Despite Streaming Competition, FAANG Companies Will Dominate OTT
The streaming world is getting crowed, especially with major hitters — Disney, WarnerMedia, Discovery and NBCU — in the mix.
Think Facebook, Apple, Amazon, Netflix and Google are worried? Think again.
Dubbed the FAANG stocks, the five companies make up 63% of global OTT subscriptions this year. And that sizable chunk is expected to hold through 2023, when they are forecast to represent 60% of the market.
The research, from Ovum’s World Information Series-Service Provider, a data and research service, underscores how tough the fight is for direct-to-consumer video customers.
Breaking it down, YouTube (Google) and Facebook Video are predicted to make up 43% of AVODs (ad-based video on demand) in four years. That’s a 14% rise from today. (NBCU’s Peacock recently announced it was considering an AVOD model.)
Even with big investments in new streamers, there is no guarantee that money will purchase supremacy. The Verge noted that Disney “is expected to spend close to $24 billion this year” on its theatrical releases and original streaming content for Disney+.
But Ed Barton, chief analyst of Ovum’s Consumer and Entertainment team, is wary, given the dominant position the FAANG companies have in two key video growth areas: OTT subscriptions and advertising. “This situation is making life very hard for competing video services seeking to gain a foothold,” he stated.
“The FAANGs are feasting while entertainment giants prepare to lose billions of dollars establishing direct-to-consumer video platforms,” Barton added. “The entire OTT video industry is likely to be loss-making until the mid-2020s. The companies left standing in 2025 will have the opportunity to fashion the long-term future of visual entertainment distribution, but they will have paid a very high price.”
In the first six months of this year, four of the five FAANG stocks — Facebook, Amazon, Apple and Netflix — upped their market value at least 25%, CNBC reported.