AT&T announced on Saturday that it intends to acquire Time Warner Inc. for $85.4 billion, and the agreement has reportedly been approved unanimously by the boards of directors of both companies (story here). How regulators respond remains a question, and AT&T obviously was aware of that as it outlined potential benefits to consumers in both its written statement about the deal, and in a Monday call to investors and analysts. One of the big potential boons of the deal for consumers, at least according to AT&T, would be the combined company’s potential “to become the first U.S. mobile provider to compete nationwide with cable companies in the provision of bundled mobile broadband and video.”
That’s an interesting point to make, especially given consumers’ passion for streaming video and research on how that business if further developing. For example, Amazon’s efforts to unbundle its Prime video and shipping subscriptions have spurred more viewers to sign up for its streaming video service, according to recent eMarketer data, and it forecasts that Amazon will add more viewers to its service this year than previously projected. At the same time, eMarketer has adjusted its usage estimates for Netflix and Hulu downward due to a price increase and a change in business model, respectively.
This year, Amazon will have 76.2 million users of its streaming video service, about 3 million more than previously forecast by eMarketer. The company assumes roughly 2.5 viewers for every paid subscription to Netflix, Amazon and Hulu. Amazon’s streaming video service is no longer tied only to annual Prime subscriptions since viewers can now purchase a standalone video subscription on a month-to-month basis, which has helped increase user growth. This year, the user base for Amazon video is projected to grow 16.5 percent, making it the fastest-growing over-the-top (OTT) service of those covered in the forecast, eMarketer says.
“Amazon’s growth in digital video viewers is driven by three factors: the success of its Fire TV streaming devices, the rollout of a standalone streaming video service, and its increased investment in original content, which the Boston Consulting Group estimates at $3.2 billion this year, second only to Netflix among video platforms,” eMarketer senior analyst Paul Verna, notes.
Netflix, still leads the category, with 120.0 million users, although that figure is slightly lower than forecast last year, according to the research. Netflix is maturing in the U.S. as the service raises its prices, and those factors have contributed to eMarketer’s lowered growth projections through 2020, despite its strong Q3 performance.
“Netflix has a larger user base and therefore less room to grow, but it continues to add subscribers in the U.S. and elsewhere thanks to the appeal of its original shows,” Verna adds. “The success of these companies, and of the OTT category as a whole, indicates continued momentum for subscription-based, on-demand video.”
eMarketer has adjusted its estimates downward dramatically for the smallest player in the category, Hulu, due to its new business model. It no longer offers a free, ad-supported product. Therefore, eMarketer expects its user base to be cut by more than half, to 30 million users this year in the U.S. After this year, eMarketer expects Hulu to grow only slightly through 2020.
