Online Streaming Sites and How They Came to Dominate

Written by Aaron Choi

At its peak, Blockbuster was the leading brand in providing movie content to consumers outside of a movie theater. All consumers had to do was go to the store and walk out with a movie rental. In this day and age when convenience has become a top priority, consumers find it too tall an order to go to a store and rent a DVD. Thus has emerged the idea of delivering content through the internet, so that consumers can receive it without any effort on their part. At a flat fee per month, consumers are able to watch TV shows, movies, and everything in between. Netflix, which pioneered the idea of streaming content, has become one of the biggest household names in the streaming industry.

Netflix claimed an idea that created and revolutionized the streaming services industry. It was so influential that Amazon introduced Amazon Prime video in order to compete with Netflix. Not only did Amazon launch its Prime video feature, but it also bought Twitch.tv, an online-gaming streaming website, at nearly $1 billion in cash. Today we see that a significant number of American consumers obtain their content through streaming. With competition from Hulu, Amazon Fire TV and other streaming services, the cable box has become a relic of the past.

Netflix and Hulu currently have nearly 100 million subscribers. Their annual revenues have increased by 50% over the last two years. The streaming service industry has expanded, owing to the convenience of its program. Content is playable on iPads, iPhones, and laptops. One of the most appealing characteristics of streaming services is the reduction in advertising. When users watch Netflix as opposed to cable and other platforms, they save on average 160 hours per year. Another selling point of streaming service is the ever-expanding premium content to which subscribers have access. Unlike most other companies, Netflix is able to deliver ad-free content and popular programs to its users for a small monthly fee.

Streaming services can extend beyond broadcasting the everyday TV-show or the newest Tom Hanks movie. For example, Twitch.tv, owned by Amazon, holds a substantial share in the e-sports streaming industry. In 2015, it held a 43% market share of the gaming content industry, equivalent to $1.6 billion in revenue.

In a survey of Stern students, it was found that 73% of respondents subscribed to Netflix, either its streaming, DVD service, or both. Of these students, around 40% reported watching less than 2 hours a week, 40% reported watching between 2-6 hours a week, and 20% reported watching over 6 hours a week. An overwhelming 80% of sampled students reported binge-watching a show. Binge-watching is an activity in which consumers continuously watch episodes over an extended period of time, typically spanning over six hours. Of those who binge-watched a series, most stuck to either the Emmy Award Winning series The Office and/or the Emmy Award Winning Netflix original series, Orange is the New Black. Among students who subscribed to Netflix, 41% reported subscribing to Amazon Prime video. A subscription to Amazon Prime allows users to download or stream video through Amazon Prime Video. Twitch.tv was largely unpopular, with only 10% of survey respondents reporting watching its content.

Netflix’s subscriber base continues to rise, but faces threats from other streaming services. Needless to say, streaming services bring premium content to the average consumer and can expect to grow into the future.