Streaming Wars: What They Mean for Consumers

Written by Peter Nowak

Back in 1995, a Columbia University business professor conducted what's now known as the famous jam experiment. At its most basic, researchers looked at how consumers behaved when presented with a large number of jam varieties versus just a few selections.

At the end of the day, the experiment concluded that too many options can be paralyzing for consumers. You might have heard this referred to as choice overload — a concept that's been tested and debated with almost every conceivable product and service, including in the investing world.

This so-called paradox of choice — as coined by psychologist Barry Schwartz in his 2004 book of the same name — is now starting to apply to streaming video services, according to industry watchers.

Choices, Choices...

Netflix, the grandfather of the business, in July reported its first decline in U.S. subscribers since 2011, adding fuel to analyst suggestions that — like jars of jam — perhaps it's getting crowded when it comes to options for streaming.

U.S. consumers have more than 300 streaming subscription services to choose from, with the average person subscribing to three, according to the 13th edition of Deloitte's annual Digital Media Trends survey. More major services are surfacing: Disney has launched its streaming service in the U.S., Canada and elsewhere, while Apple has launched its own video subscription service.

In the U.S., the newest players will join the likes of Hulu, Amazon, HBO and CBS, to name a few. In Canada, they'll compete with Netflix, Amazon and Bell offerings, among others.

The number of Canadian households paying for at least one streaming service, meanwhile, is expected to surpass those subscribing to traditional cable in 2020, according to research conducted by Victoria, B.C.-based Convergence Research.

In the Deloitte survey, nearly half the respondents said the preponderance of options makes it difficult to choose a service, with a similar number saying it's difficult to find what they want to watch across multiple platforms.

That searching conundrum is set to worsen as watchers will soon have to track down where their much-loved reruns of shows like Friends and The Office have moved to. Netflix has announced it will be parting with both.

The jam conundrum isn't yet as apparent in Canada, with consumers here having only around half the streaming options of their American counterparts, according to research.

Latest Developments

Of course, with crowding can come consolidation. Deloitte's research suggests larger platforms may move to re-aggregate some of the disparate services out there.

It's already starting to happen. Amazon, for one, in May announced a service that allows some subscribers to tack on additional standalone channels and bundles of channels to its core video offering.

As many industry watchers have pointed out, this sort of re-aggregation is similar to pick-and-pay television — and is indeed starting to look like traditional cable, both in presentation and cost.

It's a bit of an ironic evolution, given that streaming video's initial success was due to its simplicity and low cost. As the streaming industry evolves, it will be interesting to see how many varieties of jam there are to choose from — and how consumers and industry players will react.