Category: An Intelligence Analysis of The Streaming Wars

If The Streaming Wars are a War…Then What War Are They?

In November, a war started. 

Fortunately, in this war, no one will die and the biggest risk is to the stock price of ViacomCBS. If the biggest war our current generation is a streaming war, then the future isn’t all gloom and doom.

Since I’m writing an “intelligence preparation of the battlefield” for the streaming wars, it sort of begs the question: if the streaming wars are a war, what kind of war are they? To prove I’m not making a straw man here, here’s a host of articles asking about the streaming wars, but no one tying them to the best comparable war.

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I was a history major and in the military. I should be able to figure this out. Let’s do it.

The Plan

1. Will rank wars from “easily discarded” to “Pretty darn close”. Scroll down to the bottom to find out the winner(s).

2. One imaginary war per section. 

3. I’m fairly “American” so all of these wars will inevitably come from that bias viewpoint.

Easily Discarded

The Civil War (and most other civil wars)

The case for the Civil War—and other civil wars—is that the entertainment industry itself is like a country riven by sectarian strife. The Confederates would be the traditional studio conglomerates and cable MVPDs clinging to their profits, while upstart streamers are, I guess, the Union? Trying to impede the new movement? Or maybe switch the two and the streamers are the Confederates splitting off from the Union? See, it doesn’t really work.

The Persian Gulf War or Franco-Prussian War

The problem with these wars is they were too darn quick, each lasting under a year. The streaming wars won’t end any time soon.

Alexander the Great, The Huns or The Khans Conquer the Known World

Every so often, some military leader just up and conquered most of the known world. Four years ago, we probably would have said Netflix was set up to do just this. Yet, unlike the foes who fell under Alexander, Attila and Genghis, the traditional studios may have a fighting chance to defend their territory.

Independence Day War

This is the fictional version of massively powerful invaders taking over everything, just this time with aliens. We only have two sides in this war, where the streaming wars are multi-polar, so we’ll need some better analogies.

Closer, but Key Flaws

Punic Wars

We have our first “traditional” war where two massive powers square off for domination of, literally, Western civilization. If Carthage had defeated Rome, all of human history may have taken a different course. (Instead of Rome, the Western World would have been centered around North Africa.) If the upstart tech streamers defeat the traditional entertainment conglomerates, the results for investors may be similarly momentous.

The challenge is we’re not dealing with two united sides in the streaming wars. Disney+ is fighting for control from HBO Max as much as they are fighting Netflix and Amazon. However, if I did make this analogy, it would mean Ted Sarandos is Hannibal and his elephants are Netflix originals powered by algorithms. Which could mean Bob Iger is Scipio Africanus, but now we’re going too far.

The French Revolution

Revolutions are like Civil Wars, just without sides or uniforms. Which make it tough to compare to our streaming wars. Sure, our combatants don’t wear uniforms—well, NBC Pages do, but you know what I mean—but you have to like the symbolism of revolution. Streamings isn’t a war, but a “digital revolution” in how we receive content! 

That has an ethos of “power to the people” who are rising up and saying, “No more high cable prices, I’m cutting the cord!” Of course, the data doesn’t support that—most Netflix subscribers have cable; most cord cutters pay well below costs for content—but it sounds good.

The Cold War

If I took points from The French Revolution for not wearing uniforms, well no one wore any uniforms in the Cold War either. This war was waged via proxies, spies and nuclear stock piles. All of which I have a tough time comparing to the streaming wars. In its favor, The Cold War was a global enterprise, with battlefields from a divided Germany to Vietnam to Latin America to China to Korea to Afghanistan. The streaming wars will match that scope.

War of the Ring (Lord of the Rings)

Human-Covenant War (Halo)

Lots of science fiction or fantasy works have two sides squaring off for all the marbles just like the Punic Wars:

Lord of The Rings. This is the literary equivalent of the Punic Wars. The humans battled Sauron for literal survival. And somehow a hobbit saved humanity.

Halo. This is the video game equivalent of the Punic Wars. The humans battled the Covenant for literal survival. And somehow a super-soldier saved humanity.

Pretty Darn Close

Peloponnesian and Corinthian Wars

Now we’re getting there. While the wars between Sparta and Athens had two sides, each city state had its own power and made its own decisions. Each city state picked a side and either allied with the Spartans (Peloponnesian league) or Athenians (The Delian League). These city-states also struggled with civil wars and popular up risings, depending if they were winning or losing. That’s a lot like the streamers disrupting traditional movie studios, but each city-state still working for its own end and switching sides as needed.

These wars also were bloody, inspiring later theorists to develop the concept of “total war”, when war isn’t just a show of force, but a fight for survival. Like the streaming wars: instead of shedding blood, though, the plan is to shed cash flow.

One Hundred Years War and/or War of the Roses

These two wars were the inspiration for countless fantasy novels, especially one of our “co-winners” of the streaming wars analogue crown. Like the Peloponnesian Wars, two sides squared off for power (first, in France, then in England), with the nobles switching sides and betraying each other whenever needed to stay in power. Still, as much as these previous wars resemble the streaming wars, neither quite captures the scope of conflict. We need a really big war, when the War of the Roses is really squabbling over England’s crown. Not like our next contender.

World War II

Most Americans when they think of wars, they think of World War II.

World War II is America’s favorite war, and Hollywood’s too. Just look at their regular output of Greatest Generation films. The problem for this analogy is that, well, I can’t make either side the Axis. Otherwise they’ll be horrifically offended. 

Not to mention, if this analogy were really true, it would be as if the British turned their guns on the Americans midway through the fighting. Because Disney is squaring off as much against fellow conglomerates AT&T (HBO Max) and Comcast (NBCU/Peacock) as it is Netflix and Amazon. (And those two started the price war in the first place for content.)

Finally, at the end, the Allies won partly because they developed one tremendously destructive weapon. There are no nuclear weapons in the streaming wars. Speaking of which…

Star Wars

This galactic battle was allegedly a “civil war” between two sides—Rebels versus the Empire—that each squared off in decisive battles like a traditional war. Like World War II, though, there isn’t some giant super weapon of streaming which one side or the other can destroy to win the war. I tried to imagine this as “data”, but every streamer has that. 

The best case for Star Wars is that The Force is a mysterious force that rules our lives that no one individual can master, sort of like “creative excellence” is the force that rules Hollywood that no one individual can master.

Runners Up – The Iraq War or Vietnam War

I could make a better case for these insurgencies than the civil wars of old. Where civil wars pit uniformed soldiers against each other, in Iraq, militias faced off against the traditional military against insurgent groups versus terrorists all mixed in with organized crime and genuine political parties. It’s as confusing a web of relationships as my “value web” for entertainment.

What I particularly like, too, is the role of persuasion in this type of war. Insurgencies aren’t just about defeating the enemy in the field, but persuading the population at large to support your side via propaganda, ideology, bribery or threats. Which is how AT&T plans to woe it’s customer base too. I really wanted to make one of these multi-sided insurgencies the winner but…

Again no uniforms! Or even enough cohesion to form coherent battle plans. So we need two other wars to take our crown.

The Winners – The 30 Years War and Game of Thrones

The 30 Years War

Whoa! Went off the “American only” board. Most of my readers don’t know what this war was really about, so let’s just slam off a summary from my AP Euro textbook, A History of the Modern World by R.R. Palmer:

The Thirty Years War…was therefore exceedingly complex. It was a German civil war fought over the Catholic Protestant issue. It was a German civil war fought over constitutional issues, between the [Holy Roman] Emperor striving to build up the central power of the Empire and the member states struggling to maintain independence…It was also an international war, between France and the Habsburgs, between Spain and the Dutch, with the Kings of Denmark and Sweden and the prince of Transylvania becoming involved, and with all these outsiders finding allies within Germany, on whose soil most of the battles were fought. The wars were further complicated by the fact that many of the generals were soldiers of fortune, who aspired to create principalities of their own or refused to to fight to suit their own convenience.

Here’s that paragraph on the streaming wars:

The Streaming Wars were therefore exceedingly complex. It was an entertainment civil war fought over new content distribution models, from streaming to theatrical to cable. It was also an entertainment civil war fought over technology, between new sticks, devices and UX. It was also an industry wide war, between giant tech companies striving to enter entertainment and traditional studios struggling to keep them out. It was also an international war stretching from Sweden to Japan, to Australia to Brazil. It was further complicated by the fact that many of the new entrants were deficit financing their streaming efforts to support other businesses, while all the while clinging to “data” as the raison d’être.

I’ve always had a soft spot for this war in my heart because when it finished, Europe was never the same. Arguably, the Peace of Westphalia established the modern conception of the nation-state. When the streaming wars finish, we’ll have new entertainment nation states ruling our lives. That connection was enough to make this our winner, but there are even better reasons.

This war had it all,. Like a traditional war, there were two sides, the Catholics versus the Protestants, which connects to our “entertainment” versus “tech” narrative. Like the Peloponnesian or Hundred Years war, there were also tons of city-states in the German heartland, like our various streamers, FASTs, vMVPDS and more. Plus there were giant empires funding the fighting on each side, the way Apple, Google and Amazon are funding their streamers. Plus, each side was trying to convince local populations to support their side, so you have influence campaigns like the Iraq or Vietnam insurgencies. The Thirty Years War lasted so long and covered so much territory, it fits almost any analogy.

Finally, if you factor in the size of the population at the time, this may have been the most destructive war in European history in terms of casualties. (Over 8 million by some estimates.) Bet you didn’t know that. 

If we could take a lesson, the bloodshed only ended via diplomacy. In entertainment, this means a tacit agreement to collude on price setting, as has happened in entertainment since the golden age of studios, the golden age of broadcasting, the golden age of cable and someday the golden age of streaming. Just wait.

Game of Thrones

This analogy was written perfectly by Dylan Byers in his must read piece here. Game of Thrones captures the nuances and destructiveness of the Thirty Years War in fictional form. (Even though George RR Martins says he based his epic series on the War of the Roses, the Thirty Years War fits better.)

 

Aggreggedon: The Key Terrain of the Streaming Wars is Bundling

(Welcome to my series on an “Intelligence Preparation of the “Streaming Wars” Battlefield”. Combining my experience as a former Army intelligence officer and streaming video strategy planner, I’m applying a military planning framework to the “streaming wars” to explain where entertainment is right now, and where I think it is going. Read the rest of the series through these links:

An Introduction
Part I – Define the Battlefield
Defining the Area of Operations, Interest and Influence in the Streaming Wars
Unrolling the Map – The Video Value Web…Explained)

In war, what really matters on a map is the “key terrain”. The place on the map that if you control it, you have a much better chance at winning the upcoming battle or war. In Army lingo, terrain that control “affords a marked advantage”. Usually this is the high ground, but can be anything from a bridge to a national capitol, or airfield or even castle, in olden times.

So take a gander at our “map” of the video landscape from last week.

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As a commander, where do we want to control? What gives us a “marked advantage”? Well, I highlighted it in yellow. 

Last week, I “defined” the map and area of operations. Now we move onto the challenging tasking of describing that map. While I won’t use all of the Army’s frameworks, the concept of “key terrain” really does resonate with business. (Don’t worry, we’ll use other business analysis frameworks as well.)

Today, I’m going to highlight the key terrain the streaming wars will be fought over, and it’s not what most streaming observers and customers think it is. (If I had to guess, they’d call it subscribers.) I’ll start with the “BLUF”, then describe the situation in broad strokes, the reasons why digital bundlers are in a powerful position, the stark choice facing streamers, and finally the ramifications for all players in digital video. 

Bottom Line, Up Front – Digital Streaming Bundlers Are Best Positioned to Capture Value

While streamers started as the aggregators—Netflix inspired cord cutting by offering it’s own bundle—in the next five to ten years, the new digital video bundlers (who I call DVBs) will be in the best position to capture value (meaning profit and cash flow) in the video landscape. This means the winners will be folks like Amazon, Apple or Roku, and not Netflix, Disney, Comcast or AT&T.

The Situation: Netflix breaks the user experience monopoly of cable TV

In the past—meaning just ten years ago—the landscape was relatively simple for TV: you turned on a cable or satellite box, and scrolled. Netflix changed that all. Using its installed base of DVD subscribers, it started offering streaming video to its customers. Thus, when you sat down at your TV, you could decide, “Netflix or cable?” Netflix provided a second user experience to watch TV. Some people—though less than usually hyped—cancelled cable just to use Netflix and were dubbed “cord cutters”. 

Netflix was so successful, it inspired copycats from Amazon Prime to Apple TV+ to Disney+, who launched this week. Of course, the best place to watch TV isn’t from a computer screen, but from a living room TV. Devices were released to manage all these different streaming platforms, like smart TVs, Google Chromecast, Roku, Amazon Fire TV and Apple TV.

Which leads to my biggest theory of the landscape: customers will want to return to one operating system to manage all their television watching. Crucially, this may include bundling content. The cable companies didn’t just provide one user experience, they provided a bundle of cable channel at one fixed price. That bundle is dying.

But it’s returning. Instead of just channels, though, it will be a combination of virtual MVPDs (like Hulu Live TV, Youtube Live TV or AT&T TV), FASTs (like Pluto, STIRR, Xumi, and Tubo) and SVODs (like Netflix, Disney+, Hulu and Amazon Prime). The question is who mediates that experience. Someone will. And potentially to manage all their payments. And if you’re managing all the payments, you can bundle all the streamers/FASTs/vMVPDs into one monthly or annual price. A bundle.

The question is what do we call them? I’ve taken to the acronym DVB:

Digital Video Bundlers. 

I’ve colored this in yellow on my map because of how important I think it is. If an Amazon or Apple can own the customer relationship, they’ll own all the data and be best positioned to capture value from suppliers or competitors. Before I get into the ramifications, let me explain why I think this will happen.

Reasons Why The Bundle Will Return

The return of the bundle doesn’t just seem likely, but almost inevitable.

First, a clear customer value proposition – One user interface for all content.

Both Amazon and Apple have touted a clear proposition to users, which is the idea that you have one place to go to watch all your content. Meaning: if you log in, every subscription video service is in one location to easily search and browse without having to switch between apps. 

(In some cases, this vision is still aspirational, as opposed to realized. But it’s both companies’ dream user scenario.)

This makes sense from the cable example. The big revolution wrought by Netflix stemmed from the idea that suddenly customers now had to choose between two different ways to interact with the TV screen. Once that was severed, the cable bundle no longer offers it all. But neither did the “Netflix only” option, since you missed all traditional cable channels. Or other streamers like Hulu. This makes deciding what to watch just that much harder (and was to Netflix’s advantage).

Most smart TVs don’t offer a simple way to scan between streaming services. Instead, you decide what app to use and go to its platform to browse. Amazon and Apple want to incorporate everything into one user interface, so HBO content would sit next to Disney+ content which is next to CBS All-Access, for example. Meaning you can organize all your video in one place. Here’s Amazon Channels right now to show this vision:

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(By the way, Amazon and Apple both ruin this customer experience with a clear user experience fail. When customers surf TV and streaming, the expect everything to be watchable for free. Pay Per View, historically, was always limited to clearly defined section of the cable interface. In their efforts to have an accurate search, Amazon and Apple both surface results for their TVOD businesses, which customers despise. Loathe. Hate. Keep your “pay for it” shows and movies clearly separated from your TV experience.)

Second, a vague customer value proposition – One source for payments.

The second reason cited by folks selling subscriptions is it offers simplicity in payments. I’m less sold on this value proposition because people will likely still search for the best deals. But it’s a potential for some customers and has some value.

Third, a potential value proposition: the new bundle. (Which everyone is predicting)

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Unrolling the Map – The Video Value Web…Explained

(Welcome to my series on an “Intelligence Preparation of the “Streaming Wars” Battlefield”. Combining my experience as a former Army intelligence officer and streaming video strategy planner, I’m applying a military planning framework to the “streaming wars” to explain where entertainment is right now, and where I think it is going. Read the rest of the series through these links:

Part I: An Introduction
Part II: Defining the Area of Operations, Interest and Influence in the Streaming Wars)

As an Army officer, getting lost is sort of the death knell for your career. For the Band of Brothers junkies out there, I’ve always had the “hot take” that if Captain Sobel could have read a map he would have stayed in charge of Easy Company. 

Having had to pull out a map and lead a group of soldiers somewhere, I can testify it’s a nerve-racking experience. There was always this moment when I started planning a mission—from my time in ROTC with squads to training in Ranger School with platoons to being on the ground in Afghanistan—that I essentially had to “unroll my map” and figure out where we were going.

Every time, my stomach would start to churn as I looked to see if I could understand what a bunch of squiggles on paper meant in the real world. Inevitably, I could. We’d start and finish planning and head out. Honestly, my stomach is churning thinking about it.

Today we unroll the map for digital video. But where is the map? There are a few lay outs I’ve seen, like this one from the Wall Street Journal. 

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Or this map from Recode, which is probably the most commonly linked to image I’ve seen in the streaming wars.

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Unfortunately, each has flaws. In both cases, neither links how the various companies relate to each other, merely the sheer size in one case, or the type of business in the other. The challenge is that while you can see the various areas, the concept of the “value chain” is totally missing. Who is producing content versus who is distributing it? Yes, ad-supported is different than subscription, but don’t they fill the same customer need? I’d argue they do. (Also, while the Recode map looks really cool, you know I sort of loathe “market capitalization” as a measure of size.)

So I made my own lay-out. This has been an idea I’ve been tweaking for over a year. Essentially, I’m not just reading a map, but drawing my own of the entertainment landscape. Which is even more nerve racking then just reading the map.

Today, I’m going to explain the two business school frameworks that inspired my map of the entertainment landscape. Next, I’ll talk about the “jobs” completed by various steps in the process. Then, I’ll show the “Digital Video Value Web”, with some explanations about the key pieces. Finally, I’ll highlight the most important terrain of the streaming wars.

A Quick Reminder on Value Chains, Porter’s Five Forces and the “Value Web”

The value web is the name I picked for a mashing together of two well established frameworks for business. The first is this little guy, “the value chain”, who I explained back in May:

True Full Value Chain(I use potato chips to explain concepts.)

Reread that article for a fuller description, but a value chain is essentially every step of a business process that results in a good. So suppliers provide the raw materials to factories that turn it into goods, which go to distributors to send to stores, who sell it to customers. The “value” component is really asking creates or captures the most value along the way. 

The limitation to “value chain” analysis is revealed by the WSJ image. I could make a value chain for ad-supported video on demand, for streaming TV hardware, for sports, subscription video and traditional cable bundles. All those value chains would start to get confusing. But to understand the landscape, we need to understand those connections between the value chains.

We have another tool for that, fortunately. In the past, I’ve also explained “Porter’s Five Forces”. (It’s one of my most popular articles, actually.) Read that article here. Here’s a visual of that…

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Porter’s Five Forces is a good organizing tool to lay out the potential threats and opportunities for a specific business. Its limitation is its focus: it only looks at one specific company in one part of the value chain. For example, if I used it for “cable companies”, it would leave out the studios distributing the content, merely the channels providing them content. That’s like a map that is zoomed in to one hillside when we need to look at the whole mountain range.

My insight was simply to realize that the value chain is going across the middle of a Porter’s Five Forces diagram. If I combined them on one table, I could make essentially an overarching view of any rough industry. My name for this is a “value web” because I couldn’t find anyone else making a similar layout and I elevate value above all other business concepts. Here’s my version from my Porter’s Five Forces article.

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Now we can make one for digital video.

The “Jobs” Done at Each Step of Digital Video

The first step was to pull out my value chain for streaming video. I’d previously made that here:TV Value ChainThe challenge was that I left out a fairly big component of the video value chain when I focused on distributors. Really, after a distributor sells their film to a cable channel, they don’t care how customers get that cable channel. But someone is “providing” that feed of cable channels. For the streaming wars that matters.

To borrow a phrase from Clayton Christensen, essentially the cable companies do the “job” of providing access to bundles of entertainment. I like putting “ing” after a step of the process because it gets at the type of work being performed. Applying this to my value chain you get:

Talent (acting, writing, directing, so on)
Producing
Distribution
TBD
Providing

The challenge is that “TBD”. What is it that a cable channel is doing? Or a movie theater? Or a streaming video service? I’d argue they’re all providing the same job, which is creating a library of content to watch, even if they use different monetization methods for those libraries. Frankly, the best word to describe that is “aggregating”. (And yes, we’ll get to Ben Thompson’s Aggregation Theory later in this series.)

That explains part of the “TBD”, but not really the whole thing. Because cable companies then aggregate the “aggregators” or channels. So what do we call them? They are definitely NOT in the same step of the value chain. A a group of cable channels is a separate business from the channels themselves. In reality, they’re providing access to a “bundle” of content which they charge for one price. I call that bundling.

(To quote a second business thinker—cited by Mike Raab recently—James Barksdale has said all business is either bundling or unbundling.)

With that, we have our six jobs being performed (with customers waiting at the end). 

The Video Value Web

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Defining the Battlefield – Areas of Operation, Interest and Influence in The Streaming Wars

(Welcome to my series on an “Intelligence Preparation of the “Streaming Wars” Battlefield”. Combining my experience as a former Army intelligence officer and streaming video strategy planner, I’m applying a military planning framework to the “streaming wars” to explain where entertainment is right now, and where I think it is going. Read the rest of the series through these links:

Part I: An Introduction)

Certain parts of the US Army’s IPB process have such a good correlation to business planning it makes me wish I had connected these two ideas—intelligence preparation of the battlefield and business strategy—earlier. (As a professor described me once before, I’m a sucker for frameworks and planning processes.)

Take this map from a Wikipedia page, based on the US Army’s IPB manual (available free/open source online, I was taught off an older version):

Image 1 Battlespace Lay Out

It’s a subtly simple concept: the area you are assigned (your area of operations) is part of larger area you can directly “influence”, but you still need to be aware of the even larger environment, the “area of interest”. 

Today, I’m going to define the entertainment battlefield within those three terms. I have four rough categories: entertainment business, related industries, geography and regulatory environment. But first, let’s define these terms to make sure we’re all on the same page. 

Defining “Area of Operations”, “Area of Influence” and “Area of Interest” in war and business

Let’s start with an example to illustrate this. Say you have an Army Brigade deployed to Afghanistan. (About 5,000 troops.) If they are assigned “Kunar Province”, that’s their area of operations (AO). The definition of this in the manual is (paraphrased) “the territory your boss gives you”. In practice, this means the place with all your troops that you defend, protect or attack into. 

Of course, while your area of operations is “Kunar Province”, that brigade commander could influence a larger territory. This could mean being able to deploy their troops or fire artillery into the surrounding area. In Afghanistan, this would likely mean the provinces around Kunar, like Nuristan, Nangahar or Kabul. (Here’s a map of Afghanistan for reference. Kunar is the upper right.)

IMAGE 2 Map Afghanistan

Of course, the commander can’t influence Pakistan directly, because it’s off-limits, but Pakistan can influence Kunar Province. (Specifically, by acting as a logistics base for insurgents.) Making it an “area of interest” the commander needs to monitor.

It’s a great framework because it reminds you to broaden your thinking to solve your problems. If you only focus on your area of operations, you miss new trends and forces from outside your day-to-day focus. On the other extreme, though you can monitor what is going on in your “area of interest”, you can’t influence it without losing focus. As well, the most important events that could impact your mission will happen in your area of operations. And if your area of operations is bigger than your area of influence, you’re likely spread too thin.

Do these lessons apply to business strategy? Absolutely. 

Let’s use my default explanation of potato chips. The brand manager for Kettle Chips has “chips” as their area of operations. That’s their AO; they focus on managing and impacting potato chip sales. But they can “influence” the entire snack market. They’re fighting for shelf space against pretzels, nuts, healthy snacks and candy. Of course, the rest of the retail industry is an “area of interest”. 

Most business leaders probably don’t think in these terms, but doing the thought exercise may reveal some insights into either blind spots or areas you’re spread too thin.

Defining Our Area of Operations: Digital Video

Since we don’t have a “battlefield commander”, our “area of operations” is up to me to define. As I said last article, I’m focused on digital video. This is the heart of the “streaming wars”. But I’ll include anything “digital” in this from streaming (SVOD) to ad-supported (AVOD) to virtual MVPDs to FASTs (free-ad-supported streaming). These “areas of operation” mean those things the digital players can directly control, including the apps they roll out, how they distribute those, the prices they charge, but most importantly, the content they put on those platforms.

Geography: The United States

I don’t have enough bandwidth to cover the entire world in this series. Though Netflix and Amazon have notably turned the streaming wars into a world war, with global launches in a hundred plus countries, the start of the streaming wars will be US-centric. The United States produces the most content and if its streaming companies cough, the whole digital ecosystem will catch a cold. 

Other Industries: Communications

In this case, “communications”—my catch all for cellular, telecoms, cable and satellite connections to transmit data—is the key industry included in our area of operations. If you can’t distribute your content over the pipes, you can’t compete. So we’ll check in on the big players in communications like AT&T, Comcast, Charter, Dish, Verizon and Sprint/T-Mobile.

Regulation: The FCC (and Other Antitrust Regulators in the US)

Since our geography is the United States, the roles of the FCC, FTC and antitrust regulators could have a key impact on our area of operations. In the last twenty years, the trend has been toward lax regulatory footprint. Whether that continues is a key question for entertainment companies, and it’s coming right as the streaming wars kicks off. (Meaning November 2020 could be important.)

Defining Our Area of Influence: Video

The story of the streaming wars is really a story of the evolution of “video”. There are the traditional distribution methods (theaters, home entertainment, broadcast, etc) that are being disrupted by digital methods. What that means for us is that the giant conglomerates battling in the streaming wars can heavily influence these others parts of the value chain, even if that’s not the ground being fought for. 

We’ve already seen the influence of digital video in one of the most important areas of Hollywood production: the price of content. Essentially, everyone is paying more for scripted TV series, with a parade of articles on how much more these cost every studio. Netflix—a digital only provider—started this push by its winning bid for House of Cards, but Amazon, Disney+ and now HBO Max are al competing to raise these prices even further.

When I roll out my “map” of our area of operations, I’m going to include all of the video ecosystem since it can so easily be influenced and influence the digital video space. 

Geography: High Income or Growth Countries

Just because I’m focusing on the United States doesn’t mean I won’t acknowledge the rest of the globe. Indeed, one of the descriptions of this battlefield is how certain firms paying for global rights—whether accurately valued or not—is impacting those content prices I just mentioned.

When it comes to what can really influence and be influenced, high income or high growth countries such as the European Union, Latin America, India and parts of Asia fall under this analogy. While lots of potential customers may live outside those limited territories, the bulk of near term streaming revenue will come from there.

Other Industries: Technology

Arguably, the tech firms are already inside the area of operations, but for this category I’m specifically referring to the new innovations in technology that can change the next generation of streaming. Digital video is already our battleground, but what comes next? Virtual reality? Artificial Intelligence? And how can the entertainment companies influence that in turn?

Regulation: The EU Antitrust Authorities

The European Union’s antitrust authority is the biggest influencer here. Already Google and Amazon are heavily trying to influence how they are regulated in Europe, to more or less success. Again, only some of these will impact our United States area of operations, but we need to monitor it.

Defining Our Areas of Interest: Other Entertainment Options

As Reed Hastings pointed out:

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Introducing An Intelligence Preparation of the “Streaming Wars” Battlefield

As the streaming wars kick off this month, one question is dominating every conversation online, whether implicitly or explicitly:

Who will win?

As if this were a professional sports league. And only one studio gets the championship each year. Or even more extreme, like it is a war to be won. To steal a quote from Game of Thrones, “When you play the streaming wars, you win or you die.

Listen, it won’t be that extreme, Mike Raab explained on Medium last week. Or as Alan Wolk has said, no one will “kill” Netflix anytime soon.

But if you’re an executive, there are plenty of questions about the streaming wars you still need answered:

– What is the landscape of digital video, and how is your company positioned?
– Who are the strongest competitors in digital video?
– What are the biggest economic, technological and regulatory forces facing streaming?

If you can answer those questions, you can then answer the most important question for your company, business unit or team:

– What should we do to “win” the streaming wars?

Frankly, what I described above is how an intelligence officer in the United States Army would approach the battlefield in a war. Before a military commander can decide what to do, she needs to know what she is facing. That makes this analogy between real wars and the streaming wars fairly apt. The biggest change is we’ll change “win” to “create or capture value”.

So if we want to explain the streaming wars, we need someone versed in both intelligence planning for the military and the economics of streaming.

Fortunately, I’ve worn both intelligence officer and entertainment strategic planner hats in my life…

Introducing: The Entertainment Strategy Guy’s “Intelligence Preparation of the Battlefield” for the Streaming Wars

As the streaming wars kick off in earnest, it seems like the perfect time to reflect more broadly on the streaming war, going a bit beyond my weekly columns and analysis. There have been some great layouts of the industry the last few months, but none that captured everything I’ve been seeing (with my own unique nee skeptical) take on the industry. 

So that’s my job for November. A lay out of the streaming video landscape. An explanation of the business of streaming. An intelligence briefing for the streaming wars. Since I used to make those for the US Army—a story for another time—that’s the framework I’ll use to organize my thinking.

In today’s article, I’ll explain what the IPB process is, and how I need to translate it to the streaming wars. Then, I’ll explain what I will and won’t cover in my first version of this.

What is an “intelligence preparation of the battlefield”?

In truly US Army fashion, an acronym fills in where regular words will do. So Intelligence Preparation of the Battlefield becomes IPB.

An IPB is both a process completed by a staff (the IPB planning process) and the product(s) that results, usually a powerpoint presentation, but sometimes a document or brief. It also usually results in maps and graphics. It can also include a plan to collect further intelligence.

The strength of an IPB is the clear process. For a bit now, I’ve been collecting thoughts on specific companies and larger issues in the streaming wars, but I didn’t have an organizing framework. The IPB process provides that. It’s a great tool because it’s flexible enough to be used by intelligence officers from small battalions to gigantic corps managing entire theaters of war, in situations involving a pitched battle with tanks in the desert to combating insurgencies in the jungles. 

Or in our case, the streaming wars.

Which battlefield in the streaming wars?

Crucially, I need to pick which battlefield I’m analyzing. The streaming wars will be a global war, but I’m going to start by focusing on the United States. Frankly, each country probably deserves its own analysis because of its own unique situation. But we have to start somewhere and I think covering the entire globe will be too tough for one month. 

Moreover, even in the United States, I’ll be focusing on digital video. Meaning streamers, bundlers, aggregators and virtual MVPDs. But digitally distributed. Broadcast, cable, theaters and home entertainment are all interesting, but for a future analysis.

With that, let’s explain this tool. (By the by, if you want to download a copy yourself. The U.S. Army hosts them online.)

Intelligence Preparation of the Battlefield…Explained

An IPB consists of four parts:

– Define the Battlefield (in jargon terms, “operational environment”)
– Describe the Battlefield
– Evaluate the Threat (formerly “enemy”)
– Determine Threat Courses of Action

Let’s define a few terms to unpack that simple four step process. In previous iterations, the operational environment was called the “battlefield”, but that wasn’t an acronym so the Army had to change it. We’re going to stick with “battlefield” since it is so much clearer of a phrase to use and “IPOE” just doesn’t sound right.

The battlefield is where your unit is conducting its operations. In a lot of was this is the military analogue to properly defining the problem. If you don’t know where you can and can’t operate, you can’t properly plan. It’s also particularly important in the military context because knowing where fellow military units are prevents friendly fire. (It’s a simple leap to make an analogy to a giant conglomerate with competing business units here.)

Once you know the battlefield, you then describe it. For the Army, this usually means three areas: terrain, weather and civilian considerations. Weather is just weather. But the terrain is what most Cold War military veterans were raised on, and it was summarized by the acronym OACOK: Obstacles, Avenues of Approach, Cover and Concealment, Observation, and Key Terrain. After the post 9/11 wars, when counter-insurgency became a thing again, the civilian part of the OE was described with ASCOPE or Area, Structures, Capabilities, Organizations, People, and Events. We’ll use different tools to describe the streaming war’s battlefield.

Next comes the threat. In the olden times, the Army called this the enemy. But then insurgencies were filled with political and non-violent actors, so this became “the threat”. During the evaluation part of IPB, you basically ask, “How dangerous are they? How many of them are there? What weapons do they have? What can they do?” When the Russians were the main bad guy, this meant a lot of maps with graphics describing effective firing ranges for artillery and machine guns and what not. For insurgencies, it meant capturing a lot more data about the relationships of society. The best word to capture this is “capabilities”.

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