streaming services essay

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Essay: The Future of Streaming Services

Is Netflix’s recent subscriber loss the beginning of the downfall of streaming? I recall one time my friend and I were watching TV at my house, and we decided to watch “Everybody Hates Chris” on Hulu. When I clicked it and an ad came up, she looked at me in bewilderment and asked why I had ads. I told her I had the student Spotify premium plan that comes with an ad supported Hulu plan, and Showtime, and I would rather have ads on Hulu. She then asked why I would keep ads on Hulu, and that I might as well watch cable. As someone who grew up watching cable television and liked it, I never understood why people didn’t like it. It wasn’t until streaming came along that I saw the potential in ad-free streaming; especially services that allow more creativity than a cable network. Although streaming has become a dominant figure in film and television, it has started to come down from its climax. Recently, Netflix has reported a loss of 200,000 subscribers in the first quarter of 2022, resulting in their stock plunging, and are expected to lose 2 million more subscribers. Netflix is now offering a cheaper, ad-supported plan as a result. With Netflix turning to ad-supported streaming, along with other services, what does that mean for the future of streaming? To understand the future of streaming, we have to look at how streaming began. Before streaming services were the norm, Netflix and Hulu were the main players in the field. Netflix and Hulu would pay studios to license their TV shows and movies to stream on their platforms. This is how we were able to watch Marvel, Star Wars, DC, and a plethora of other shows and movies on one service. This was the standard model until one company started to change the media industry forever. In 2009 Disney acquired Marvel Studios and Lucasfilm in 2012, resulting in one of the biggest media monopolies. Then, in 2019, Disney Studios bought 21st Century Fox for $71.3 billion dollars, making it one of the biggest media mergers ever. With Disney acquiring so many intellectual properties (IP), in addition to their already well established library, they knew they could make their own streaming service and gain a lot of money from it; and they have since they are expected to begin turning a profit in fiscal 2024 according to the company’s quarterly earnings report . Many other channels and companies also saw the potential in taking back their IPs and creating their own services, thus spreading all the content we love across different platforms. But isn’t that just cable television? The main appeal of streaming services when they first came out was that it was different and better than cable. Many people liked the idea of being able to watch what they wanted without ads. With the rise of popular television shows being available to binge all at once with no ads came the solution to many people’s problems with cable. However, with streaming services like Hulu, HBO Max, Peacock, and now Netflix adding ad-supported subscriptions, streaming is becoming the new cable. Streaming services still offer many things that cable doesn’t that differentiates it from that model. Although cable television still airs great shows like “Better Call Saul,” “Abbott Elementary,” and “Atlanta,” creators still have to follow heavy restrictions whereas creators that work with streaming platforms tend to have more creative freedom and bigger budgets than creators who make network television. According to The Wall Street Journal, Netflix spent $30 million on each episode of Stranger Things’s upcoming season 4, which is much more than the average cable show costs. Streaming services also have a plethora of options to choose from so that you always have something to watch, on the other hand with cable you are forced to watch whatever programming they have on. However, to be able to enjoy these services ad free, you have to pay a fee that’s not always feasible. Even though streaming platforms still have an edge over cable, the line separating the two becomes thinner and thinner as time goes on. However, it is not only the ads that are blurring the lines between cable and streaming. The main issue is the fact that different companies and studios are creating their own streaming services, making it harder to house everything in one spot. A part of streaming services’ downfall is that the market is oversaturated with them. As of right now there are almost 50 streaming services available in North America, and many of our favorite shows and movies are spread out across these platforms. Before, if I wanted to watch one of my favorite comedy shows, I could head to Netflix because they had shows such as “Friends,” “The Office,” “Parks and Recreation,” “Brooklyn Nine-Nine,” and “It’s Always Sunny in Philadelphia.” Now, “Friends” is on HBO Max, “The Office” and “Parks and Recreation” are on Peacock, and “Brooklyn Nine-Nine” and “It’s Always Sunny in Philadelphia” are on Hulu. Since more studios and companies are taking back the rights to their content to create their own platform, you have to pay for different services in order to access all the content you want. The cost of multiple streaming services is about on par to the cost of cable, not making it any more cost effective. The new model of how we watch TV on streaming is starting to change as well. Netflix can be credited for starting the binge-watching model we all have been accustomed to recently. Before, we would all binge watch the latest season of “Stranger Things” in a day, but now with Disney+ and HBO Max, releasing their shows week by week, people tend to stay engaged longer and the popularity of their shows grows as the show premieres. So does this mean the end of Netflix, and by extension streaming services? Not at all. Streaming is here to stay for the foreseeable future, due to their popularity and wide access to TV shows and movies we want to see. Disney+ is still seeing massive success due to their collection of Marvel, Star Wars, and Pixar content. Even though it doesn’t look like they are going anywhere, they will have to start implementing changes to their model and fees if they plan on keeping the subscribers they still have. Not evolving to keep up with their audience will result in the steady decline of the streaming model, and to ensure that won’t happen, they will have to listen and adapt accordingly. Although many are complaining about Netflix’s tendency to cancel shows and then increase their price right after, many still prefer Netflix and streaming over cable TV. While Netflix still arguably remains top of the game, if they don’t acclimate to this new playing field, it will only be a matter of time before they get left behind. Image courtesy of Vox

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Rizwan Khan • Aug 30, 2023 at 1:45 am

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Home — Essay Samples — Business — Netflix — The Rise of Netflix and the Future of Streaming TV

The Rise of Netflix and The Future of Streaming Tv

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Introduction, transforming television consumption, the path ahead.

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Streaming services challenge the future of movie theaters

In the future, going to the movies is going to be like going to the opera: a special occasion where you put on a nice suit and make an evening out of it. At least that's what film critic David Sterritt said he remembers someone saying almost 20 years ago. Now in 2022, it doesn't seem to be the most far-fetched idea.

“I'm not literally saying that,” Sterritt said about the opera comparisons. “But clearly things have been veering in that sort of direction for quite a while.”

Sterritt takes movies seriously. He has a Ph.D. in cinema studies from New York University, spent 10 years as the chair of the National Society of Film Critics and now works as a film professor at the Maryland Institute College of Art. Movies are a huge part of his life.

Sterritt said for decades he has greatly preferred to watch movies on his home TV rather than go into the theater, even though a lot of his colleagues prefer the latter.

Movie theaters and movie releases have long been intertwined. Sterritt said in the 1980s when the original “Dune” movie came out, he had the chance to speak with writer and director David Lynch about the film.

He said Lynch believed his version of “Dune” had to be seen in a movie theater with a great screen and excellent sound. Sterritt challenged Lynch on that, saying a lot of people in the future were going to be watching the film on video.

This same sentiment expressed by Lynch is visible in other contemporary filmmakers. In a letter written to 'Variety,' “Dune” (2021) director Denis Villeneuve said he was upset with the decision to release his version of the film on streaming the same day it was released in theaters.

“With this decision, AT&T has hijacked one of the most respectable and important studios in film history. There is absolutely no love for cinema, nor for the audience here,” Villenueve said in the letter.

Sterritt said technology has brought so much accessibility to movie-watching. He grew up in an era where you couldn’t watch a movie unless it was playing in the theater near where he lived, and once it was gone from the theater you couldn’t watch it unless it happened to play on TV.

People could watch the new 'Dune' in the comfort of their own home the day it came out, and most people will watch both Lynch’s and Villeneuve’s versions of “Dune” on smaller screens long after their theater runs are over.

Sterritt said for someone who spends prodigious amounts of time watching movies, he finds significantly fewer distractions in the comfort of his own home.

“Unexpected things confront you in the movie theater; the person behind you is talking or answering the phone, or rumbling popcorn and stuff like that,” he said.

Sterritt has a nice big screen in his living room and said he feels as though he is able to achieve something really close to the theatrical experience there.

COVID-19 and the great shutdown

If the movie distribution model had been veering away from theaters, COVID-19 gave it quite the push.

During the pandemic, theaters have seen a steep decline in attendance. In 2020 AMC lost $4.5 billion , and both Cinemark and AMC had to close all their theaters.

The preference for movie theaters has decreased since the start of the pandemic. A study done by Statista found that in November 2018, 28% of people strongly preferred to watch a movie for the first time in theaters and 15% strongly preferred streaming. In June 2020, those numbers practically flipped, with 14% saying that they strongly preferred the theater and 36% saying that they preferred streaming.

The impact of COVID-19 can't be understated when looking at these numbers. Statista said risk of infection was definitely a factor in consumers' decisions to attend or not attend theaters.

Streaming in general has gotten more popular. Another study done by Statista found that 52% of consumers in the U.S. had some form of streaming service in 2015. In 2021, that number increased by 26%, with 78% of consumers having at least one streaming service.

The Quorum , an organization that tracks information related to film marketing, published a study in November 2021 about people’s willingness to attend movie theaters. This study was an effort to determine who wasn’t going to the theaters anymore and what would make them more comfortable returning.

The study found that 33% of respondents have continued to go to the theaters despite COVID-19, even during the delta variant surge. On the other side, 8% of respondents said they stopped going to the theater altogether when the pandemic began. Of all respondents, whether currently attending the theater or not, 71% said they would be disappointed if theaters disappeared.

Along came a spider

Among those who would be disappointed to see theaters go is Tori Baker, President & CEO of the Salt Lake Film Society . Baker said the group's mission is to exhibit and preserve — and part of preserving means preserving the movie theater experience.

“We are preserving that communal experience where you come together, sit around the fireside, tell the story,” Baker said.

Baker said the aspect of being with a lot of other people is integral to that experience.

“It's about the coming together and the feeling of communal emotion,” Baker said. “That shared experience and the energy that happens in a room is super unique. You can possibly feel it with your partner on your couch for a little bit, but it's very different to feel it in a dark room with 200 strangers.”

Many people were able to experience that feeling of coming together with the release of “Spider-Man: No Way Home.”

Kaden Prows, a BYU student studying media arts, said watching “No Way Home” in a packed theater was one of his favorite movie-watching experiences ever.

“Had I just watched this movie on my own, I probably would’ve thought it was pretty good. It was a good movie,' he said. 'It’s not a perfect movie, but seeing it with that crowd made me like the movie a lot more than I would have had I just watched it in my home on a small screen.'

Prows, who went to see movies in theaters more than 25 times last year, said the atmosphere made the experience very special and unique. He said the coming together of a crowd to experience something they loved gave him the feeling of euphoria.

Other people share this sentiment about “Spider-Man: No Way Home.” Cheyanne Elton, a BYU student from San Diego studying media arts, said movies like 'No Way Home' become an event that you plan ahead for and they're something you want to experience with other people who like the same things you do.

Content wars

While it's impossible to know for sure what the future of movie theaters looks like, “Spider-Man: No Way Home” shows that people are still willing to go to the movies. The film made more than $1.5 billion globally , becoming one of the highest grossing movies of all time.

Kelly Loosli, an animation professor at BYU and co-creator of the school's animation program, said movie theaters are still important to filmmakers. She said most filmmakers still want their movies screened in theaters for the experience that it provides as well as for the financial benefits.

“Most of them grew up watching movies in the theater and they love that experience. More important than that is the financial impact. It used to be that a movie would play in the theater, then it would go to prime cable TV stations like HBO, it would be sold on DVDs or Blu-rays, then after that play on channels like NBC or CBS,” Loosli said.

Loosli also said streaming services have their upsides and that they allow for other types of movies to be made. Not a lot of romantic comedies or relationship-based films end up in theaters, but those types of films are still being made for streaming. However, Loosli said the problem with movies made for streaming is that a lot of those films are being made with less care and quality.

Baker said a lot of companies follow the “quantity over quality” model and that as long as a service pushes enough content onto their platform then subscribers will continue to pay the monthly fee. She said what sets theaters apart from the vast amount of streaming services is the quality.

“There's no way that anybody's going to invest in a theatrical release because it costs money to mount that, unless they stand behind their work and unless they've gone through this kind of rigid process,” she said.

Baker said a theatrical release is what every filmmaker shoots for, and getting that release says something about the filmmaker’s work. While there can be good content on streaming services, the movie theater is where you'll find the films that have made their way to the top.

The cultural impact or lack thereof

While “Spider-Man: No Way Home” was able to make a good amount of money, other films in 2021 weren’t as fortunate. Many films didn’t make back their budget, even critically successful films such as “The Last Duel” and DC’s “Suicide Squad.” Loosli said theaters may evolve to be houses for big-event films only.

“Streaming doesn't seem to have this same sort of 'wow' factor,” Loosli said. “We may just find that theatrical releases end up being for more unique films that can create this audience draw, and everything else goes to streaming.”

Loosli also said the recent Disney and Pixar movies that have been released on streaming haven’t thrilled him.

“Is that because they aren't as good or is that because the venue in which I watched them didn't create the same experience? I don't know. For me, seeing a movie I am excited to see in a theater is still my top priority,” he said.

Baker said she believes for a piece of media to achieve true cultural relevance it needs millions of eyeballs on it. She said a big streaming platform like Disney could have those millions of eyeballs, but the question is whether or not it will get those views in a certain time frame.

“It's probably the theatrical window that really is the magic sauce to cultural relevance,” she said. “There's something to that model that inherently allows that window to protect you being able to talk about that at the water cooler, so to speak, which is what it takes for cultural relevance anymore.”

While it's hard to know exactly how the distribution of movies can impact culture, Baker said she believes the impact movie theaters can have on people is immense.

“If you're going to the theater, you're going to have that experience at some point that either changes who you are or shapes your worldview,” she said.

To each their own

In referencing his comparison of the movie theater becoming like the opera, Sterritt said he was exaggerating and it's pretty clear people still want to go to the movies.

He himself goes every once in a while when there’s a movie he wants to see that isn't streaming, and he said he assumes his local theater sells a lot of Saturday night tickets. He said he wants theaters to be available for anyone who wants to go have that community experience, but he also doesn't think the future is going that direction.

“I think the future is going to be a hybrid, and I think there will be fewer movie theaters than there used to be. But I hope that there are still plenty of them,' Sterritt said. 'The main bulk of movie-watching will probably be done by people at home.'

His heart goes out to all the film proprietors losing tons of business. He said he wishes they weren't, but it doesn't give him any qualms to watch movies at home. He believes a lot of people feel the same way.

The Impact of Streaming Services on the Movie Industry

Transforming entertainment as we know it.

1) Disrupting Traditional Distribution Channels: Streaming services have disrupted the traditional distribution model of movies, challenged the dominance of theaters and altering the way films reach audiences. This shift has both positive and negative implications.

a) Theaters vs. Streaming: The rise of streaming services has led to a decline in theater attendance. According to the Motion Picture Association, global theater attendance dropped by 4% in 2021, partly due to the availability of films on streaming platforms. The convenience and affordability of streaming services have attracted viewers to opt for at-home entertainment.

b) Direct-to-Streaming Releases: Streaming services have provided an alternative distribution channel for filmmakers. Rather than navigating the challenges of securing theater releases, independent and niche films can find a platform and audience through streaming services. This has resulted in greater diversity and access to a broader range of content.

2) Changing Business Models: Streaming services have introduced new business models that challenge the traditional revenue streams of the movie industry. These changes come with their own set of benefits and challenges.

b) Revenue Sharing: Unlike traditional models where studios received a significant share of box office revenue, streaming services typically license content from studios and production companies. The revenue-sharing model in streaming can be less predictable and potentially less lucrative for content creators.

3) Impact on Filmmakers and Content Creation: The rise of streaming services has affected the film industry and content creators in several ways, influencing production decisions, creative freedom, and financial stability.

a) Changing Creative Landscape: Streaming platforms often prioritize serialized content and binge-worthy series over standalone films. As a result, filmmakers are increasingly drawn to long-form storytelling or episodic formats, impacting the diversity and scope of movie production.

b) Financial Challenges: Traditional funding models for films relied on theatrical releases and box office performance. Streaming platforms have different financial structures, impacting the revenue potential for filmmakers and potentially affecting the budgets and scale of their projects.

4) Challenges and Potential Solutions: While streaming services have brought about significant changes, challenges remain that need to be addressed to ensure a sustainable and thriving movie industry.

a) Revenue Transparency: Content creators and filmmakers often face challenges in understanding how revenue is generated and distributed by streaming platforms. Increased transparency in revenue sharing and reporting mechanisms would allow for better negotiations and a fairer distribution of profits.

b) Compensation for Creators: As streaming services continue to expand their libraries; creators are grappling with fair compensation for their work. Developing standardized royalty rates and ensuring equitable compensation for artists would help support the creation of high-quality content.

c) Supporting Independent Filmmakers: Streaming services can play a crucial role in supporting independent filmmakers and promoting diverse voices. Dedicated initiatives, funding opportunities, and curated sections for independent films on streaming platforms would encourage the production and discovery of unique content.

• Motion Picture Association. (2022). Theatrical and Home Entertainment Market Environment Report 2021. [Link: https://www.motionpictures.org/wp-content/uploads/2022/01/MPA_2021-Theatrical-and-Home-Entertainment-Market-Environment-Report.pdf ]
• Barnes, B. (2021). Streaming’s Once-Inevitable Future Is Suddenly in Doubt. The New York Times. [Link: https://www.nytimes.com/2021/07/30/business/media/streaming-movies-pandemic.html ]
• Gaudreau, J., & Akindele, A. (2021). The Impact of Streaming Services on the Entertainment Industry: A Case Study of Netflix. International Journal of Business and Applied Social Science, 7(7), 50-62.
• Smith, R. (2022). Disruption in the Film Industry: Streaming, Subscription, and Revenue Models. Journal of Film and Video, 74(3), 25-39.
• Madrigal, A. C. (2020). Streaming Killed the Cinema Star: The On-Demand Disruption of the Film and Television Industries. Television & New Media, 21(8), 907-923.

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The battle of YouTube, TV and Netflix: an empirical analysis of competition in audiovisual media markets

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• Published: 23 August 2021
• Volume 1 , article number  116 , ( 2021 )

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• Oliver Budzinski 1 ,
• Sophia Gaenssle 2 &
• Nadine Lindstädt-Dreusicke 3  

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The world of audiovisual online markets is rapidly changing. Not long ago, it was dominated by linear television, transmitted terrestrially, through cable networks or via satellite. Recently, streaming services such as Netflix, YouTube, Amazon Prime and others have emerged as new suppliers of audiovisual content. In this quickly changing industry, competition interrelations between such different formats such as traditional TV, videos on YouTube, and streaming via Netflix are subject to controversy. In particular, doubt is cast on services such as YouTube exerting competitive pressure on services such as Netflix and traditional TV. Based upon a survey with 2920 participants, we provide an empirical analysis of consumption behavior of audiovisual contents. Using descriptive and analytical statistics, including multiple equation models, we show that there are specific areas within audiovisual content markets, where YouTube exerts considerable competitive pressure on both Netflix and classic TV, for instance, through prime time video entertainment. However, our analysis yields differentiated results as we also identify areas, where competition intensity between different service types appear to be low, for instance, through daytime and regarding the intention to shorten waiting time.

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Introduction

The consumption of audiovisual content is rapidly changing. While traditional television (TV) still dominates the consumption of audiovisual contents of an older age audience, the younger ages already devote more time to consuming audiovisual contents via online streaming services and video portals, such as Netflix or YouTube (also referred to as video-on-demand; VoD). This development is also driven by an increased use of mobile devices, such as smartphones and tablets, allowing for considerably enhanced options of consuming audiovisual contents in not only the living room at home but also virtually everywhere and every time. User figures and viewing numbers from various countries show that particularly younger generations extensively use portals such as YouTube and watch online streaming services such as Netflix, whereas older age groups (50 + years) significantly less switch on these services (see, inter alia, for Germany Lindstädt-Dreusicke & Budzinski 2020 , for Scandinavia Audience Project 2019 , for the UK Fisher 2019 , and for the US Richter 2019 ). At the same time, traditional TV is not only relatively stronger with the older population (e.g., due to a lack of mobile consumption of non-TV contents, such as YouTube videos) but also in absolute terms. In 2019, the average daily viewing time of TV in the 50 + age groups amounted to 318 min per day, whereas the 30–49 years watched 176 min per day and the 14–29 years only 82 min per day. In addition, consumption time in the older age group slightly increased, whereas it decreased in the younger age clusters, particularly within the 30–49 years (− 18 min per day compared to previous year) (Statista 2020 ). Thus, the figures do not allow disentangling how much of the dynamics results from complementary services in the mobile online world and how much from viewers abandoning traditional TV and switching to various VoD formats.

The currently relevant online services differ in terms of business models from both traditional TV and from each other. In terms of business models, advertised-financed streaming services (AVoD; e.g., YouTube) can be distinguished from paid-for (by users) streaming services (PVoD; e.g., Netflix) (Lindstädt-Dreusicke & Budzinski 2020 ). While it is possible that streaming services mix these models (i.e., hybrid models, such as Spotify is doing in respect to audio streaming services), at the time of our empirical analysis (winter 2018/19), the relevant suppliers in the German market were predominantly devoted to one of the two models. Footnote 1 Obviously, business models will develop and change along with the high dynamics of the markets in question. Therefore, for the purpose of our analysis, we decided to directly pick two of the most prominent online services for the consumption of audiovisual contents, namely YouTube and Netflix, and compare them to traditional TV (the latter with almost no dynamics regarding the main providers; Budzinski & Lindstädt-Dreusicke 2020 ). While YouTube was and remains an obvious choice in the AVoD arena, choice is not that obvious regarding PVoD-services. According to the Audience Project ( 2019 ), Netflix is taking the leading position among the most used streaming and downloading services for the US, UK, Germany, Denmark, Sweden and Norway. For the US and Germany, Netflix is followed by Amazon Prime Video, whereas in the UK the BBC iPlayer takes the second position from Amazon Prime Video. In the Scandinavian countries, by contrast, Amazon Prime Video plays a smaller role. Virtually all available market share figures assume separate markets for services, such as YouTube and PVoD streaming services (thus, ignoring YouTube when calculating shares for Netflix and co). As of October 2019, market shares according to subscription figures in Germany display Amazon Prime Video (47%) leading from Netflix (36%) with other providers clearly lacking behind (e.g., Sky with 5.9%) (Herrmann 2019 ). However, Amazon ties its Prime subscription to a bundle of different services (e.g., free shipping, next day delivery, music streaming, video streaming), thus, it is not clear how many people exactly use Amazons VoD offer (El Khaoudi 2018 ). Based on daily usage figures, Netflix is leading the market in Germany, followed by Amazon Prime Video (Herrmann 2019 ).

Despite the differences in content, business models and treatment by available empirical studies, at the end of the day, all of TV, AVoD and PVoD are offering audiovisual contents to the consumers. In the light of the increasing importance of online streaming services vis-à-vis traditional TV, therefore, the questions arise whether relevant competitive pressure between the services (in our study represented by YouTube, Netflix, TV) exists. There are some empirical studies that take a closer look at the comparison of traditional audiovisual content (i.e., TV) and audiovisual on-demand services. While previous studies researched the relationship between PVoD and traditional TV (Shelton et al. 2016 ; Prince & Greenstein 2017 ; McKenzie et al. 2019 ), AVoD services à la YouTube were not considered. By contrast, some of them distinguish different types of traditional TV (by transmission (free-to-air, cable, satellite) and/or by payment model) or include cinemas—something we are not doing due to our focus on VOD types. In Chen ( 2019 ) and Fudurić et al. ( 2020 ), AVoD such as Hulu (partially including advertising) or YouTube is included in the OTT reflection; however, AVoD and PVoD platforms are not explicitly differentiated. Furthermore, Fudurić et al. ( 2020 ) use household level data, thus, do not explicitly consider individual consumption of audiovisual content when examining the effects of OTT on cable TV cord shaving behavior. Spilker et al. ( 2020 ), by contrast, focus on a comparison of Twitch and traditional TV, thus, AVoD is considered; however, PVoD services are not included in the analysis. In sum, none of the studies mentioned above, thus, differentiate specifically between TV, PVOD and AVoD elaborating the relationship between these three different forms of audiovisual content provision for audiences. Our research article contributes to tackling this research gap. For doing so, we specify the following research questions: Does the intensity of competitive pressure between services depend on specific characteristics of demand, i.e., (1) for whom (e.g., age groups), (2) for what purposes (e.g., genre, motivation/intention), and (3) during what time of the day (e.g., prime time)? To tackle our research questions, we empirically analyze the audiovisual viewing patters by employing an econometric analysis based on a quantitative online survey in Germany. With a unique data set of 2920 participants, we are able to provide differentiated results on age groups, choices through different times of day and consumption differences regarding genres and intentions. The rich data set provides wide information on stated and pseudo-revealed preferences Footnote 2 of respondents, i.e., direct answers stating the respondent’s opinion and preferences in agreement with self-perception vs. indirect questions revealing preferences and ideas the respondent might not directly be aware of. We are able to show that those preferences diverge. While consumers state that YouTube-style AVoD does not represent an alternative to Netflix-style PVoD for them, the consumption habits described by the respondents indicate the opposite for prime-time consumption. In general, the results support the notion that consumers with limited time capacities need to decide between competing ways to get entertained. Especially the decision of evening and prime-time entertainment is not trivial and shows that consumers do not clearly prefer one distinctive medium, displaying a strong competitive relation. In contrast, consumption of specific genres, for instance, sports or news hints at less competitive relations.

The paper is organized as follows: “ Theory: competition among different channels of audiovisual content ” summarizes the theoretical background. Then, “ Empirical analysis: methodology and data ” explains the methodology of sampling and analysis and “ Empirical analysis: results and discussion ” presents the empirical analysis. Based upon the results, “ Summary and limitations ” discusses implications and “ Conclusion and implications ” concludes.

Theory: competition among different channels of audiovisual content

The ongoing process of digitization and the spread of broadband internet technology considerably increased the option for consumers to watch moving audiovisual contents. That traditional TV—irrespective of its transmission media (terrestrial, cable, satellite, online, etc.)—is now facing video-on-demand services changes the competitive landscape. This may be good news, since in many national television markets (including Germany), concentration and (a lack of) competition have been continuous concerns (Budzinski & Wacker 2007 ; Bundeskartellamt 2011a , 2011b , 2015 ; OFCOM 2018 ). However, the competitive interrelations between TV and VoD as well as among different types of VoD services are subject to controversial discussion Footnote 3 (and as mentioned in “ Introduction ”, most empirical studies ignore YouTube when they discuss VoD markets). Thus, what are the theoretical reasonings about factors influencing the competitive interrelation of different channels transmitting audiovisual contents (TV, different types of VoD)?

Fundamental differences in content

Fundamental differences in the type of content that is broadcasted may limit the intensity of competition between Netflix, YouTube, and TV. An often-raised objection claims a service such as YouTube (AVoD) does not compete with the likes of traditional TV and PVoDs, such as Netflix, because its content is predominantly non-professional and/or non-commercial (inter alia, Bruns 2008 ; Ritzer & Jurgenson 2010 ; Bundeskartellamt 2011a , 2015 ; Dennhardt 2014 ; Fuchs 2014 ). According to this view, YouTube mainly represents a social media platform, where users upload content for other users (cat videos, fail videos, etc.), i.e., a sort of user-exchange of contents, and professional contents from business companies are in the clear minority. The nature of YouTube’s early ‘user generated content’ (from users for users) has changed a lot and initial ‘private’ uploaders professionalized towards being active content providers, offering regular video uploads regarding specific topics according to the channel’s media concept (Döring 2014 ; Budzinski and Gaenssle 2020 ). Notwithstanding the still existing type of non-professional content, this trend of professionalization points towards the significant turnovers and revenues that content providers such as so-called social media stars Footnote 4 earn through participation on YouTube’s advertisement revenues as well as through product placements—with the latter further emphasizing the commercial nature of the content supply (Budzinski and Gaenssle 2020 ; Gaenssle and Budzinski 2021 ). Nowadays, a significant share, if not most of the views on YouTube, fall on commercial content, most of which is professionally produced; the most popular 20% receive 97% of views (Ding et al. 2011 ) and 10–30% of videos have fewer than ten views (Chowdhury & Makaroff 2013 ).

A related aspect refers to content differences in terms of the extent of exclusive and/or original content. While this used to be a domain of traditional television, Netflix and Amazon Prime Video for instance, as well as new players, such as Disney + and Apple TV + , aim at attracting their audience especially with original (own produced) or exclusive content (e.g., Netflix with House of Cards or Orange is the New Black ) (inter alia, Aguiar and Waldfogel 2018 ; Benes 2019 ).

Content differences corresponding to different purposes of usage

Content differences between the different types of services that relate to different consumption purposes represent a second aspect. While YouTube is known to predominantly provide shorter videos (e.g., short clips, music videos & social media star entertainment), both Netflix and TV focus on longer pieces, such as movies, series, and shows. These content differences may go along with different ways of consumption. For quick information (specific tutorials/help, etc.) or social network elements (i.e., follow stars or friends, sharing content), YouTube meets the consumers’ preferences, whereas for full-length video content the choice falls on the other types of services. Therefore, YouTube may be more relevant for purposes, such as bypassing waiting or travelling times, covering smaller breaks and shorter entertainment spaces, etc., whereas PVoDs, such as Netflix and TV, are preferred for filling an evening of entertainment or a free Sunday afternoon, for instance. As such, the two service types would rather complement each other than compete with each other. These differences in contents and consumption could reflect in service usages different times of day: Netflix and TV should be the prime-time competitors according to this view, whereas YouTube is more a media for “in-between” moments throughout the rest of the day. However, with the professionalization of AVoD content, average video length is developing towards traditional video formats. A study conducted by the search engine Pex (Turek 2019 ) shows that average YouTube videos are 11.7 min long (December 2018), with popular categories reaching up to 25 min on average (gaming 24.7 min; film & animation 19.2 min). Moreover, serial consumption of videos and so-called binge watching (Rubenking et al. 2018 ; Gaenssle & Kunz-Kaltenhäuser 2020 ) allows consumers to watch hours of video content without interruption—a phenomenon that is further fueled by individualized recommendation systems and auto-play modes (for instance, for music videos). Footnote 5 Independent of the single video length, this may result in hours of successive consumption; accumulating to a total consumption length, which is easily comparable to full-length movies. These developments show converging trends and increasing comparability of services.

Linearity, devices, and social network elements

VoD, in general, differs from TV in that there is no fixed program schedule as a take-it-or-leave offer for consumers. Instead, VoD consumers can watch all available contents whenever they want and compile their “program” by themselves. The media literature calls the schedule-bound service linear and the on-demand type non-linear (inter alia, Berman et al. 2009 ; Kazakova & Cauberghe 2013 ; Steemers 2014 ; van den Bulck & Enli 2014 ; Simons 2015 ; Enli & Syvertsen 2016 ). A further difference may relate to the device of usage. One expects consumers of traditional television programs or Netflix (PVoD) to prefer large television screens, while YouTube-style AVoD services are mostly watched on mobile devices (laptops, tablets and, particularly, smartphones). However, due to the possibility of downloading content to mobile devices and watching it ‘on the road’, consumers may start to watch their favorite shows—regardless of the original service (AVoD, PVoD or TV)—while, e.g., traveling to work. Eventually, social networking elements, such as commenting, sharing or liking content, may represent a differentiator. This social media function is usually not possible for linear TV, although broadcasters recently started to increase audience engagement, e.g., in live shows with audience questions or the possibility of writing (WhatsApp) messages. Nevertheless, due to the nature of the non-linear availability of content, audience ratings, comments, and shares are possible on AVoD and PVoD. Especially AVoD services such as YouTube or Twitch entail networking elements and active ‘below video commenting behavior’. However, former non-digital players in the market also adapt to new possibilities and try to increase audience engagement.

The economics of attention

Overall, the different services seem to converge and try to use all possible ways to increase the time recipients spent consuming their content. Attention may be a scarce resource and, in the face of information overflow due to omnipresent mobile access to the internet, a relevant one for online content consumption (Falkinger 2008 ; Anderson and da Palma 2012 ; Evans 2013 ; Boik et al. 2017 ; Gaenssle 2021 ). According to the economics of attention, all content providers compete for the scarce attention of the users who can spend every minute of their attention only once. Therefore, if a user opts for watching YouTube videos, she cannot spend this attention to a Netflix serial anymore and vice versa (opportunity costs). Given that many users spend a relevant time of any day for working, sleeping, and other activities (childcare, sports, etc.), competition for the remaining time for watching audiovisual online content may be intense. Furthermore, even though there are differences in detail, a large part of content and consumption regarding all three types of services is about entertainment and, thus, referring to the same underlying intention or want of the consumer.

From this theoretical perspective, the case for TV and Netflix-style services being in competition with each other appears to be straightforward. In a way, services such as Netflix may be viewed to take the place of TV, entailing the advantages of traditional TV and adding the luxury to be non-linear, so that users do not depend on a given program schedule anymore, but can cherry pick their times and contents (Tefertiller 2018 ; Budzinski and Lindstädt-Dreusicke 2020 ; Fudurić et al. 2020 ). Therefore, it may mainly be a generation effect separating the two types of services with older generations just being slower to adapt to a superior new good (Lindstädt-Dreusicke and Budzinski 2020 ).

However, while enhanced choice options will mostly benefit consumers’ preferences, there can be exceptions to that. Choosing does require investing cognitive capacity and in some situations in life—like the end of an exhausting day, where someone just looks for some relaxing entertainment before going to sleep or background entertainment without active engagement (like radio consumption is often done)—users may not want to spend cognitive resources on low-involvement routine consumption (Vanberg 2002 ; Budzinski 2003 ). Then, a linear service such as TV may be superior, since it demands less cognitive engagement and decision effort. Footnote 6 Moreover, regular television consumers might enjoy the feeling of being connected to society, watching what other people nationwide are also watching, i.e., networking and commonality effects as well as cultural inclusion by, e.g., national popular TV shows. Finally, the bundling of information and entertainment, e.g., news and prime-time movie as a bundle, may be valued by consumers, and be very tiresome to self-compile (or even impossible due to lack of supply) on PVoD and AVoD.

Notwithstanding, the newer services entail a tool that may serve a similar purpose. The algorithm-based recommendation service of Netflix, YouTube and co. may substitute for the linear program schedule in cases of routine and low-involvement consumption. Based on individual data, recommender systems provide content suggestions for (indecisive) consumers. To simplify the demand-process and lower the cost of active consumption decisions, services use auto-play modes (immediately starting the next video), content suggestions, trailers, etc. (see for a detailed analysis Budzinski et al. 2021 ).

Altogether, the theoretical reasoning does not yield a clear picture and, therefore, emphasizes the relevance of an empirical analysis. This empirical analysis must consider that the intensity of competition may vary with factors, such as age, intention, genre, or time of day.

Empirical analysis: methodology and data

Sampling and data.

The data used for the empirical analysis originates from an online survey conducted from November 2018 until February 2019 in Germany (by Ilmenau University of Technology and the Business School at Pforzheim University). It is an academically motivated study, independent of external funding or other heteronomous interests. The standardized quantitative online questionnaire was specifically designed to match the research questions mentioned above. We attracted 3882 registered visits, of whom 3277 started the questionnaire, to eventually reach N  = 2920 valid finishers. The students, who were responsible for the sampling, executed the recruitment and invitations to the questionnaire, i.e., spreading it mainly among their peers (young people and older relatives). The survey participation was predominantly voluntarily, although driven by social obligations towards the students conducting it. At Pforzheim University ‘StudiQUEST’ a panel of students and alumni was involved. Moreover, the invitation to the questionnaire was placed at the landing page of ‘serienjunkies.de’ for a week in January 2019. All parts of Germany are represented within the sample; however, the states of origin are over-represented (with 650 from Ilmenau and surrounding, and 661 from Pforzheim and surrounding). The average age of respondents is 31.55 years (min: 10; max: 83); with 48.15% male, 50.65% female, 1.2% ‘other’. Since the survey was conducted in a university environment, the sample is biased towards a young, highly educated, low-income group; 56.4% have an income lower than EUR 1,500. Footnote 7 The educational level is displayed in Table 1 and shows that 29.62% have a university entrance qualification and 42.5% a university degree.

The representativeness of the sample cannot be guaranteed for all relevant aspects of the analysis and cannot be compared to well-structured cluster sampling. Notwithstanding, given the sample size, we find both variance and randomness to meet statistical requirements. It provides information on stated and pseudo-revealed preferences of the participants and if/how, they diverge. Moreover, the over-sampling within young age groups can be used in favor of the analysis, as especially young adults use VoD offers. Footnote 8 For the analysis of competition between online services more information on consumers, who know and actually use all services, is very valuable. These trends will intensify over time with growing numbers of young generations and changing consumption habits.

Data analysis and variables

The questionnaire comprises of 13 content-related separate questions (excluding demographic questions, such as age, gender, etc.). We use direct questions to show stated preferences in descriptive statistics (see 4.1). Two questions in the survey feature item batteries (six items each) of attitude measurement with five-point Likert scales (1 = disagree to 5 = agree; 6 = no response). In accordance with findings of Revilla et al. ( 2014 ), who found that five-point scales are statistically equivalent (in terms of validity and efficiency) to seven-point or larger scales, we find five-points scales intuitive for respondents and analysis.

One questions asks for the frequency of media usage and another one for the duration of usage. To answer our research questions, the consumption of video content via the different services is crucial. Which service is used at what time and how much content is consumed? The frequency (i.e., how often consumers use the service) and the duration (i.e., how much time they spend consuming video content) are relevant to analyze the extent of usage and importance of the respective service. Therefore, we are interested in the consumption intensity depending on the respective type of media service i = {AVoD; PVoD; TV} and construct a pseudo-metric dependent variable for the analytical analysis:

If services compete for the consumer’s attention, it is a question of time allocation. The intensity of usage represents the time spend on consumption, as pictured in Fig.  1 , the consumer can either spent more time within one sitting (B) or shorter sittings with higher frequency (A). The exposure to content and time allocated to consumption is the same in both cases.

Consumption intensity of service i

The frequency of usage is measured on a seven-point scale from high to low frequency (6 = several times daily; 0 = never) for each service, supplemented by the option ‘no response’. The duration of video consumption in one sitting, i.e., how long without taking a break or switching activity, was also measured for each service separately. By moving a regulator on a scale from ‘0’ to ‘ > 3 h’ (in seven steps), the respondents could state the length of one average sitting. The multiplication of the variables gives us a range of 25 points (0 = never, 24 = several times daily, more than three hours). The intensity of the usage can thus be expressed by the new dependent variable on a range from non-users (never), over medium-users (e.g., monthly, on average one hour) to heavy-users (several times daily, more than three hours).

Four independent variables are used for the analysis: (1) intention of usage [entertainment, shorten waiting time, stimulate knowledge, and personal motivation (i.e., career/health)]; (2) genre (feature film, documentary, series, tutorial, sports, news, comedy, and music videos); (3) time of day (of service i ; noon, afternoon, and evening Footnote 9 ); and (4) information on individuals j (age category, gender, and education).

Since we are not only interested in the factors explaining the intensity of consumption, but the interaction between the different services, i.e., competitive relations between YouTube, Netflix and TV, we decide to perform a seemingly unrelated regression estimation (SURE) (Zellner 1962 , 1963 ; Zellner and Huang 1962 ). This method is commonly used for supply and demand models. Our model consists of three regression estimations, each with its own dependent variable (for the respective services i ). While every equation can be seen as an independent linear regression and can be estimated separately, error terms are expected to be correlated across equations. As such, it is a system of linear equations with error terms that are correlated across equations for a given individual but not across individuals. When the models do not have the same set of independent variables and error terms are correlated, SURE can lead to more efficient results than separate OLS (ordinary least square) estimations. Moreover, it is suitable to perform joint tests.

The model consists of i = {AVoD; PVoD; TV} linear regression equations for \(j=1,\ldots, N\) individuals. The i th equation for individual j is

Stacking all observations, the model for the i th equation is

Here, the error terms u are allowed to be correlated to estimate a full variance–covariance matrix of coefficients.

Empirical analysis: results and discussion

Descriptive statistics and results, for whom (rq-i).

To understand the motives of consumers and their personal perception, we directly ask them on their agreement on a five-point Likert scale. Among the questions of (dis-)agreement, we asked if respondents agreed that (a) YouTube (AVoD) is an alternative to Netflix (PVoD), (b) Netflix (PVoD) is an alternative to TV, and (c) YouTube (AVoD) is an alternative to Netflix (PVoD). In doing so, consumers are directly asked for their opinion and state their preferences for video consumption. Moreover, a detailed presentation of answers within the different age groups reveals interesting results on the sub-question (i) of our research question “for whom”.

The answers to the question whether YouTube-style AVoD is an alternative for TV are rather dichotomous. In total 38.59% tend to disagree, 12.71% are neutral, and 48.05% tend to agree (0.65% ‘no response’). Looking at the age groups the difference is apparent with 38.89% of people older than 60 years strongly disagreeing and 49.04% younger than 19 years strongly agreeing (Fig.  2 ). The results show deep differences between far end age groups and their consumption behavior.

When it comes to Netflix-style PVoD vs. TV, the answers are much more homogenous, since most consumers in our sample tend to perceive them as close alternatives and strongly agree (Fig.  3 ). Again, only those older than 60 years express a strong opinion against PVoD being an alternative to TV.

Lastly, the relationship between YouTube-style AVoD and Netflix-style PVoD is shown in Fig.  4 . There is no considerable difference between age groups and the results are comparatively heterogeneous. In total more respondents seem to disagree with AVoD and PVoD serving a similar purpose; 58% disagreement, 15.55% neutral, 22.91% agreement (7.74% of which strongly), and 3.46% ‘no response’. Thus, in our sample, considerably fewer people think of YouTube as an alternative to watching Netflix (about 23%) than to watching TV (about 48%). Still, it is quite surprising that almost 23% of respondents within the sample agree to AVoD and PVoD being alternatives for one another.

AVoD-TV alternatives

PVoD-TV alternatives

AVoD–PVoD alternatives

In addition to the Figs. 2, 3, 4, we performed mean comparison tests to check significant differences between the statements. The strongest agreement (mean 4.40) is PVoD-TV, i.e., according to the participants perception, PVoD is the best alternative to TV. Moreover, on a five-point scale 4.40 means that most people agree to this statement. This is followed by AVoD-TV alternative with a mean at 3.22—still more than neutral. Whereas, AVoD-PVoD, with a mean of 2.48, is overall rated as least good alternatives. The T tests (mean comparison) show that all means are significantly different from one another. It seems that the relatively young sample tends to substitute AVoD and PVoD for TV. Rather than PVoD for AVoD.

For which purposes (RQ-ii)?

The second sub-question (ii) “for which purposes” can be analyzed by looking at the genres which are consumed. It can be expected that competition is higher for genres which are intensely used on all services. Figure  5 shows the total number of answers per service and genre, i.e., participants stated if they use the respective service to watch for example feature films. 2242 participants stated that they watch feature films on PVoD, only 216 on AVoD and 1562 on TV. Series are strongly preferred on PVoD. Expectedly, tutorials and music are mostly watched on AVoD, such as YouTube. Overall, feature films are most popular (in total 4020) followed by series (in total 3895). Not as popular, but watched on all three services, are documentaries. A more in-depth analysis, using regression estimations, shows further insights on consumer intentions and genre (see Sect. 4.2).

Usage of genre per service

During what time of the day (RQ-iii)

Most consumers spend their evening time to consume video content, apparently actively choosing between the respective services. Figure  5 displays daytimes and total number of respondents using the service at that time (multiple answers possible). Note that n  = 2,920. In other words, more than 70% of the respondents in our sample indicate that they use all three services (YouTube, Netflix, TV) for evening video consumption. Therefore, while consumers consider the services to be different, they still choose between them as alternatives to consume audiovisual contents in the evening. Consequently, AVoD, PVoD and TV seem to compete for the consumers’ attention during peak times of consumption and standard leisure time (prime-time entertainment), whereas things look different at other times of day (Fig. 6 ).

Daytime usage

Summing up, the descriptive results show that there is no strict line between the different services, although most consumers agree to PVoD being an alternative for TV. Among younger generations AVoD seems to be a better alternative to TV than for older generations. The results for PVoD and AVoD are mixed. Consumers state to use the services for different reasons, yet, when it comes to the time they spend on consumption, the services seem to be in close competition for the consumers attention during prime time in the evening (but not at other times during the day). Altogether, the descriptive results are not fully conclusive. A detailed analysis with more sophisticated methods is necessary to verify the results.

Econometric analysis and results

By the means of seemingly unrelated regression estimations (SURE model), we analyze the influence of different intentions, genres, times of day, and individual characteristics (age, education, gender) on consumption intensity of (1) AVoD, (2) PVoD, and (3) TV. Table 2 displays the results for one model, the three different dependent variables (1–3) in the columns next to each other. Footnote 10 Due to filter questions, only N  = 2333 observations are taken into account. R-squared shows the proportion of variance explained by the independent variables. It is highest for model 1, which shows that the explanatory power is best for AVoD.

Results intention: We asked for the different intentions that consumers have for watching video content. While getting entertained is one of the main intentions, the results are not significant in our model, approximately due to lack of variance in the answers. However, other results show significant coefficients. At the first glance surprisingly, ‘shorten waiting time’ is significantly positive for Netflix-style PVoD, while it is not for YouTube-style AVoD. This appears to be counterintuitive, because based on the theoretical reasoning (see Sect. 2), one would expect a lot of mobile and ‘on the road’ usage of YouTube-style services. Yet, an explanation could be that many users download videos from Netflix or Amazon and watch them while traveling on the bus/train etc. Mobile internet connection in Germany is often limited (Briglauer et al. 2019 ), so traveling to work or long distances might lead through “dead spots” without sufficient signal strength. Regarding ‘stimulating knowledge’, research and learning are closely connected to YouTube usage, which can explain the positive results for ‘stimulating knowledge’ on AVoD. In that regard, PVoD and TV do not seem to compete with YouTube & Co, as the results for those services are significantly negative. The same is true for ‘motivation’ and TV. Consumers who seek motivation (e.g., health or career) use YouTube-like services, whereas the coefficient for TV is negative regarding this aspect.

Results genre: ‘feature films’ are significantly positive for the intensity of usage of both Netflix and TV. Therefore, it can be expected that the services compete for consumer attention when they are choosing full-length feature films. However, the preferences for ‘series’ on Netflix-style PVoD are obvious. ‘Sports’ are significantly negative on AVoD, whereas significantly positive on TV, which could be due to lack of supply on YouTube & Co rather than lack of demand. This is similar to ‘news’ and the opposite direction to ‘music videos’. ‘Comedy’ is positive for YouTube-style AVoD consumption intensity. While comedy can also be found in traditional television and on PVoD, participants in our study seem to prefer AVoD channels.

Time of day: Interestingly, and in accordance with descriptive results, there seems to be intensive competition for prime-time consumption. When asking the participants about the time of consumption during the day, multiple answers for the different services were possible. There are no significant results for the time around noon. On one hand, the preference to watch PVoD in the afternoon increases the probability of AVoD consumption intensity. On the other hand, in the evening the PVoD consumption has negative impact on AVoD consumption. The other way around, AVoD evening preferences negatively influence PVoD consumption. Moreover, prime-time television choices negatively affect both AVoD and PVoD. These analytical results confirm the descriptive results and show that services compete for the consumers’ attention—despite differing contents. If consumers simply want to get entertained, they seem to choose among all of the three services in their free time (primarily prime time in the evening).

Results age categories: the base group for age is 10–19 years. The negative coefficients show that all older age groups use relatively less YouTube-style AVoD, which thus is the “youngest” service among the three. There are no statistically significant results for Netflix-style PVoD, except for the group older than 60 years, who generally do not prefer to watch VoD services. TV shows opposing effects, since expectably older age groups tend to watch more television than younger ones. Thus, our results match other, more representative studies (summarized in Sect. 1) with respect to generation effects, increasing confidence in the results of our study which is not that representative but digs deeper into the topic.

In summary, the results of the empirical analysis show that (1) services compete for prime-time attention of consumers, supporting the descriptive findings (see 4.1); (2) show that ‘intention’ and preferred ‘genre’ mostly vary between services, yet, consumers like to get entertained by all of them, Footnote 11 and (3) concerning age groups, younger people actively choose AVoD channels, supporting the results of more representative studies. In the light of the ongoing dynamic development of online VoD service-offerings, competition between services seems likely to increase in the course of time.

Summary and limitations

Theoretical reasoning suggests that types of services that are more similar to each other should stand in closer competition than more dissimilar services (see Sect. 2). Closely connected research on PVoD streaming vs. TV shows substitutive characteristics between the two services (McKenzie et al. 2019 ; Fudurić et al. 2020 ). Given the state of the German market at the time of the survey, this implies that contentwise TV and PVoD à la Netflix are close competitors. While YouTube as the main AVoD outlet should be less of an alternative to TV, the AVoD–PVoD interrelation may be expected somewhere in-between as they share the non-linear character despite of content differences. In line with previously published studies (see above), our respondents state their views, when asked directly, in roughly that manner (see Sect. 4.1.1). Since previous studies did not include all three types (AVoD, PVoD, TV) but usually analyzed ‘only’ two of them, our analysis adds the important insight that the result ‘Netflix-style VoD is a closer competitor to TV than YouTube-style AVoD’ rests on middle-age generations, whereas for the younger generation YouTube is a substitute for TV. However, the design of our study allows to look beyond the pure statements, which yields more differentiated results.

Some results of the econometric analysis in fact support the notion of limited competition between YouTube and TV, e.g., the intention to stimulate knowledge, or finding personal motivation in video content. In both cases respondents favor AVoD and not TV. Confirming insights of studies by Chen ( 2019 ) and Fuduric et al. (2020), genres such as sports and news favor TV. There is also a strong preference for Netflix-style PVoD when it comes to serial content (in line with McKenzie et al. 2019 ), thus, competitive relations seem rather weak in this case in our sample. Therefore, we cannot confirm results from Shelton et al. ( 2016 ) and Prince & Greenstein ( 2017 ) in the U.S. market, showing little influence of content categories.

The analytical analysis further shows that the intensity of competition between the three types of services is not so clear at daytime. Here, consumers appear to use them not so much as alternatives. This is further supported by the results for the intention to bypass “waiting time”, where our respondents clearly prefer one type of service—and not the one that theory would suggest: instead of YouTube they prefer Netflix here. Different times of day and intentions are, to the best of our knowledge, not analyzed in previous studies. Not surprisingly, older generations strongly stick to traditional television, which merely points to a time-lag in the competition of newer technology-based services and is in line with previous studies (Prince and Greenstein 2017 ).

However, our empirical analysis shows that roughly 48% of the respondents view YouTube to be an alternative for TV (ranging from almost 20% among the over 60 years to almost 70% from the below 20 years; see Sect. 4.1)—despite the strong differences in content. Notably, a strong minority of approx. 39% disagrees (ranging from more than 65% in the oldest to less than 20% in the youngest age group). Since our sample is biased towards younger and well-educated respondents, it can be expected that the disagreement figure may be higher in a more representative sample—for now, as in the course of time, the development will trend towards our results (emphasizing the now younger generations). Notwithstanding, the results make it hard to argue that YouTube is not exerting competitive pressure on traditional TV—and as such goes beyond much of the existing literature (see Sects. 1 and 2). Our results expectably indicate to Netflix-type VoD services and TV being close competitors, whereas the picture for YouTube vs. Netflix is not so clear with 58% stating the view that they do not represent alternatives and almost 23% stating they do (without significant difference among the age groups; see Sect. 4.1). However, at the same time, asked what medium they consume at prime-time, for each type of service 70.6% or more of the respondents confirmed consumption. Footnote 12 The consequent indication that all three services compete for prime-time attention is confirmed by analytical econometrics (see Sect. 4.2). Thus, actual behavior (pseudo-revealed preferences through indirect questions) appears to show closer competition among the service types than (more directly) stated preferences. Both results—strong competition for prime-time attention and notable differences between stated and revealed preferences—are unique to our study and are not analyzed in previous studies.

Altogether, competitive pressure among Netflix, traditional TV and YouTube cannot be ignored when considering the development of markets for audiovisual contents—be it for competition policy or other purposes. Particularly, excluding YouTube from (analyses of) TV and/or VoD markets appears to inappropriate in this respect as it exerts considerable competition on the other two (types of) services. Especially for younger generations the competition for attention appears to be already strong today and will, furthermore, intensify in the course of time.

However, there are some limitations and caveats we need to consider. Some contents are not present on some type of services, for instance, hardly any contemporary music videos are nowadays broadcasted on TV and Netflix-style PVoD in Germany. Footnote 13 The same is true for news on Netflix and co. This raises the questions: (i) does available content drive the answer in our survey or (ii) does the consumption behavior/preferences we measure explain why there is virtually no content offering? Unfortunately, we cannot discriminate between these two possible explanations with our data. Still, this limitation is only relevant for some genre categories. Furthermore, anecdotic evidence for contemporary music videos shows that there was a considerable offer on TV (MTV, VIVA, etc.) until YouTube came up and only then the offer in TV started to vanish. This indicates that the non-offer may be a result of competition and, thus, towards explanation (ii). If this was valid, our results tend to underestimate the competitive pressure among the service types.

With respect to news-style content, the results may reflect a dependence on the (perceived) quality of this type of content, about which information are not available in our data set. Alternatively, the large-scale public service broadcaster landscape in Germany may already provide the overall market volume for audiovisual news contents, thus leaving no space for competition from newly emerging VoD-services, in particular given the fact that public service broadcasters (PSB) in Germany can subsidize their news coverage by revenues from a tax-like fee. Here, the demographic bias towards high educated respondents in our sample may influence the results, since highly educated people are said to be more likely to value high-level (PSB-) news contents.

Our results relate to the market offerings as they were in Germany at the time of the survey. For instance, the PVoD-style YouTube Premium was not relevant in Germany at the time of the survey (and still does not rack up considerable market shares at the time of writing) but may change competitive interrelations in the market in the future—as may other further dynamics. In particular, the entry of an advertising-financed Netflix-like service (contents such as Netflix and revenue structure such as free commercial TV) would represent a very different AVoD from YouTube and, thus, might lead to different results. In general, the high market dynamics are likely to continue and may bring about a convergence of services with some players attempting to provide a one-stop shop for audiovisual consumption (e.g., Alphabet adding YouTube stories à la Instagram, video rental à la Amazon and premium subscription à la Netflix to its core AVoD business). These dynamics may further change competitive interrelations as well. Based on our analysis, we predict that further dynamics further increase the intensity of competition among services.

Finally, our results can only be seen as ‘indication’, since the sample is not representative in size, nature and scope. We have no data on ‘real’ consumption behavior, but personal statements about and estimations of consumption habits. It would be interesting to compare these results with data from YouTube or Netflix to see if actual consumption behavior and self-reporting match. However, since data is of major importance in that market and represents a relevant business secret, a publication by the companies cannot be expected. Future and complementary research might still find ways to track actual consumer behavior and analyze the (changing) dynamics in the field. Naturally, since it is the first empirical study on competition in VoD markets, follow-up research and re-sampling are necessary to verify results.

Conclusion and implications

Based upon our theoretical reasoning and our empirical analysis, we are able to provide answers for and insights into our research questions. With respect to our general research question whether relevant competitive pressure between the services (in our study represented by YouTube, Netflix, TV) exists, our analysis demonstrates that all three (types of) services stand in competition with each other. Moreover, our rich data set allows us to look deeper into the matter and specify the general research question by, more precisely, inquiring whether the intensity of competitive pressure depends on specific characteristics of demand, i.e., (i) for whom (e.g., age groups); (ii) during what time of the day (e.g., prime-time); and (iii) for what purposes (e.g., genre, motivation/intention).

Regarding age groups, the battle between YouTube, Netflix and traditional TV mainly takes place regarding the younger generations for whom these services represent close alternatives, whereas older generations remain more focused on TV. This also hints at further increasing competitive pressure among the services in the course of time. While these results confirm less detailed but samplewise more representative studies, our result regarding different times of day represent novel insights. Our analysis shows that all three services strongly compete for prime-time consumption, i.e., the vast majority of consumers actively chooses between all three types when it comes to watch video content in the evening. However, our results for other times of day are mixed and insignificant. With respect to consumer intentions, the respondents in our sample prefer Netflix over the other two when it comes to “shortening waiting time”, which represents a counterintuitive result to the expectation that YouTube would dominate this intention category.

Our analysis yields important implications for the effects of cooperations, alliances, mergers and acquisitions in audiovisual content markets. It is not sufficient to point to differences in content or an alleged (and, however, defined) professionalism of content producers to assume a lack of competitive pressure. In addition, features and characteristics of consumption behavior and competition from traditional TV markets cannot readily be applied to more—offline and online—audiovisual content markets. Eventually, a general “they all compete because they all provide audiovisual content” would also be too superficial. Instead, our analysis demonstrates that audiovisual content providers act in a heterogeneous market, where some suppliers may be closer competitors to each than to others (thus, markets, where unilateral oligopoly effects matter; Kaplow and Shapiro 2007 ; Froeb and Werden 2008 ; Kerber and Schwalbe 2008 ; Keating & Willig 2015 ). Furthermore, consumption behavior is so differentiated that these interrelations may differ across, inter alia, daytimes, consumer intentions, and genres. Thus, a careful analysis of the actual competitive effects is necessary when assessing joint venture projects or mergers and acquisitions among these players, including vertical effects (which are not part of our analysis; but see, e.g., Stöhr et al. 2020 ). Moreover, unilateral business strategies need to be observed and considered as well, in particular, if these strategies aim at or result in a walled garden type of offering, i.e., proceed in the direction of a closed ecosystem protected against outside (maverick) competition. This is necessary to sustain dynamic competition among audiovisual content providers and maintain a diverse, pluralistic, and preference-conformal landscape.

Moreover, our analysis yields strategy implications for companies in the audiovisual sector. The separation of the three types of audiovisual media is likely to further disappear in the future when the now youngest generations—who already view all three as close competitors—incrementally replace the older generations who stick more to traditional viewing habits. Thus, ignoring YouTube consumption as being too different may be riskier in the long run than embracing the YouTube kids as consumers. This also entails the underlying business models: relying on subscription-based services (PVoD) looks likely to be inferior strategywise to mix payment models and allow for both AVoD- and PVoD-style consumption. This requires moving away from a silo mentality and to interconnect the different channels to transmit audiovisual contents into an integrated offering.

Data availability

The data sets generated during and/or analyzed during the current study are available from the corresponding author on reasonable request.

YouTube started its paid-for service only in mid-2018, just before our data was collected, but it was hardly known or used at the time (YouTube Official Blog 2018 ). Moreover, until today, YouTube is predominantly known for its AVoD service. In addition to this, it had been announced in September 2019 that a lot of own productions that had been set behind the Premium Paywall will be moved to the advertising-financed section of YouTube, leading to speculations about the success and performance of the paid-for service offer ( Meedia 2019). Joyn, a VoD service by ProSiebenSat.1. and Discovery started in June 2019 with an AVoD model only and just switched to a hybrid model of both advertising and user financing at the end of 2019, both after our data had been collected. TV Now, a hybrid service by the RTL Group had been existent before, however, had little meaning in the German VoD market compared to the market leaders Netflix and Amazon Prime Video and just in 2019 announced massive investments in its video streaming activities for the next 3 years (Krei 2019 , WV 2019 ).

Please note, since these answers are not revealed preferences of actual consumption behavior, but descriptions on their behavior by the respondents, we consider them as pseudo-revealed. For a discussion of stated and revealed preferences in online media from an economic perspective, see Budzinski and Kuchinke ( 2020 ).

Less than a decade ago, the Federal Cartel Office of Germany (Bundeskartellamt) denied the existence of relevant competitive pressure from YouTube on German television channels (Bundeskartellamt 2011a , 2011b , 2015 ; Budzinski and Lindstädt-Dreusicke 2020 ).

Social media stars (so-called: influencers, creators, micro-celebrities, online stars, etc.) are successful content providers on social media platforms like YouTube or Instagram (for a detailed analysis see Gaenssle and Budzinski 2021 ).

The platform Twitch (twitch.tv), for instance, allows content providers 24 h streaming.

Netflix seems also aware of such challenges with indecisive consumers and started a test for a linear channel called “Netflix Direct” in France in November and December 2020 for existing Netflix subscribers (Etherington 2020 ; Pauker 2021 ). According to the COO and Chief Product Officer of Netflix this linear channel should start internationally, though the exact countries are not yet announced (Pauker 2021 ). See also Spilker et al. ( 2020 ) on linear broadcasting on Twitch.

See Appendix 1 and 2 for detailed information on income and age groups.

See Sect. 1 as well as Kupferschmitt ( 2018 ) for Germany, Statista ( 2018 ) for the US, and Lindstädt-Dreusicke and Budzinski ( 2020 ) for a supportive economic analysis.

Multiple answers were possible. We excluded “morning” and “night” due to multi-collinearity. Moreover, these periods do not add more information on competitive relations from a theoretical point of view (see Fig.  5 for an overview between daytimes).

We performed regression specification tests on separate OLS regressions (each dependent variable separately) to check the applicability. Especially multi-collinearity was of concern, but the variance inflation factors (VIFs) for the independent variables show values below five for each linear regression. Moreover, we checked if all equations together are statistically significant. The Breusch–Pagan test of independence shows that, for the same individuals, the correlation of the residuals is significant and we can reject the hypothesis that this correlation is zero.

2,893 out of 2,920 participants choose at least one of the services to get entertained.

We included a question on second screen usage (i.e. parallel use of two screens) in our questionnaire. Although, younger consumers tend to engage in second screen usage like e.g. Instagram on the smartphone and Netflix on television at the same time, we consider the parallel usage of two videos to be a rare exception (mostly, due to overlapping audio tracks). Yet, future research is needed to investigate the phenomenon and better estimate the possibility of parallel usage.

For instance, MTV still broadcasts but its program does not primarily contend of music videos anymore. A channel like Deluxe Music does still broadcast music videos (mostly for older generations) but is of little relevance.

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Acknowledgements

We thank Thomas Apolte, Thomas Grebel, Stefan Heyder and the participants of the European Media Management Conference (Limassol, June 2019) and of Radein Reseach Seminar (Radein, February 2020) for valuable comments on an earlier version of the paper. Special thanks to the Office for Gender Equity (TU Ilmenau) for supporting the conference attendance of Sophia Gaenssle. Furthermore, we thank Valentina Wenzel, Charlotte Volk, Julia Diana Adschalow and Janine Dietz for valuable assistance

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Budzinski, O., Gaenssle, S. & Lindstädt-Dreusicke, N. The battle of YouTube, TV and Netflix: an empirical analysis of competition in audiovisual media markets. SN Bus Econ 1 , 116 (2021). https://doi.org/10.1007/s43546-021-00122-0

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• Video-on-demand
• Cultural economics
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The Influence of Streaming Services

Introduction/background to the research.

The entertainment industry has changed a lot lately due to the massive and remarkable rise of on-demand platforms like Netflix and Amazon Prime. These digital platforms have ushered in an era of unprecedented convenience that provides customers with various content from their homes. However, this technological revolution has inevitably increased customer options while raising concerns over its impact on the traditional practice of film attendance. The cinemas face the challenge of adapting and moving forward in view of this changing paradigm as they usually have been strongholds for independent movie making and shared watching.

This research is aimed at examining in depth significant changes taking place in the entertainment industry, specifically, how streaming services relate to movie attendance. Cinemas are faced with the difficult task of maintaining their importance when consumer behaviour is increasingly driven by streaming services and encouraging them to come back to conventional cinema theatres. Consequently, this study aims to investigate the different impacts that streaming services have on cinema turnout, determine significant contributors to the transformation and finally, suggest some strategic steps that theatres could adopt to survive and thrive within contemporary digital media trends.

This research does not just aim to look into trends; it is an honest effort to provide valuable perspectives and insights towards having successful and sustainable cinemas. As we navigate through this intricate intersection where technology meets consumer tastes amidst enduring theatre magic, it is evident that there are multiple challenges as well as possibilities. Therefore, this study will be an invaluable resource for stakeholders, experts in the sector or anyone interested in the eternal appeal of movies.

Research Aim and Objectives

Aim:  To evaluate the impact of streaming services on cinema attendance and propose efficacious strategies for increasing footfall.

Objectives:

• To Scrutinize current trends in cinema attendance and the utilization of streaming services.
• To Analyze the determinants influencing the choice between cinemas and streaming services.
• To Investigate the impact of exclusive content on streaming platforms on cinema attendance.
• To Identify successful strategies implemented by cinemas to counter the impact of streaming services.
• To Propose recommendations for cinemas to bolster their appeal and footfall.

Literature Review

Because of the significant changes happening in the entertainment business, the point where streaming services and regular moviegoing meetings have become a focus of academic research. This literature review gives a broad picture of the situation, using information from many different sources to show how streaming services affect movie theatre attendance and how movie theatres try to deal with this problem.

Decline in Cinema Attendance

There has been a clear drop in people going to the movies since streaming services became strong alternatives to regular theatres. People are used to the ease and flexibility that platforms like Netflix and Amazon Prime offer, so they are okay with the set times and restricted options that come with going to an actual theatre (Zhang et al., 2023)… The fact that streaming is available on demand has caused this change in customer behaviour. This is because streaming lets people choose how they want to enjoy entertainment, which is only sometimes possible in theatres. As a result, going to the movies is becoming less appealing to a large part of the crowd.

Streaming Services and Exclusive Content

Investing in exclusive material is a big reason why streaming services are becoming more popular. (McMillan, 2023) says that platforms like Netflix have put a lot of effort into making original stories that keep people interested. These unique offerings have made it harder for standard movie theatres to control the entertainment market. The best thing about exclusive material is that it is easy to get. People can watch high-quality entertainment whenever they want without having to worry about when it will come out. Focusing on original shows makes subscribers more loyal to the brand and draws people away from the standard movie theatre experience.

Competition for Exclusive Content

Streaming services and movie theatres are now competing harder than ever for exclusive material. It is always a priority for streaming services to get exclusive rights to popular TV shows and pictures, which makes them even more valuable (Hadida et al., 2021). People choose streaming over going to the theatre because it offers the unique appeal of being the only source of specific material. Because there is so much competition for material, movie theatres have had to rethink how they bring in customers.

Challenges for Cinemas

In a world that is constantly changing, theatres face a number of problems. Since streaming services are so popular now, one of their biggest problems is that they need to change what they offer in order to stay current (McMillan, 2023). People who value ease and personalised viewing are calling into question the traditional movie theatre model, which was based on the appeal of watching with a group and the grandeur of the big screen.

Strategies to Counter the Impact

Because of these problems, movie theatres have used a variety of methods to fight back against the effects of streaming services. Improving the general moviegoing experience is one way to do this. This includes spending money on cutting-edge technology like IMAX screens and high-quality sound systems to make the movie theatre experience different from watching at home (Curtin et al., 2014). To get and keep people, movie theatres have also used creative marketing and loyalty programmes. The goal is to make people feel like they are part of a group that streaming services cannot offer.

Diversification of Offerings

Diversifying what they have to offer is another thing that movie theatres do. To get a broader range of people to go, more and more movie theatres are holding live events like concerts, sports broadcasts, and interactive screenings. Cinemas hope to stay relevant in a world that is changing quickly by presenting themselves as entertainment hubs instead of just places to watch films.

Collaborations with Streaming Platforms

Some movie theatres have also thought about working with streaming services. They use the allure of the big screen to bring people to premieres or exclusive screenings of material made by streaming services. By working together, these companies are marketing both the movie theatre and the streaming service. These services have gotten in the way of traditional film showings because they offer many films and make it easy for people to watch them at home. People do not have to go to the movies as much because movies are available on streaming services. This has caused movie theatre ticket sales to drop.

Pricing Strategies

Movie theatres have also used pricing tactics to help them compete with streaming services. Moviegoers now have more affordable and adaptable choices thanks to special deals, subscription models, and dynamic pricing, which compete with the value promise of streaming platforms. Netflix mostly makes money from streaming subscriptions in the United States and other countries, as well as DVD-by-mail memberships in the United States (Codreanu & Combe, 2019). Netflix charges different prices for different screens based on how many accounts can stream the same material. There are also different prices for sending DVDs depending on how many DVDs a customer wants at any given time.

Cinemas as Cultural Hubs

Also, movie theatres are becoming cultural hubs again by holding film festivals, Q&As with directors and stars, and educational events. This method aims to build a sense of community and involvement that goes beyond just watching a movie (Tryon, 2013).

In conclusion, the research clearly shows that streaming services have changed how many people go to the movies. Streaming platforms have put the standard movie theatre model to the test because they are convenient, offer personalised content, and have exclusive content. However, movie theatres are more than just standing there doing something during this change. As a response, they have come up with a number of plans to improve the moviegoing experience, broaden their selection, and work with streaming services. These proactive steps show that movie theatres are responding to the changing environment and are determined to keep their place in the entertainment world as it changes.

Research Methodology

To thoroughly examine the influence of streaming services on cinema attendance and identify practical techniques that cinemas may use to increase their attractiveness, we will use a mixed-methods study methodology. This methodological decision is based on the notion that it will offer a comprehensive comprehension of the intricate dynamics in the field of entertainment consumption.

Quantitative Methods

Quantitative methods will play a crucial role in collecting numerical data to identify patterns, trends, and correlations. An integral aspect of this research will entail disseminating surveys to a heterogeneous sample of individuals. The surveys will be created to gather data on different elements of movie attendance and usage of streaming services. Participants will be asked about the frequency of their visits to the cinema, the variables that influence their selections between cinemas and streaming services, and the level of their involvement with streaming platforms.

The surveys will be subjected to rigorous statistical analysis to analyse the quantitative data. This analysis will aid in identifying overarching patterns in audience behaviour, providing significant insights into the quantitative aspects of the battle between traditional cinemas and streaming services. The statistical techniques utilised will encompass regression analysis, correlation analysis, and descriptive statistics to obtain a complete comprehension of consumer preferences and habits (Aarons, 2020).

Qualitative Methods

Methods that focus on understanding and interpreting subjective data, such as interviews, observations, and case studies.

In addition to the quantitative part of this research, qualitative methodologies will explore the underlying motivations and perceptions that support the observed patterns in greater detail. The acquisition of qualitative data will be accomplished by conducting in-depth interviews and focus groups with specifically chosen individuals. These qualitative methodologies will facilitate the examination of intricate individual experiences and preferences, elucidating the qualitative features of the interaction between movie attendance and streaming service usage.

The research will incorporate a qualitative approach by conducting interviews with industry experts, cinema owners, and executives from streaming platforms. Interacting with these critical stakeholders will offer a valuable viewpoint on the plans and difficulties within the entertainment industry. Industry experts’ insights will provide a comprehensive perspective and analysis of the significant developments influencing the competition between cinemas and streaming services.

Data integration

The qualitative data obtained from interviews and focus groups will undergo thematic analysis. This technique will entail the discovery of recurring themes, issues, and strategic approaches within the data. An in-depth analysis will be conducted to examine the qualitative aspects of the relationship between cinema attendance and the use of streaming services, aiming to provide a nuanced understanding of the interaction (Capobianco, 2019).

In order to thoroughly analyse the intricacies at hand, the quantitative and qualitative findings will be combined. Quantitative and qualitative components of the research will be connected by using statistical methods to the qualitative data, enabling the identification of patterns and trends. By employing a dual-method approach, the research will be strengthened, providing a comprehensive comprehension of the dynamic changes occurring in the entertainment business.

Research Methodology Conclusion

Overall, this study employs a mixed-methods research methodology that integrates quantitative surveys, qualitative interviews and focus groups, and collaboration with industry experts. This versatile approach aims to offer a thorough comprehension of the factors that impact movie theatre attendance throughout the age of streaming platforms. This research seeks to uncover significant insights into the complex interplay between traditional cinemas and streaming platforms by analysing both quantitative and qualitative data through triangulation. This methodology guarantees that both the measurable and subjective aspects of the study are vital, allowing for a detailed and thorough analysis of the intricate relationship between movie theatre attendance and the use of streaming services.

Gantt Chart

The research timeline is structured as follows:

• Literature Review (Months 1-2):  The first task, the Literature Review, spans the initial two months of the research project. During this period, an extensive review of existing literature on cinema attendance, streaming services, and related industry trends will be conducted. This comprehensive review will serve as the foundational knowledge base for the subsequent phases of the research.
• Survey Design and Distribution (Months 2-4):  Task 2 involves the design and distribution of surveys to a diverse sample of participants. This task spans from the end of the first month into the third month and the beginning of the fourth month. This timeline allows for careful survey design and thorough planning before data collection begins. Surveys will be formulated to gather quantitative data on cinema attendance and streaming service utilization, covering various aspects of consumer behaviour.
• Data Collection and Analysis (Months 3-5):  Task 3, which encompasses the third, fourth, and fifth months of the research project, focuses on data collection and analysis. Quantitative data collected through surveys will be processed, analyzed, and interpreted. Statistical techniques, including regression analysis and correlation analysis, will be applied to identify patterns and trends in audience behaviour. Additionally, qualitative data obtained through interviews and focus groups will undergo thematic analysis to provide deeper insights into consumer motivations and perceptions.
• Report Writing (Month 5):  Task 4, scheduled for the fifth month, involves summarizing findings, drawing conclusions, and formulating recommendations based on the analyzed data. The research report will be meticulously crafted to present a cohesive narrative of the research outcomes, highlighting key insights into the impact of streaming services on cinema attendance and strategies for cinemas to adapt and thrive.
• Finalization and Submission (Month 5):  The final task, slated for the fifth month, encompasses the review and finalization of the research report. This period allows for quality assurance, proofreading, and ensuring that the research adheres to academic standards. After the report is polished and complete, it will be submitted, concluding the research project.

This Gantt chart illustrates a well-structured and sequential timeline for the research project. It ensures that each phase of the research is given the necessary time and attention, from thorough literature review and data collection to analysis and reporting. The timeline is designed to maximize efficiency and rigour while maintaining a clear trajectory towards the project’s objectives. It also allows for contingencies and revisions if needed during the research process.

This research has conducted a thorough investigation of the influence of streaming services, such as Netflix and Amazon Prime, on the conventional practice of going to the movies within the ever-changing and dynamic entertainment business. Concurrently, it has explored the tactics employed by cinemas to mitigate the difficulties presented by these digital channels.

The empirical evidence obtained and examined using a mixed-methods approach has provided valuable insights into the complex connection between going to the movies and using streaming services. The decrease in conventional cinema patronage, ascribed to the convenience and tailored content options provided by streaming platforms, has been supported by both quantitative and qualitative research. The change in customer behaviour highlights the urgent requirement for cinemas to adjust and provide new ideas in order to be significant in the era of digital technology.

Nevertheless, this research has also emphasized that cinemas are not simply passive spectators of this shift. They have taken aggressive measures to address the problems posed by streaming services, implementing various techniques to improve the cinematic experience, expanding their offerings, and establishing partnerships with streaming platforms. The implementation of these measures, along with the adoption of pricing strategies and the rebranding of cinemas as cultural hubs, has unequivocally shown the dedication of cinemas to ensuring their presence in the ever-changing landscape of entertainment.

This research has consequences that go beyond academic discourse. The findings provide a significant resource for stakeholders in the entertainment sector, helping them comprehend the complex processes at play. Cinemas, streaming platforms, and industry experts can utilize the information supplied to shape their strategy and make informed decisions at a time when customer preferences and behaviours are constantly changing.

To summarize, our research highlights the significant influence of streaming services on the number of people going to the theatre while also underlining that cinemas are more than passive recipients of this disruption. They have demonstrated fortitude and flexibility in response to change. In the ever-changing world of entertainment, both traditional cinemas and streaming platforms can coexist and provide audiences with a wide variety of choices. This ensures that the charm of seeing movies in theatres remains intact in the digital era.

Aarons, H. (2020). A Practical Introduction to Survey Design: A Beginner’s Guide. Sage.

Capobianco, P. (2019). Migration and Identity: Japan’s Changing Relationship with Otherness. The University of Iowa.

Codreanu, T., & Combe, C. (2019). Vlogs, video publishing, and informal language learning.  The Handbook of Informal Language Learning , 153-168.

Curtin, M., Holt, J., & Sanson, K. (Eds.). (2014).  Distribution Revolution: Conversations about the digital future of film and television . Univ of California Press.

Hadida, A. L., Lampel, J., Walls, W. D., & Joshi, A. (2021). Hollywood studio filmmaking in the age of Netflix: a tale of two institutional logics. Journal of Cultural Economics, 45, 213-238.

McMillan, K. (2023). Developing the Nonprofit Theatre: Building a Foundation for the Emerging Theatre Company.

Tryon, C. (2013).  On-demand culture: Digital delivery and the future of movies . Rutgers University Press.

Zhang, L. T., Vázquez-Calvo, B., & Cassany, D. (2023). The emerging phenomenon of L2 vlogging on Bilibili: characteristics, engagement, and informal language learning.  Profesional de la información ,  32 (3).

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Music Features

The success of streaming has been great for some, but is there a better way.

Paula Mejía

It's tough to recall a time when listening to music — and making it — wasn't completely synonymous with streaming. The idea of filling an iPod up with carefully selected digital files almost feels like a distant memory, though it wasn't that long ago that these kinds of players, and the digital library of songs you built through them, embodied the future of music. (For what it's worth, Apple still sells one.) These days, streaming services offer music fans a tantalizing premise: Instant, limitless access to music from all over the world and across history, for a small monthly fee. Or for free, as long as you're cool with advertisements cutting into the experience.

A Borrowed World: Streaming As The New Reality

These days, part of being an artist — from Top 40 superstars to independent bedroom songwriters, the Bad Bunnys and Nobunnys alike — entails throwing oneself professionally and promotionally into these services. "Professionally, streaming has become crucial for the artists I work with, and it's become such a big part of what we do in terms of marketing our campaign and making sure that people know that it's on these streaming platforms," says Katie Garcia, who owns Bayonet Records and does A&R for Secretly Group. "It's crucial nowadays; it's a necessity."

The tantalizing premise of streaming has been a success story in many ways. Industry strategy firm MIDiA Research notes that recorded music revenues ballooned to $18.8 billion last year, a $2.2 billion uptick from 2017 — within that, streaming was up 30% year on year, and climbed to $9.6 billion, in what they describe as "the engine room of growth" for the industry. In a 2018 year-end report, the Recording Industry Association of America (RIAA) touted the fact that "for the third year in a row, double-digit growth was driven primarily by increased revenues from paid subscription services including Spotify, Apple Music, Tidal, Amazon and others." The International Federation of the Phonographic Industry's (IFPI) most recent Global Music Report revealed that in the United States, streaming revenues steadily rose by 33.5% last year. (In 2017, that number was even higher: 50%.)

But, while streaming continues to evolve at a breakneck pace, the system through which artists are paid for the music being listened to hasn't evolved in tandem — meaning that, as dissenters note, many artists are still paid little, after services and labels take their respective cuts. Streaming payouts to artists vary wildly however, depending on whether they are signed to a major or independent label, and whether or not they're songwriters of an individual tune, as well as the performers. And within these situations, the terms of these contracts can make one artist's pay stub unrecognizable to another's.

More in this series:

• Khalid Is The Shooting Star Of The Playlist Era
• The Language I Learned From Cassettes
• Remembering The Bottled Lightning Of 'Music Tumblr'
• A Requiem For Audiogalaxy, The Digital Wild West's Best Outlaw Record Store
• The Green New Deal: Where Spotify Stands, And Where Artists Wish It Would
• What's The (Far) Future Of Music Listening?
• Towards New Musics: What The Future Holds For Sound Creativity

But beyond these contractual idiosyncrasies, the bedrock structure for streaming services' royalty payouts tilts the entire system towards those who, in some ways, need it least. Spotify and Apple Music's model for determining who gets what from their services is known as " pro rata ," which means that rights-holders are paid according to market share; how their streams stack up against the most popular songs in a given time period. The people who hold the rights to the most listened-to tracks, then, stand to make the most. "The 'pro rata' model is perceived as being inherently objective and fair, however, it doesn't take into account different user behaviors," says Will Page, Spotify's Chief Economist. "Arguably, it does produce an efficient outcome in that every stream is worth the same and it is relatively cost-efficient to manage."

That cost efficiency is outlined well in a 2017 study from Digital Media Finland, which found that pro rata streaming models tend to benefit the services themselves, who keep about 30% of a subscriber's fee. The rights holders of the recordings, which include record labels, producers, and performers, split about 55 to 60% of the fee. Meanwhile, the rights holders of the song itself (the composition) — which at once includes composers, arrangers, music publishing companies and lyricists — see about 10 to 15% of that pie. As David Turner, a critic who writes the weekly streaming newsletter Penny Fractions and now works for SoundCloud, said in an interview with Slate last year: "So if you're signed to a major label, for every stream you get you're probably getting maybe 12 or 15% from that if you're an artist." It varies, of course, but Turner notes that while independent artists may not have to pay out to labels, they also don't have access to the same kinds of resources — managing the nuts and bolts of an artistic career — as an artist who signed to one.

Critics say the pro rata model disproportionately privileges top artists and labels, and leaves little chance for even midsize artists, such as a band like Khruangbin — whose most-listened-to songs have tens of millions of listens on Spotify — to get a fair shake. Also and importantly, fans have no say in the direction of where their subscription dollars head. In parallel to the promise of "music for everyone" (as Spotify's tagline goes), a harsh truth has emerged: Countless working artists in the United States can't feasibly make a decent living in this new world.

While streaming is the music industry's most visible economic driver these days, its problems are historical in proportion. "Capitalism has a role in this problem," says Henderson Cole, an entertainment attorney based in New York. "But I think also how our legal system is built is that instead of usually rewriting something, they'll just build on it. And we've been putting Band-Aids on this for I don't know, 100 years? So none of [the royalty system] makes sense... if a song is played on the radio, 100% of the royalties go to the songwriter. But if the same song is played on a streaming service, only about 20% of the royalties go to the songwriter. Where does that come from?"

Artists confirm that these numbers can be murky. "You cannot get at actual data, especially financial data [from Spotify]," says the musician Damon Krukowski, who plays in the projects Galaxie 500 and Damon & Naomi. "No matter what they tell us about our quantities of plays — which seem to be approximations, not down to the single ones — they do not tell you exactly what you're making. You can look back through your royalty statements, but it's hard to do."

It gets particularly nebulous, too, considering the digital blind spots. Crossed wires and bad metadata have contributed to a "royalty black box" of unpaid money, thought to be somewhere at least in the millions . Some speculate that even those reported streaming numbers themselves might not even be entirely correct, either. Earlier this year, news broke that a criminal investigation is underway against Jay Z's high-fidelity streaming service, Tidal, following accusations from the Norwegian newspaper Dagens Naeringsliv that the platform had exaggerated listener streaming numbers for Kanye West's The Life of Pablo and Beyoncé's Lemonade "to the tune of several hundred million false plays... which has generated massive royalty payouts at the expense of other artists," as they wrote in their report . Under the pro rata system, those allegedly false plays would affect the kinds of royalties other artists are making.

As streaming has become a dominant part of being an artist and a listener alike, musicians, activists and critics have also increasingly and vocally criticized the dominant streaming economy, and the purported inequalities that arise therein.

A purposeful playlist from Spotify. "Keep calm and focus with atmospheric music." Spotify hide caption

Money (for artists) aside, naysayers also point to the shift towards mood and purpose-driven playlisting instead of full-length albums or EPs as both an advertising tool and not working for every single artist. Nor does it benefit every kind of listener. "Their product is more valuable if people just listen more," says Liz Pelly, a contributing editor for The Baffler and journalist who covers streaming. "If people just don't stop streaming. So in some ways, it seems to me that a result has been this situation where music that is being surfaced by the platform is music people won't turn off: This background experience, where music isn't really as intentional of a thing, and it's more music that people could just stream for hours and really not think about."

As a consequence, streaming isn't just changing consumption habits, but how people write music altogether — with songs becoming shorter and shorter , for instance. The independent distributor CD Baby's DIY Musician blog suggests that if musicians want to optimize their music for the streaming age, they might want to explore changing the structure of their song to have the chorus hit listener's ears first, in the vein of Post Malone's " Better Now. "

"I really do feel like the flattening and watering down of the experience of musical community and fandom is one of the biggest issues [of streaming]," says Pelly. "We're in this moment where artists on every level are expected to think this way that, in the past, would have been a way of thinking about artists that are gonna be on the Top 40 radio. And now all artists are expected to be beholden to the mechanisms of pop music in a sense... the idea that one platform could ever serve all artists is something to really be scrutinized."

"That's another thing about streaming I find so frustrating," Krukowski adds. "We're not developing as a community — as digital producers and listeners — through these companies."

Alternatives have emerged that can, perhaps, offer a more equitable path to those whose livelihoods depend on it. "As listeners, we have agency, and I think platforms like Spotify and other streaming services are really banking on people's requirement of everything being super convenient," Pelly says. "But being fans of independent music has not, historically, been a super convenient thing, and if we can forgo a little bit of convenience to support economies that are a little bit more equitable for independent artists and artists in general, that's something that we should keep in mind." In recent years, other modes, including user-centric and stream-to-own models, have become a bigger part of the conversation.

"One-size-fits-all is a very crude, barbaric approach to music," says Mat Dryhurst, an artist and a teacher at NYU's Clive Davis Institute of Recorded Music in Berlin. "And actually, the internet and music might be a whole bunch more exciting if artists were given the tools to make the experience of consuming their work as unique as, arguably, the work is in itself."

One alternative streaming service that's emerged in recent years, Resonate , functions on a "stream-to-own" model with transparency in mind. Unimpressed by his experience trying to use other services as an artist, musician Peter Harris started the Berlin-based company in 2015. It works by splitting the cost of a digital download into several streams; after listening to a song nine times, paying a small amount that slightly increases with each listen, the person then owns it. The company is a co-op, so everyone, from listeners to artists, has a say in profits and decision-making; according to their website, Resonate says they "will share any and all profits with consumers (listeners) and workers (musicians, labels, staff and volunteer contributors). Members will be able to trade their profits for more streams and downloads and/or withdraw as cash."

Resonate notes that they pay $0.006 per stream, falling on the high end of what current streaming services reportedly pay out. (There's also a sliding scale, where you can see the estimated profit you might make as an artist through it.) The service, which includes the likes of highly regarded electronic artists and DJs such as Fatima Al Qadiri, Burial, and Kyle Hall, relaunched earlier this year.

Advocates also point to Bandcamp as an alternative model that's beloved by the people who use it. On it, artists and their labels can directly upload their songs, and fans directly support artists they love, follow their work, and post gushing odes about their favorite tracks. Unlike Spotify and Apple Music, the service not only enables listeners to stream songs, but also allows both artists to set the price for their work and listeners to name a price to own the songs. It has an editorial arm, Bandcamp Daily, where music fanatics dish about under-the-radar artists and scenes (on Bandcamp) flourishing around the world, and newsletters that keep you abreast about what your favorite label's just released, and digital tracks and vinyl records that your friends have been into lately.

Compared to a behemoth like Spotify, Bandcamp is not unlike a city's independent record store compared to a Best Buy (at least, back when it even stocked music ) — a place that attracts a more engaged listener. "I think if you're a fan, knowing that your money is going directly to the artist and supporting them, there's something really awesome about that, and that's probably what inspires people to pay more for something online," says Garcia. But realistically, Bandcamp doesn't do the numbers that Spotify does, in both subscribers and revenue. "Bandcamp, you can see each and every single penny where it came from and where it went," Krukowski says. "So financially there's absolutely no mystery at all. Of course, the numbers are radically different. Spotify at this point is an important part of our music income, and Bandcamp is not yet."

And while many independent musicians, artists, and critics have positive things to say about Bandcamp, and how its model allows for more equity than anywhere else right now, they're hesitant to hinge the future of streaming on it. "My great optimism would be that more people who have engagement with the archive, for example, or more of an emphasis on the kind of deep cultural aspects of music would think like that, rather than trying to pin their hopes on something like Bandcamp. Which I completely like," says Dryhurst. "But long-term, I don't see it as being viable, it feels like... retiring into your fantasies or something, to think that will ever compete at the level of a venture monster like Spotify."

The user-centric model , an alternative to the pro rata model, also focuses on a listener's money going directly to the artists they listened to, and not to the entire pool of musicians whose songs were streamed in a given month. For example, if Megan Thee Stallion was your most-listened to artist in June, that means that your money would go to Megan — and not to, say, Lil Nas X, whose "Old Town Road" is the most-streamed song of 2019 so far (by far). Spotify's Will Page argues that the complexity of the user-centric model "would arguably come at an increased cost — and the value of a stream would be more volatile, and less predictable, as well." Others see it as perhaps a more ethical way to stream music, and the idea has picked up steam as of late: The French streaming service Deezer has been said to be exploring user-centric licensing. It also exists in platforms such as Patreon, where fans give their money to support a specific artist and might periodically receive music, a podcast, or another creative output through their subscription.

The downside of Patreon-esque ventures, as Krukowski points out, is that it only works for specific kinds of artists, particularly those who are hands-on and have preexisting fanbases. Not to mention the fact that sometimes relying on these solutions-oriented tech endeavors doesn't always end up shaking out: The crowdfunding service PledgeMusic announced its bankruptcy back in May, and it still owes scores of artists and labels, many of them independent, hundreds of thousands of dollars. "There's no single model, in other words, that's going to fit for everybody," he says. "And I think that's part of the problem also with streaming right now, is that we're allowing this narrowing of possibilities of how many models we have to choose from."

Krukowski has one radical idea for a potential future alternative streaming economy: Doing away with the royalty system altogether. "I think it sounds kind of kooky to people, but I seriously wonder: if we just gave up the idea of owning digital streams at all, of trying to attach them to copyright, if we'd be better off as musicians and as listeners," he says. "Now it would mean, obviously, a loss of income streams insofar as we're getting any from digital music right now, but what I would suggest to people is, we don't know how that digital realm is going to pay us yet. It's still not working. It's working for a tiny little handful of creators right now. That's not a solution. That's a problem."

Cole instead wonders if bringing music streaming fully into the hands of the government—which would also mean building a different kind of royalty system altogether—might make it a more equitable system for everyone involved. For years, he's been working on a proposal called the American Music Library , a taxpayer-funded streaming service that at once would act as a repository for all recorded music and also would guarantee free access to all listeners across the United States, not unlike the public library system. That would entail establishing a new royalty system that would give artists and songwriters a "stipend royalty" paid out directly. In his proposal, Cole estimates that "the American Music Library would be able to offer somewhere in the neighborhood of $0.01 per Artist master stream and $0.0075 per Songwriter composition stream," which is considerably higher than any payouts currently offered by major streaming services.

"If you did a program like this that helped more artists and more songwriters to have a sustainable form of life, that would be a huge boost for ... the economy," Cole says. "Also it's a huge job creation mechanism: If there were a lot more artists that were working full-time doing that, they'd hire more managers, they'd hire more music video people." Since this service would be managed through the government, it poses several steep challenges — one of them being that anything deemed "obscene" wouldn't qualify, which would disqualify a massive contingent of important, innovative music. Given that the service would function as an archive, that at once means a step forward for preservation efforts. But as Cole notes, that would also potentially allow for music that's considered hateful, or made by abusive people, to exist on the platform as well.

Others advocate for moving offline and looking more holistically at culture cultivation writ large. Along with Holly Herndon, his partner in life and creative endeavors, Dryhurst is involved in a handful of different projects that challenge the paradigms of music consumption in the streaming economy. One of his ideas involves moving away from platform participation, and towards exploring group equity in real-life spaces, fostering both artists and fans who converge together, make music, perform and build communities around shared creative endeavors — which would also stimulate local economies. "You could try and each individually sell your record, or you could instead gather together and try and get everybody in the world who cares about [say] ballroom music to own, or at the very least crowdfund, the space that makes all of this possible," Dryhurst says. "That takes the focus kind of away from trying to sell files and trying to scrimp point-one cent per play on some s****y streaming platform and more looking at: 'What is the fundamental infrastructure necessary to keep a culture going?' And, often time, space is pretty much the answer to that — space to record, space to play." The idea is an echo of the self-reliant approach that touring punk and hardcore bands took throughout much of the 1980s — making a concerted point to play at spaces that welcomed fans of all ages in their hometowns and beyond, and creating communities around fanzines and booking local shows themselves.

Pelly sees a way forward in offering resources for artists to have the tools to continue creating into their own hands, in the way that the nonprofit Cash Music allowed for open-source coding, as well as supporting online as well as off. "I would love to see artists and independent labels and communities take the work of establishing those relationships more into their own hands, and to build websites on their own," she says. "Where those types of recurring, subscription-based support systems could be more on their own terms instead of having these platforms being in the middle of this relationship... Also buying stuff from artists directly at the merch table, supporting independent record stores, mail ordering from labels that you're a fan, that kind of stuff is also important. And it's these things that seem really little that do add up to comprising a more meaningful relationship with music and art."

Ultimately, having more models out there means more options, and further room to experiment with possibilities that don't yet exist yet — a critical part of an ecosystem that allows for mainstream sounds to flourish alongside more experimental avenues. "The perpetuating of the logic of one-size-fits-all ultimately is damaging to the very thing that makes music or culture on the margins powerful: That it presents an actual alternative," Dryhurst says. "While I'm not optimistic that such small initiatives will topple Spotify, I am optimistic that it might create something else entirely." Krukowski adds: "My own personal sense of what works, what would be helpful and to music listeners, is the more platforms the better. The more possibilities the better... If you just keep going down this road, and you just don't allow for any other models to develop, or alternative models to develop, then that's all we're going to get. We're just going to keep going down this same trajectory. And this trajectory, it's not hard to see, is really bad. It's harmful to both the creative side and the listening side."

Paula Mejía is currently the culture editor at Texas Monthly , and her work has appeared in the The New Yorker , The New York Times , Rolling Stone and other publications. She is also a co-founding editor of Turning the Tables , NPR Music's series about centering women and non-binary musicians in the musical canon.

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Three-circle analysis is a tool that allows management to give an internal analysis of the organization. Through the analysis, strategies assess the needs of customers, competitors’ offerings, and company offerings for clearly articulating the competitive advantage of the company and way it differentiates itself from its competition. The paper presents the analysis of Netflix’s competitive strategy in the light of three-circle model to better illustrate customers’ needs, company’s offerings, and competitors’ offerings.

Most Important Customer Segments Need or Want from the Product or Service

How Has The Age Of Digital Streaming And Downloading Affected The Music And Film Industry?: Research Paper You Might Want To Emulate

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Video title: Music Tech Investments in 2014/2015 - Midem 2015Music Tech Investments in 2014/2015 - Midem 2015.

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The Woes of Being Addicted to Streaming

I feel unsettled when I stream music on Spotify. Maybe you feel that way, too. Even though it has all the music I’ve ever wanted, none of it feels necessarily rewarding, emotional, or personal. I pay a nominal fee for this privilege, knowing that essentially none of it will reach the artists I am listening to. I have unfettered access to an abundance of songs I genuinely love, along with an abundance of great songs I’ve never heard before, but I can’t shake the eerie feeling that the options before me are almost too perfect. I have personalized my experience enough to feel like this is my music, but I know that’s not really true—it’s simply a fabricated reality meant to replace the random contours of life outside the app.

The truth is that if you’re using Spotify, Apple Music, Tidal, or any other streaming service, you’re not paying for music so much as the opportunity to witness the potential of music. Music becomes an advertisement for the streaming service, and the more time and attention you give it, the more it benefits the tech company, not necessarily the music ecosystem. In Spotify, each song’s play count is prominently displayed, in effect gamifying the music industry so that tracks tacitly compete against one another inside the app. They even go so far as to turn the amount of time you spend in their app into a badge of honor during their annual year-end promotional campaigns. So you’re in the top percentile of Big Thief listeners? That’s not just a measure of your love for an artist’s music , but also a reflection of the time spent enriching the value of a company.

In addition to co-opting corporate social media strategies to benefit from the attention economy, tech companies have inherently made songs fleeting, cheap, and sometimes intrusive , corrupting the cultural exchange between artist and listener. Music is now leased to you through a secret system that you don’t understand, by a company with which you should have no emotional connection. Instead of simply buying a physical product or even pirating music from Napster—both of which created uniquely personal libraries of songs that helped define the identities of a generation—millions of users now sit side by side at the ledge of one great big trough of recorded music for the monthly price of a Chipotle burrito.

There have been many passionate and excoriating essays written about how streaming services have short-changed artists with minuscule payouts. But as the reviews editor of this music publication, I find myself asking: What does a platform like Spotify afford the most engaged music fans and what are the lingering effects of its use? As the independent musician and writer Damon Krukowski once wrote, there are alternative and radical solutions to combat the upstreaming of profits and homogenization of sound that the streaming era has come to stand for. But as one of nearly half a billion people who pay a small fee to rent the vast majority of the history of recorded music—not to mention the 2 billion people per month who use YouTube for free—I have found that, after more than a decade under the influence, it has begun to reshape my relationship with music. I’m addicted to a relationship that I know is very bad for me.

I know I am addicted to Spotify the same way I was addicted to nicotine or Twitter. It makes me happy, aggrieved, needlessly defensive. Oh, you boycott Spotify and only buy CDs on Bandcamp? Good for you. I use Spotify every day for hours on end, when I’m working, at the gym, running, when I want to put some music on while making dinner, when I go to sleep.

I write off part of my Spotify use as a hazard of my job, but I just can’t get enough of that sweet streaming asbestos outside of work, too. Even though I buy a fair amount of records every year, Spotify is my main delivery system for music. It’s like being hooked on rolling papers or the yellowed smell of a casino—not the actual vice itself. The ease, the look, the familiarity—I’m addicted to the emotional labor it does for me when its “Radio” feature instantly creates a playlist of songs that kind of sound like, say, “Breakdown” by Tom Petty and the Heartbreakers while I’m sitting outside on a nice afternoon. It loosely organizes what I love and what I might love and, for the most part, it’s absolutely correct.

I’ve sometimes rationalized that it is not an unhealthy addiction: I use Spotify in a way that reflects who I am, I bend it to my whims. For the last 10 years, I have kept playlists of favorite songs—both old and new—I discovered each year, a living record of growth and change in taste. I listen to weekly playlists that are made by friends and colleagues and artists, silently connecting with their interests. I’m going beyond the algorithm, operating at a higher frequency, clipping between the walls that cannot contain my taste profile.

The seeds of this addiction were planted in the late 2000s, when the music industry was struggling to adapt to the new digital era, unsure of how to wrap a tourniquet around the vast hemorrhaging of money caused by such a fast-moving paradigm shift. The streaming era as we know it began in an unlikely place, with good intentions: On October 10, 2007, Radiohead released In Rainbows and allowed fans to pay what they wanted for its digital files. After 1.2 million downloads, the average price paid per album was $2.26. Case studies in setting a new market price don’t come in a tidier package than this.

But as free-market and egalitarian as it was, the experiment was meant to motivate fans to go out and buy an actual physical copy of the album. Devised by Radiohead’s managers Bryce Edge and Chris Hufford while they were “a bit stoned,” the pay-what-you-want stunt was a means to an end: “If we didn’t believe that when people hear the music, they will want to buy the CD, we wouldn’t do what we are doing,” Edge said at the time. A lot of Radiohead fans did buy the album when it came out—it sold 122,000 copies in America alone in its first week—but by then, the downloaders outnumbered them by a wide margin. So even though Thom Yorke later described Spotify as “the last desperate fart of a dying corpse,” his band all but invented the model of what would become the streaming era: turning music into an ad that you pay very little for, with no real incentive to go and buy what it is advertising.

Another important shift was happening in 2007. Seeing the writing on the wall, several high-profile artists were abandoning their longtime major labels to find other avenues of distribution: Madonna left Warner to sign with touring giant Live Nation, a bellwether of where the real money was being made in the industry. (JAY-Z would make a similar move the following year.) Nine Inch Nails left music mogul Jimmy Iovine’s label Interscope and independently put out an instrumental album, Ghosts I-IV ; by Trent Reznor’s estimation, the collection made millions more than it would have had they released it with the label.

Into this stew of major label woes—which included the lingering piracy boogeyman—came Spotify. Launched in 2008, the streaming start-up was a direct attempt to both stem piracy and circumvent anti-piracy laws in its native Sweden. In addition to offering a way for online listeners to legally play music, Spotify acquired its user base in markets around the globe because of how easy it was to use. No more paying per song on iTunes, no more navigating the murky waters of P2P servers, no more waiting for albums to download. Here, finally, was a solution: legal music, a lot of it, right now, for cheap.

After officially launching in the U.S. in 2011, Spotify quickly turned into a potential panacea for everything that was ailing the music industry. Two years later, newspapers were asking: Can Spotify Save the Music Industry? A race to market dominance ensued. By 2014, Reznor had mended fences with Iovine and became the chief creative officer of Iovine’s new streaming platform, Beats Music, which wanted to set itself apart from competitors like Spotify and Pandora. Instead of an algorithmic platform that served you what you wanted, its team of curators would provide you with a more human experience. Iovine saw that, through artist and influencer-created playlists, you could confer taste, status, and criticism—the stuff that the former record-buying public supposedly pined for. One of Iovine’s maxims at the time: Access is average; curation is everything. Seeing the promise of a more bespoke streaming experience, Apple bought Beats for $3 billion and relaunched the service as Apple Music in 2015.

That same year, JAY-Z stood on a stage with Madonna, Rihanna, Daft Punk, Kanye West, and several other A-list musicians to announce the artist-majority-owned service Tidal, with “a mission to re-establish the value of music.” Touting hi-fi streaming and better payouts for artists, Tidal seemed like a much-needed counterweight to Apple Music and Spotify. Finally, here was a platform not funded by Silicon Valley VCs but by (admittedly already wealthy) musicians who understood the art and work that goes into the process of creation. But since its launch, its growth has lagged dramatically behind its competitors. Last year, JAY-Z sold the majority of Tidal to Square, a mobile payment company owned by Twitter founder Jack Dorsey.

Each successive introduction of a new tech company into the streaming era sought to solve a problem created by the digital era: pirating, the devaluation of music, and the lack of human connections music once relied upon. At this point, music piracy has generally been on the decline for five years. Major labels have plugged the holes in their coffers by licensing the vast majority of their music to streaming services and meting out payouts to their signees. The exception has always been the independent-minded Bandcamp, which includes a Radiohead-style pay-what-you-want option at a record’s point of sale, and fosters holistic connection between musicians and listeners through hubs run by labels and artists. Earlier this year, Bandcamp was acquired by the software company Epic Games.

Much like social media, the streaming era has created a simulation of real life. Each company uses its technology to digitize and replace the analog practice of buying, listening, and connecting to music, all while capitalizing on the nostalgia of those activities. The seamlessness of the experience—the ease with which one song bleeds into the next, and the buffet of decisions laid before you on Spotify’s home screen—creates an artificial scarcity out of vast abundance. For me, it has caused a kind of nagging depersonalization, an experience so divergent from, say, holding an album in my hands, or being in a record store, that I feel like a little bit of a hack every time I open the app. But I also understand that for the majority of subscribers, this simulation of a beautiful, vibrant, limitless music industry is possibly all they could ever want.

Let’s say there are three general categories of music listeners: Passive, Auxiliary, and Intentional. Most of the world falls into the Passive category, absorbing music like inhaling oxygen: without much thought at all. For them, there is either music playing, or maybe it’s not music playing, who can be sure? There is perhaps little to no interrogation into why any sound is floating down from the speakers at the grocery store; it simply exists at the same megahertz as the shopping cart and the fluorescent lights and the cereal selection. Songs are liked and not liked, if they are thought about at all, and the whole relationship is pure and elegant.

The second is the Auxiliary listener, someone for whom music enhances a primary experience to make it more interesting. Common forms of auxiliary listening involve music accompanying a visual stimulus, like film scores or needle drops in movies, music videos or their modern-day equivalent: a song snippet looped in a TikTok. But the Auxiliary listener chiefly uses music as a utility: to relax, to work, to go to the gym, to get drunk, to do drugs, to have sex, to dance, to fall asleep. Music is not your life, but what was playing while you lived it.

The last is the Intentional listener, someone who chooses to listen to music for the pleasure of it in and of itself. This is admittedly the tiniest category of people, a subset that spends a remarkable amount of time listening to albums, mixtapes, DJ sets, and playlists without distraction. They are purposeful about what they select and why—for them, there is a pleasure to be found in the flow of listening to music and the emotional, intellectual, and biographical response that it creates untethered to anything but the chemical responses in the brain. Some of these people use drugs to enhance this connection, but not all of them. Music, for these people, is life.

It’s important to make these distinctions because I believe that, for Passive and Auxiliary listeners—again, the vast majority of people in the world —Spotify and the streaming era writ large have achieved an ideal compromise. The technology has made accessible what had previously been difficult or kept behind the gates of record stores or music criticism. For an older generation, there is a sudden and overwhelming pleasure in being able to listen to all the music from your life instantly, retracing the decades through a digital library.

The cognitive dissonance occurs when people in the Intentional group—people like me—try to tell people in the Passive and Auxiliary groups how to listen to music. I know the global financial devaluation of music is irreversible, and there are only a small percentage of total music listeners for whom the phrases “buy from brick-and-mortar stores” or “support Bandcamp Fridays” means anything. But what I fear is that the streaming era is actually writing the same listening histories for those who can’t be bothered with Intentional listening–all exclusively based on proprietary algorithms that seem like a way to discover music but, in fact, act more like a feedback loop.

A close friend, an Auxiliary listener, recently sent me a Spotify link to an album by classic rock revivalists Greta Van Fleet, noting that it would be good music for the gym. This sent me into a bit of a panic spiral for three reasons. One is that I wondered why I neglected to share my professional life with him: In 2018, my pan of their debut album drew the attention of those beyond Pitchfork’s usual purview, with Barstool Sports suggesting that the band must have “fucked my girlfriend,” and GVF fans threatening to “TP” my house via homemade signs they held up at concerts. The second is that I realized I am but a tiny little dust mite in the universe, and my own opinion on Greta Van Fleet is largely irrelevant beyond the scope of a few thousand music snobs and select GVF fans, and what’s actually important in the world is the bond close friends have despite these relationship glitches. Third is that Spotify knows me better than my close friend.

The more time I spend on Spotify, the more it pushes me away from the outer edges of the platform and toward the mushy middle. This is where everyone is serviced the same songs simply because that is what’s popular. Four years ago, while the app’s algorithmic autoplay feature was on, I was served the Pavement song “Harness Your Hopes,” a wordy and melodic—and by all accounts obscure—B-side from the beloved indie band. As of this writing, the song has over 72 million streams, more than twice as much as their actual college rock hit from the ’90s, “Cut Your Hair,” the one Pavement song your average Gen X’er might actually recognize. How did this happen? In 2020, Stereogum investigated the mystery but came up empty-handed from a technological perspective, though the answer seems obvious to me: Whereas many Pavement songs are oblique, rangy, and noisy, “Harness Your Hopes” is among the most pleasant and inoffensive songs in the band’s catalog. It is now, in the altered reality of Spotify, the quintessential Pavement song. When frontman Stephen Malkmus was asked about this anomaly, he sounded blithely defeated: “At this point we take what we can get, even in a debased form. Because what’s left?”

The whole “Harness Your Hopes” situation is in part a result of what’s called “cumulative advantage.” It’s the idea that if something—a song, a person, an idea—happens to be slightly more popular than something else at just the right point, it will tend to become more popular still. (On the other hand, something that does not catch on will usually recede in popularity, regardless of quality.) This is the metric of how most social recommendation algorithms work—on Facebook, the more “likes” an article has, the better odds a user will read it. But when this is applied to what songs are sent to which people, Spotify can engineer its own market of popularity as well as what song defines a band. Popular songs on Spotify are popular within the app because they are what most people are listening to. So from both a behavioral psychology and business perspective, it makes sense for Spotify to assume that you want to listen to what other people are listening to. The chances of the average listener staying on the app longer are much higher if Spotify curates songs that have had a similar effect on people whose taste matches theirs.

This is one of the main addictive chemicals of most streaming services: Recommend a handful songs—out of millions!—that feel uniquely personal but in fact are just what everyone else is hearing, too. If a Passive or Auxiliary listener lets the algorithmic Spotify Radio play songs based on Tom Petty’s “Breakdown,” the results are almost purely based on chronology, tempo, and feel. Gone are the filigrees and the autobiography of the song and how it existed in the world to you , the listener. Instead, everyone’s experience is now the same.

For instance, Spotify’s radio station for Ludacris’ “What’s Your Fantasy” doesn’t link to any OutKast songs, even though I watched Ludacris open for André 3000 and Big Boi when that song was released in 2000, and both acts are from Atlanta. Is Spotify aware that Big Boi is a huge Kate Bush fan? Does Spotify know that singer-songwriter John Darnielle of the Mountain Goats is a metal head? If you have seen Darnielle cover metal bands from Dio to Gorguts to Nightwish, or are familiar with one of his most popular songs, “The Best Ever Death Metal Band Out of Denton,” you know that he loves some sick riffs and moonward barks. But all of that intimate (and publicly available) knowledge is lost to machine learning. Tuning into Spotify’s Mountain Goats’ Radio won’t turn up any Dio at all—just literate and mostly acoustic indie rock songs that sound similar to the Mountain Goats. Left to a streaming service, these kinds of textured and unique connections are smoothed over or erased entirely.

I have committed my personal and professional life to making sense of music, of finding connections and context within songs to create a critical framework that allows me to organize everything I listen into an ornately chaotic web. If I started a Fugazi radio playlist, maybe I would throw some Red Hot Chili Peppers on there—you’ll hear it. If I started a Pavement radio playlist, how could I not include the Louisiana rapper Young Bleed’s song “How Ya Do Dat,” where he calls himself “ slanted and enchanted ”? I would argue that Prince’s “When Doves Cry” and Parquet Courts’ “Instant Disassembly” both utilize a stilted, inverted grammatical style in their lyrics and are absolutely in conversation with each other.

When music is so abundant and our attention is scarce, there’s power in adding more intention to your listening diet, more chaos, more risk. The thrill in finding music that is wired to your singular life is not that thousands of other people have found the same thing. It’s that the music becomes something confounding and unique, a true reflection of where you are and where you’ve been. The beauty of the algorithm of your mind is that it makes perfect sense to no one but yourself.

This week, we’re exploring how music and technology intersect, and what today’s trends and innovations might mean for the future. Read more here .

Music Streaming Industry and Trend Analysis Essay

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Introduction

Industry analysis, trend analysis, works cited.

The world music industry is going through a process of modernization and technological advancement. When the Internet popularity and the development of diverse programs and websites enable illegal music consumption known as piracy, there is a tendency in legal music usage observed worldwide. The newly introduced music streaming industry allows users to access the storages of recordings from their smartphones or other devices for an affordable payment.

Many platforms for streaming, with leading ones, such as Spotify, iTunes, and others, are compatible market players capable of causing shifts in the whole music industry. The technologies applied to the industry development enable consumption growth, guarantee industry revenues, and have a potential to occupy more significant market share in the future.

Technological advancement introduced to the industry of music production caused some consecutive shifts in the business. It “reduced the cost of producing, distributing, and even promoting recordings” (Benner and Waldfogel 129). The sphere is developing attracting large numbers of users who pay for access to the recordings library. Such an approach does not limit the consumers in the choice of the products and offers personalized recommendation procedure for the increase of consumption. According to the analytical data, streaming became “the single largest source of music industry revenues in the United States” in 2015 (Datta et al. 25). The current market size of the sector counts in millions of individuals and its expenditure is anticipated in the future.

The growth rate in the sector is observed in the example of the tendency to use streaming platforms. The advancement of the industry is closely related to the nature of music consumption. Music is described by Benner and Waldfogel as an “experience good,” which is the characteristic that indicates purchasing before usage (131). Also, the tendency to consume new music of less popular artists by the users emphasizes the need for the increase in the industry and the development of new labels, as well as new streaming platforms.

Nevertheless, the current state of the market advancement shows that the vast majority of consumption rates are occupied by active industry players. According to Datta et al., the USA music streaming industry is represented by such top platforms as Spotify and iTunes, “with market shares of 22.8% and 18.3%, respectively” (8).

Among the less popular platforms which constitute a class of less active market players working as the tools for CD and MP3 local listening, such as Winamp, with more than 12% of market share and Windows Media Player, with approximately 10% (Datta et al. 8). Regarding the growing tendency of streaming platforms for all types of devices for monthly payments from the users, there is expected an appearance of new market participants capable of competing with the major players.

The patterns in music production and consumption have shifted during the past several decades. Since the 1990-s, there have been two main participants in the production sphere of music that were competing and making revenue on music recording and releasing. They were “major” companies or labels that had a long history in the business and “independent” labels, that occupied less space in the industry but still were compatible (Benner and Waldfogel 129).

Major labels released high-promoted music by famous musicians for the mass market, whereas smaller independent companies concentrated on less popular and lower-costing releases. However, the pattern changed with the introduction of streaming to the music industry. This influential participant occupied a significant part of the field of business and established new rules of music, as well as film and literature, consumption (Data et al. 5).

The main characteristic of a change in music production consists in lowering the costs of releases and appearance of new independent labels in the market. Streaming gave them an opportunity to popularize the low-promoted musicians and gain revenue out of new technologies. Therefore, the change influenced the consumption of music, too.

The consumption of music is closely related to the trends in the industry and the technological advancement in the sphere. With the introduction of streaming to music, the consumption rates increased due to the shifts in the production sector. Since the number of new popular musicians appeared, there occurred a variety of products. Concentrating on the major singers, consumers, however, look for diversity in music, thus increasing the demand (Datta et al., 5-6).

With a specific pricing system of streaming where a higher payment is required for major artists, there is a tendency to the discovery of new music. Consumers tend to look for new tunes within the affordable range. According to the research conducted by Datta et al., there “long-run shift in music consumption toward more plays, variety, and new music discovery” is observed in the industry over the past decades (6). Thus, the active participation of streaming services in the market leads to a significant change in both, production and consumption of music.

As for the perspectives of the music streaming industry in the future, it shows a constant tendency to growth. From the technological point of view, streaming platforms designed for multiple devices and operating systems offer a personalized approach to music recommendations according to a user’s preferences and listening history (Datta et al. 7). It makes expenditure on new music consumption possible and increases the number of new releases. There are some perspectives in the introduction of new streaming platforms to the market which will attract more consumers and enlarge the market size. On the background of fighting against piracy in the music industry, the streaming systems are expected to regulate the illegal consumption of music and bring the sector to a global level of development.

In conclusion, the music streaming industry is a developing business that has originated during the last decades as an alternative to CD or MP3 recordings purchasing. The advancement in modern technologies caused a change in the sector of music releases, making independent labels compete with major ones. Such a shift caused the introduction of new music with lower production schemes to the industry and took the streaming sector to a new level.

The personalized approach to users’ activity recommendations concerning their preferences and history of listening allows the platforms (Spotify, iTunes, and others) to increase the volume of products and their revenues. The demand for new music forces independent labels to look for unique talents and introduce them to the business, which contributes to the growth of the music industry as a whole. Thus, the sector occupies a big part of the music business in the United States. It provides new opportunities for musicians and recording labels fighting against piracy as a crucial hazard to the market. Music streaming is a developing industry that shows the tendency to grow in the future.

Benner, Mary J., and Joel Waldfogel. “The Song Remains the Same? Technological Change and Positioning in the Recorded Music Industry.” Strategy Science , vol. 1, no. 3, 2016, pp. 129-147.

Datta, Hannes, et al. “Changing Their Tune: How Consumers’ Adoption of Online Streaming Affects Music Consumption and Discovery.” Marketing Science , vol. 37, no. 1, 2018, pp. 5-21.

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IvyPanda. (2021, May 22). Music Streaming Industry and Trend Analysis. https://ivypanda.com/essays/music-streaming-industry-and-trend-analysis/

"Music Streaming Industry and Trend Analysis." IvyPanda , 22 May 2021, ivypanda.com/essays/music-streaming-industry-and-trend-analysis/.

IvyPanda . (2021) 'Music Streaming Industry and Trend Analysis'. 22 May.

IvyPanda . 2021. "Music Streaming Industry and Trend Analysis." May 22, 2021. https://ivypanda.com/essays/music-streaming-industry-and-trend-analysis/.

1. IvyPanda . "Music Streaming Industry and Trend Analysis." May 22, 2021. https://ivypanda.com/essays/music-streaming-industry-and-trend-analysis/.

Bibliography

IvyPanda . "Music Streaming Industry and Trend Analysis." May 22, 2021. https://ivypanda.com/essays/music-streaming-industry-and-trend-analysis/.

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