As Streaming Consolidates, Netflix Keeps Gaining Upper Hand

While we may still be in the “too many streaming services” era, the last year has also shown significant momentum toward consolidation — or as, TVREV colleague Alan Wolk long predicted, we’re in The Great Rebundling.

Having more options tented under fewer services sounds ideal for recently overwhelmed consumers, and potentially, streamers as well given the ongoing trend of price-hikes. And yet, as more content seems to be either appearing under the same bucket, or inside of multiple buckets, I can’t help but feel like this benefits Netflix above all competitors.

Netflix’s global subscriber count has long outpaced the field, and will continue to do so as it goes back to licensing more titles from competitors (and reaping the demand and watch-time rewards). But along with its own ability to churn out hits, and pick the right external library content winners — hi, Suits — the answer for why Netflix is the ultimate victor here could be even simpler: It’s kids content.

Netflix has had kids content for some time, and keeps adding more. From Cocomelon to Dr. Seuss movies, Trolls, Shrek and more, there’s an endless supply of kids movies and shows for consumers to tune into. And they do, happily. I can attest to it happening in my own home with kids (nearly-four and nearly-six years old) ready to toss on Netflix whenever they have some coveted, infrequent screen time.

What’s more, however, is that the omnibus content approach for Netflix kids content in particular has led to competitors trying to do the same, with the same content. Along with Netflix, Amazon Prime Video and Hulu also have Cocomelon videos in the U.S., along with a large collection of other lower-budget, digital-first programming.

There’s benefit there, of course. But if you’re a Disney+ subscriber who also has Hulu bundled with it, you’re now getting Cocomelon, other digital-first videos and non-Disney intellectual property served up alongside the likes of Frozen and Moana. I’ve witnessed myself how Disney’s built-in advantage quickly erodes in that scenario. The kids don’t care what’s Disney and what isn’t. They don’t care about the screen it’s on or the delivery mechanism. They just see a bunch of kids programming in front of them and (provided their parents approve) opt for the most addictive content available to them.

If you’re Disney or NBCU or Paramount, that’s a bit of a nightmare, to be honest.

Your selling point is the IP, and especially for younger audiences, it’s how you differentiate yourself in a sea of other potential viewing options. But if viewers increasingly see those famous cartoon characters alongside the likes of YouTube video fare (no knock on YouTube), the inherent value goes down. Watch-time usually goes with that, and then suddenly, subscribers are wondering “why am I spending the money on this other services when everything is on Netflix?”

Though I used an example of kids programming, you could extend it out to other types of programming as well. If Disney+ is not the only place to watch Marvel movies anymore, does the same premium exist for those subscribers to have it over something else that may be cheaper or just has more additional things to watch? If Peacock isn’t always the only place to watch The Office, how does that impact the subscriber base there?

This isn’t to say that licensing is a bad thing. It’s mutually beneficial for Netflix and the other streaming services, and this approach returned (after a short hiatus) in part because of the financial upside.

Still, if you flatten the video landscape to such an extent where there are too many services to keep track of new shows, but also too many to keep track of old shows, AND everyone knows Netflix has the largest collection and variety of content… doesn’t that just make it the lone solution for a cost-conscious consumer?

It’s unlikely we see the full impact of a return to licensing and the incorporation of digital-first programming into these platforms for awhile yet. As streaming subscription costs rise, though, there’s an increasing likelihood that consumers just start consolidation around Netflix because its competitors made it so hard to tell the difference (or the value) they provided.