🎦 Who will win the streaming wars?


December 29, 2020

PLUS: Meet the new healthcare billionaires.
December 29, 2020
The Hustle
TOGETHER WITH
Solgaard

Programming Note: We have 2 newsletters to close out the week (Dec. 30 and Dec. 31), including some special goodies you won’t want to miss. On Friday (Jan. 1), we’re giving Trung — and his central nervous system — a day off from Red Bull.

The Big Idea
dirtbike race

Source: Piñata Farms

The streaming wars are heating up. Who will win?

Raise your hand if you watched Die Hard Wonder Woman 1984 or Soul over the weekend.

The release of these blockbusters on HBO Max and Disney+, respectively, are among other major streaming developments, as noted by The Economist:

  • Warner will release 17 feature films on HBO Max in 2021
  • Comcast’s Universal Pictures will make films available online 17 days after hitting AMC theaters
  • ViacomCBS’ Paramount Pictures sold films to Netflix instead of releasing them in theaters

The biggest mic drop was from Disney+, which announced 10 new Star Wars series, 10 new Marvel series, and 30 other series/films.

By 2024, Disney will spend $14-16B a year on content

This is in the ballpark of the $17B outlay Netflix made in 2020.

In fact, the meteoric rise of Disney+ makes it the only real contender to Netflix’s streaming crown (to wit: Netflix has an industry-low churn rate of  2-3%).

Disney forecasts 260m subs by 2024, which could put it on track to eventually overtake Netflix, currently with 195m users (not including the 10 college friends you share your account with).

Traditional TV networks going digital will see profits crushed

Media analyst Doug Shapiro lays out why:

  • Cable TV is very profitable, with consumers paying for bundles they mostly don’t watch (e.g., 100s of channels)
  • TV is bigger than streaming: Traditional TV made $100B (ads, affiliates) in 2019, which is 5x streaming ($19B)
  • Streaming monetizes worse than TV: A pay TV home generates 6x more revenue than a pay streaming home

Further, none of the traditional networks (other than Disney) have been able to capture significant streaming share. WarnerMedia, NBCUniversal, ViacomCBS, Fox, and AMC all have lower streaming share vs. TV.

Source: Doug Shapiro

What about Apple and Amazon?

These 2 tech giants are using Apple TV+ and Prime Video, respectively, to subsidize the rest of their business:

  • Apple: All that sweet high-margin hardware
  • Amazon: Literally everything in your “one-day shipping” shopping cart right now

The non-Disney TV networks (AKA subscale streamers) have no choice when it comes to streaming, per Shaprio.

“But they are ultimately fighting for share of a shrinking pie,” he says. “The TV industry is likely to change radically as a result.”

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Snippets
  • Speaking of the Wonder Woman sequel, it pulled in almost $17m last weekend, making it the highest pandemic box office open. This is way off from the first film’s $100m open but — all things considered — a positive sign for the theatre industry.
  • The S&P 500, Nasdaq, and Dow all briefly hit record highs on Monday after the $900B stimulus bill was signed into law, averting a government shutdown and extending unemployment benefits.
  • Bitcoin’s market cap rose above $500B after a holiday rally. It took only 12 years since its founding to reach that milestone… meaning the Winklevoss twins finally bested Zuck, who took 13 years to get Facebook to half a trillion.
  • Game over: Alphabet’s AI division DeepMind keeps obliterating all the games us lowly humans have made. Its new AI program MuZero can master chess, shogi, and Atari without knowing any rules in advance.
  • India’s version of the Chinese super app, WeChat, could be… some combination of Facebook (e.g., WhatsApp) and Google (e.g., Maps) products, according to one of India’s tech billionaires.
  • China reins in Jack Ma: The government wants Alibaba’s payment arm Ant Group to focus on payments, meaning its ventures into investment and insurance may slow. (Read more on the Chinese government vs. Jack Ma here).
 
Clean Energy
boat gif

Nuclear tech: Coming to a boat near you?

What happens when you cross the scientist nerds from the sitcom The Big Bang Theory with the Lonely Island’s “I’m On a Boat” music video?

Seaborg — a Danish startup putting nuclear power plants on boats.

The team of PhDs and engineers just landed ~$24m in funding, jumped their first regulatory hurdles, and could be powering coastal cities by 2025.

Seaborg uses nuclear tech known as molten salt reactors (MSRs)

This type of reactor is able to operate at lower temperatures — and, thus, reduce explosion risk — as compared to many reactors in operation today.

Research on MSRs stalled in the 1970s, partly because a key ingredient (thorium) can’t be turned into bombs. But they have lots of peaceful advantages:

  • It’s cheaper to build, more efficient, and can’t melt down
  • The nuclear waste can potentially be used as fuel
  • It can also supply heat and clean water to homes

Each of Seaborg’s nuclear barges can power ~200k homes…

… run for 20+ years, and be a potential source of energy for ~1B people — mostly in sub-Saharan Africa and South Asia — without power.

These nations have to balance supplying power to their populations while also managing climate change risks.

Nuclear offers an alluring option — generating ~1.5% of the CO2 of coal power, and requiring <10% of the raw materials of wind, hydro, and solar farms to build.

With the course Seaborg is charting, those figures should drop even further — all without the risk of a Big Bang.

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New Money
Healthcare Billionaires

The pandemic minted 50 new billionaires in the healthcare sector

Sharp suits defined the rise of Wall Street, while hoodies and Patagonia vests were a sign of Silicon Valley’s riches.

Well, now it’s the lab coat’s time to shine.

According to Forbes, there were 50 new billionaires — scientists, researchers, and doctors — in the healthcare sector this year.

The majority of these billionaires are from China…

… the site of the COVID-19 outbreak and home to more than 30 new “3-comma club” members.

Here are other notable members:

  • The team behind Pfizer’s vaccine: Uğur Şahin (net worth = $4.2B) — a Turkish physician — founded Germany-based BioNTech in 2008 with his wife, Özlem Türeci, the company’s chief medical doctor. The team partnered with Pfizer on a vaccine.
  • The Moderna team: Three billionaires were minted from the other major vaccine. Stéphane Bancel ($4.1B) is the CEO, while Timothy Springer ($2.0B) and Robert Langer ($1.5B) are professors at Harvard and MIT, respectively, who both made early investments in Moderna.
  • The vial maker: Stevanato Group is “the world’s second-largest producer of glass vials and a prominent supplier of vials for more than 40 Covid-19 vaccines.” Its president, Sergio Stevanato, is worth $1.8B
  • The lab man: From antibody tests to vaccine trials, Cincinnati-based Medspace does it all. Its founder and CEO, August Troendle, is worth $1.3B.
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The Hustle Says

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Netflix fact of the day
Netflix Prize Leaderboard

The leaderboard for the Netflix Prize in 2009 (Source: Netflix)

The Netflix Prize was a competition launched by (you guessed it) Netflix in 2006 to improve its recommendation algorithm.

Netflix — still only a DVD mailer at the time — offered $1m to a person or team that could “predict user ratings for films, based on previous ratings without any other information about the users or films.”

The raw data used included 100m+ ratings made by 480k+ users for 17k+ films.

In September 2009, the winning team — BellKor’s Pragmatic Chaos team (which included a group of AT&T scientists) — was awarded the prize, but Netflix never used the algorithm.

Why?

The engineering costs were too high, and there was the rise of a “next level” of personalization: streaming, which Netflix began to offer in 2007.

TRENDS

The industry raising $325M in one month…

Earlier this month, the Trends team dove into Esports – a multi-billion dollar industry that’s still in its “early innings.”

Funding in the space is exploding: This October alone saw ~$325m raised. Earlier this fall, Epic Games (creator of Fortnite) netted a cool $1.78B.

So, where’s the white space?

Here are just a few ideas from this week’s Trends report:

  • Gaming Tourism: In August we touched on birding tourism, a relatively tiny industry that generates ~$41B/year in revenue in the US. Post-COVID-19, travel and tourism packages for gamers could bring in far more. Entrepreneurs could create on-the-ground themed experiences, or focus on accommodation and eateries.
  • College Esports: Opportunities in gaming coaching (already a $1B industry) and recruitment.
  • Esports Betting: Cash is often not the chosen currency, and new betting formats are creating white space.

We dove deep into these and dozens of other ideas in this week’s Trends report.

If you’re not already a member of Trends, sign up today for a $1 trial to get access to the full report and start receiving a brand new Trends report every week.

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