Competiton is often a game of survival of the fittest; an evolution of sorts where the savvy and persistent win, the slow lose. What happened to Nokia and Microsoft and BlackBerry’s mobile businesses? Too slow to adapt to the changes Apple and Google wrought.
Streaming video has been around a while and there are many players. I was going to write “a growing number of players” but now it appears that even before Apple and Disney get into the game, the game has claimed a big victim.
Die, Canary. Die!
Sony’s PlayStation Vue was a promising mix of live and streaming video, and, in the U.S. had over 500,000 households paying $50 a month. Do the math. That’s $25-million a month. That’s $300-million a year. Those are my guesstimates so they may be off a bit but not much.
Compare Sony’s Playstation Vue with Netflix’s nearly 160-million subscribers. If the monthly average is $10 a month, that’s about 1.5-billion per month, and the company report revenue of almost $16-billion last year, so my numbers are close.
Sony’s entry into video streaming was, indeed, a canary among eagles. The canary in the coal mine.
An allusion to caged canaries (birds) that miners would carry down into the mine tunnels with them. If dangerous gases such as carbon monoxide collected in the mine, the gases would kill the canary before killing the miners, thus providing a warning to exit the tunnels immediately.
Every successful business is a business about big numbers. Big revenue or big marketshare might sound good, but if the profit isn’t big, then other numbers don’t matter. A pencil company that sells 100-million pencils at 10-cents each makes 10-million in revenue. A pencil company that sells gold pencils for $1,000 brings in the same revenue on sales of a mere 10,000 pencils.
Sony could not sell enough pencils. The numbers were not big enough. Netflix appears to be doing well. Disney, like Apple, has deep pockets and should survive what would kill a canary.
Apple needs Apple TV+ to be used by enough customers to make it worth the company’s while. So, let’s do some math. Apple plans to give away Apple TV+ to customers who buy a new iPhone, iPad, or Mac. One subscription per customer. That means Apple TV+ could have over 100-million viewers by the end of next year. How many will subscribe is the unknown question, but the $4.99 price tag may tell the story.
If Apple can reach a mere 100-million subscribers in a few years, at $5 a month, that’s monthly revenue of $500-million, and annual revenue of more than $6-billion. Watch those Services revenue jump in a couple of years.
The survival of the fittest is not the only indicator of business success, but both Disney and Apple have very deep pockets. Apple has money and Disney has a long list of valuable content which will be attractive to a large number of people.
For now, the first canary in the coal mine is dead. Who’s next?