost its streaming services.

Behind these big handbooks are the great changes in the market structure of streaming media. What they are looking for is that the number of users who are streaming media services is going beyond the traditional pay TV. According to Ofcom, the UK media regulator, in July this year for the first time, the number of people using streaming media services such as Amazon Prime and Netflix in the UK exceeded that of paid TV users. Subscriptions to Netflix, NOW TV (Sky) and Amazon Prime, the three largest streaming media companies in the UK, climbed to 15.4 million, while subscriptions to pay TV were less than 15.1 million.

At the Emmy Awards in 2018, Naifei won 112 nominations, which was the first time in 18 years that the HBO, which produced such works as "Game of Rights" and "The Western World" lost its position as the episode leader. As a representative of streaming media, Nifei's achievements in recent years have forced the industry to re-examine its business model.

From video tape to streaming media

In the 80s of last century, with the popularity of cassette tape recorders, video rental business began to rise. By 1988, the annual rental income of us video rental business was US $5 billion 150 million, more than the movie box office. Blockbuster is the most successful video rental company in this period. In 2000, Block-buster had 7700 stores with revenues of US $4 billion 960 million and net profit of US $535 million.

But with the promotion of DVD in the mid-1990s, DVD rental business began to erode the original market of video rental. In 1997, Nai Fei, whose main business was DVD leasing, was listed in 2002. Unlike Blockbuster's physical stores, Nai Fei provides services through mailing DVD discs. In 2001, Blockbuster spent $450 million to replace the inventory of home video system (VHS) to DVD. However, it was not until 2004 that Blockbuster recognized Nash's threat to its business. Since then, Blockbuster has adjusted its business to start competition with Nai Fei.

In 2005, with the replacement of dial-up Internet by broadband Internet access, the speed of Internet has been greatly improved, which lays the foundation for watching video programs online. In 2007, Nye Fei released the online watch service, which is the predecessor of Nye's streaming media business today. At the same time, Block-buster is busy developing DVD rental terminals.

Blockbuster eventually declared bankruptcy in 2010, and Dish Network bought the remaining 1,700 Blockbuster stores at auction, then closed all the physical stores. In 2015, Dish released its own streaming media platform, Sling TV.

All along, Nye and other streaming media platforms are all copyrighted programs. In 2013, Naifei launched its first homemade play, The House of Cards, which was a great success and broke the original pattern of the television and film market.

Naifei has booked a two-season house of cards with an investment of $100 million, which is a very expensive attempt. Naifei's confidence comes from the analysis of big data for customers, and the analysis of users'preferences from themes, directors and actors. Ted Sarandos, chief content officer of Naifei, said: "I am not using data to create programs, but to identify future audiences with data."

With the success of a series of popular dramas, such as "House of Cards" and "Women's Prison", Naifei began to make more dramas. In 2016, Naifei produced 30 programs and planned to broadcast 600 hours of original content, twice as much as in 2005.

Turning point

Neifei's revenue depends on subscription fees. The success of its own dramas has brought a large number of subscribers to the company. Its share price has risen steadily. It has promoted FANNG (Facebook, Apple, Amazon, Netflix, Google's parent company Al-phabet).

As of the third quarter of 2018, Nifei had 56.96 million subscribers in the United States and maintained its lead in streaming video platforms. Naifei, which won the Emmy Award in 2018, has a market capitalization of $138.6 billion, but is facing an unprecedented crisis.

Several other big technology giants in FANNG are speeding up the layout of content business to compete for limited user time; traditional film and television production companies and TV stations are seeking transformation, and the current pattern of streaming media industry may change.

Amazon Prime's streaming subscription service has been fiercely competitive with Nai Fei. Recently, news came that Amazon was considering acquiring Landmark Theatres, an American cinema line that had previously been held back by high prices. If the acquisition succeeds, Amazon can form, buy courtyards, make movies, and use Prime Video to control the distribution of movies.

In 2010, Ama zon founded Ama zon Studios, which specializes in series and film production. In 2017, Amazon became the first streaming media company to nominate Oscar for best picture. Amazon studio's Manchester by the Sea won an Oscar for Best Actor and Best Original Screenplay.

Apple has always had the ambition to create free content distribution platform. As a long-term goal, apple is still in the layout, and has launched Apple Music. Apple will build big membership services in the future, including music, video and news. Apple Music, launched in 2015, currently has more than 40 million subscribers, contributing $2 billion to Apple's revenue in 2017.

In April, Bloomberg reported that Apple was planning to acquire Netflix Texture in magazines, merge it with Apple News, and withdraw from paying membership services similar to Apple Music. In June 2017, Apple drew two executives from Sony's operating television department who had created such hit shows as "Dead Poisoner" and "Crown".

In March this year, foreign media reported that Apple will launch a streaming video service in 2019 called "Apple Worldwide Video". Recently, it emerged that Apple is considering acquiring iHeartMedia, an American radio giant, to enhance its streaming services.

In June, AT& T, an American telecommunications giant, paid $109 billion for Time Warner, the parent company of HBO. AT& T is also the largest paid TV service provider in the United States, AT& T believes it is in a life-and-death battle with Netflix, Amazon, Facebook and Google over user time.

AT&, T will launch new subscription streaming services through Time Warner in 2019. A larger HBO is the cornerstone of this strategy, and HBO will have more money to produce original dramas. AT& T hopes that video users can become wireless users, while wireless users can also become video users, open channels to reduce customer costs.

Disney, which has been established for nearly a century, announced its strategic restructuring plan at the beginning of this year, setting up a new department responsible for its major streaming media service platforms. Earlier this year, Disney and its ESPN Sports Channel jointly launched "ESPN + Streaming Media Service", and Disney's independent streaming pay TV platform will be launched in 2019.

After Disney's $71.3 billion acquisition of 21st Century Fox, it will own 60% of Hu-lu as a streaming media service platform in the United States. As of April 2018, Hulu has 20 million paid subscribers. Disney CEO Bob Iger called the successful launch of streaming media services his "priority".

YouTube, supported by Google, launched an ad free subscription service in 2015. YouTube is supporting the popular video producers on the platform to work together with the Hollywood team to make programs.

With the maturity of technology and the change of consumer's viewing habits, technology giants and traditional film and television production companies have entered the streaming media market one after another, and they have to share in the market. At the same time, the investment budget of original content has been constantly improved. In 2015, Ted Sarandos, Neifei's chief content officer, said that original content can get longer viewing time than copyrighted content, which is also an investment of $1.

In the future, the competition of streaming media industry is not only for the audience, but also for the talent of film and television production.

Unexpectedly, in 2019, a number of giant streaming media platforms will be launched, and the fiercest competition in the streaming media market will officially open, and the turning point of streaming media may come.

The market is changing dramatically, as Reed Hastings, CEO of Neville, once said, "The change of the market is not caused by Neville, the real reason for the change is the development of the Internet."

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