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Streaming wars just warming up

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Robert Iger, Chief Executive Officer of Disney, poses in “Star Wars: Galaxy’s Edge” during a media preview event at Disneyland Park in Anaheim, California, May 29, 2019.

Mario Anzuoni | Reuters

Disney+ is here, ushering in the unofficial kickoff to “The Streaming Wars” — the slew of monthly subscription services that are flooding the market to win your last incremental entertainment dollar.

But in reality, “war” is a misnomer for what’s about to happen in the world of streaming video. Perhaps there will be a day, years from today, when Disney+, Netflix, Hulu, Amazon Prime, AT&T‘s HBO Max, a hypothetical melded product from CBS and Viacom, Comcast-NBC Universal’s Peacock, a service from Discovery Communications, Jeffrey Katzenberg’s Quibi, Lionsgate‘s Starz, Apple TV+ and others all fight for your wallet share, with some surviving and others failing.

In the meantime, the average consumer isn’t going to look at a menu of a dozen options and select three or four, thus determining winners and losers. There are too many complicating factors for such a simple calculation. Some services already exist (Netflix, HBO) and will be largely grandfathered in by their existing subscriber bases. Others come with additional benefits (Amazon) that make “losing” extremely unlikely.

Here’s a more realistic vision of what’s about to happen over the next year.

Disney+

The idea of a streaming war suggests conflict, or at least some degree of unpredictability. But when it comes to the streamers, Disney+ can’t lose, if losing means rejection by most consumers. Disney+ is going to be an essential part of any family’s streaming diet.

There’s not much guesswork here. Disney is charging just $6.99 per month for nearly its entire back catalog of Star Wars movies and related series, Marvel movies and series, Pixar movies, old Disney movies, 30 seasons of “The Simpsons,” Disney Channel shows, 35 original movies and shows in year 1, and much more.

If a streaming service were selling just Marvel and Star Wars series and movies, it would a significant player in the “over-the-top” non-cable world. Disney’s offering is simply too robust to fail.

Indeed, Disney signed up more than 10 million subscribers for Disney+ in less than two days!

One way to define success or failure is if Disney hits its own internal subscriber targets. But those numbers are home-cooked, selected by the company to provide achievable benchmarks. Disney estimates it will have 60 million to 90 million subscribers by 2024. Disney has already struck a partnership with Verizon that will give away Disney+ for free to Verizon unlimited data subscribers and new Fios and 5G broadband homes. MoffettNathanson estimates there will be 18 million Disney+ subscribers by the end of Disney’s fiscal year 2020.

Amazon Prime Video

Amazon will be a “winner” by default. Prime Video comes with Amazon Prime subscriptions, and it’s going to make sense for tens of millions of Americans to get free shipping on Amazon. Prime Video, which spends billions each year on original movies and shows including “Fleabag” and “The Marvelous Mrs. Maisel,” comes as a throw-in for most consumers. It almost definitionally can’t lose, unless Amazon, itself, decides video no longer moves the needle for its Prime subscribers.

NBC’s Peacock

NBC is leaning toward offering an advertising-supported version of Peacock for free to everyone, sources told CNBC earlier this month. While there may be tiers of the service that offer more content (and no ads) for a price, NBC has decided that advertising revenue can make up for subscription revenue. As a result, NBC isn’t really playing the same game as everyone else, and therefore also can’t really lose. A lot of people are going to subscribe to a free service. It’s free.

HBO Max

About 34 million U.S. subscribers already pay for HBO. So when AT&T announced last month that HBO Max would be the exact same price as HBO, it can’t totally lose — at least if “lose” means being totally rejected. As soon as it strikes distribution deals, current HBO customers almost certainly will take the additional HBO Max content for free.

The question then becomes if enough new subscribers will come aboard to cover the billions AT&T plans to spend on new content.

As Netflix CEO Reed Hastings said earlier this month, using customer signups as a metric for success is flawed because it’s too easy to maneuver. AT&T says it wants 50 million U.S. subscribers by 2025. But AT&T is giving away HBO Max to its premium unlimited wireless subscribers and top-tier home broadband customers. And if AT&T finds that few people are subscribing, it can simply offer HBO Max to more AT&T customers for free to meet targets. AT&T has about 160 million total mobility connections and customers

Apple TV+

Apple is giving its streaming video service away for free for a year before charging $4.99 per month to customers. But Apple can easily change this offer if it notices that few customers are paying for its limited library of originals, either bundling the service with its more popular music streaming service or extending the offer indefinitely as consumers buy new Apple products. Apple hasn’t released an internal streaming subscriber goal because the whole point of Apple TV+ isn’t to get you to pay for video — it’s to keep you using Apple electronic devices. Like Amazon, Apple will continue to be in the streaming game as long as it wants to be in the streaming game.

Netflix

So if all these other services will win, or at least comfortably exist, does that mean Netflix will lose? Probably not. Because so many of the services are free or cheap or throw-ins as benefits to products you’re already paying for, Netflix isn’t in any immediate danger of losing its place as the centerpiece of streaming solutions.

Netflix also outspends everyone, paying $15 billion a year for content, and has more than 160 million global subscribers. T-Mobile wireless subscribers get Netflix for free indefinitely.

First-mover advantage, brand recognition and massive content spend on original programming will almost certainly keep Netflix as an essential part of an average consumer’s streaming package.

Eventually, it’s possible that millions of subscribers will conclude that a bundle of, say, Disney+ and HBO Max is a good replacement product for Netflix. But while that decision may impact Netflix’s marginal growth, it probably won’t disrupt the company’s global expansion ambitions.

Everyone else

Finally, we reach the contestants in the actual Streaming Wars, at least in the near term — everyone else. Congratulations, Quibi! I’m not sure you will succeed. Starz and Discovery? Maybe you’ll stick, or maybe you’ll need to merge with CBS and Viacom to gain the necessary scale to compete. Everyone else I didn’t mention? You’re here until you prove yourselves.

These are the players Americans could actually refuse to spend money on, driving them out of business with more choice. This is why Hastings noted that a better metric for success may be time spent on a service instead of subscriber numbers.

These streamers are the junior varsity of available products. Of course there will be cut downs at this level.

There are a lot of streaming services. Most are going to stick around for a while. Investors can dial back the Streaming Wars rhetoric.

There’s good news for consumers, too: You probably already pay for a lot of these services, and many of the new ones are free for a while. Your entertainment budget isn’t going to blow up just yet. Relax.

(Disclosure: Comcast’s NBC Universal is the parent company of CNBC.)

Follow @CNBCtech on Twitter for the latest tech industry news.

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Amazon Fire TV Stick and Fire TV Stick Lite announced, start at $30

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Amazon Fire TV Stick Lite

Amazon

Amazon announced two new Fire TV products during its big online hardware event on Thursday. Amazon’s Fire TV gadgets compete directly with Roku and Apple TV, offering people access to popular apps like Disney+, Netflix, Hulu and more. 

Amazon says people are spending more time in front of TVs than ever before due to the spread of coronavirus. It sees the TV as a the center of the household and wants to get even more features in front of users to keep them coming back. The new features may help it compete more aggressively against Roku, which still has a 50% market share of global connected TV streaming hours with strong growth opportunities, according to an analyst note from Deutsche Bank in August.

The new Fire TV Stick and Fire TV Stick Lite will be the first of Amazon’s streaming gadgets to offer a redesigned home screen when they launch next week, although the changes will come to existing Fire TV devices beginning in the first quarter of 2020, too.

Here’s what you need to know.

Easier to find stuff to watch, new user profiles

The new Amazon Fire TV interface, which includes user profiles.

Amazon

Amazon’s vice president and general manager of Fire TV, Sandeep Gupta, told CNBC that Amazon received feedback from users suggesting the home screen was too cluttered. Amazon worked on a redesign to make it easier to find stuff to watch and to quickly jump into live TV.

“Today, you can search for comedies, or stuff by Tom Cruise, but we’ve tried to make a landing spot for when you don’t know what you want to watch. This shows you stuff that’s free, movies and TV shows, broader categories, apps and more,” Gupta said. Gupta said the quick access to a TV guide will provide a familiar experience for people transitioning from cable TV to streaming.

The new software supports up to six user profiles. That means you can log into your profile and see the shows and movies Amazon recommends to you, while your significant other can use a separate account for their own personalized recommendations. You can also create profiles for children that will only show kid-friendly content you’ve approved. Previously, you’d have to switch profiles inside each app, like Netflix or Hulu, to see content recommended to you inside those apps.

The latest software provides a new option to see your Ring or Alexa-ready video cameras on your TV through picture-in-picture — kind of like seeing a small window on your screen — while you’re watching movies or TV show. 

Finally, Amazon is expanding its Alexa voice assistant on Fire TV. Gupta told CNBC that there are billions of requests to Alexa and that it has seen an 80% growth in requests on Fire TV over the last year, although he did not provide specific figures.

“It’s a good indication people like Alexa and are using it more to manage shopping routines, recipes, whatever it is, in a centralized place,” he said. Alexa’s responses now pop up and cover just a small part of the screen so you can keep watching or doing what you were without being interrupted.

Video chat for Amazon Fire TV Cube

The Amazon Fire TV Cube

Amazon

Separately from the Fire TV sticks, though still part of the new software that will roll out to other Amazon Fire TV gadgets during the first quarter of 2020, is new video chat support.

People who own the second-generation Fire TV Cube will soon be able to add a Logitech webcam for video chat through Fire TV. It’ll support Alexa video calls and, later, Zoom. It won’t work on the Fire TV sticks since it requires a USB port that’s only found on the Fire TV Cube.

New Amazon Fire TV Sticks price and release date

The new Amazon Fire TV Stick

Amazon

The Fire TV Stick and Fire TV Stick are relatively similar. They’ll cost $39.99 and $29.99, respectively. The Fire TV Stick offers support for newer technologies, like HDR and Dolby Atmos if your TV and speakers support them. Neither support 4K video and are capped at 1080p, so, don’t buy them if you have a 4K TV and want the best quality possible.

If you need 4K, look at the Fire TV Stick 4K, which costs $49.99 but doesn’t ship with the new software. The Fire TV Stick Lite is more basic without Dolby Atmos and some of the more advanced Wi-Fi support for more stable streaming. Both are said to be 50% faster than the last-generation Fire TV Stick, however, and both come with voice remotes that you can use to speak with Alexa to open movies, TV shows, apps and more.

Pre-orders for the new Fire TV Stick and Fire TV Stick Lite begin on Thursday and they’ll begin arriving to customers on Sept. 30.

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Spotify CEO to invest over $1 billion for ‘moonshot’ bets in Europe

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Spotify CEO Daniel Ek

Toru Yamanaka | AFP/Getty Images

LONDON — Spotify CEO Daniel Ek announced Thursday that he will commit 1 billion euros ($1.2 billion) of his own resources to invest in European start-ups.

Speaking at a virtual talk hosted by start-up event organizer Slush, Ek said he would use the funds to make “moonshot” bets in the continent, focusing on deep technology — new tools that are focused on scientific innovation. Among the sectors Ek is looking to invest in are health, education, machine learning and biotechnology.

“I want to do my part; we all know that one of the greatest challenges is access to capital,” Ek said, adding he wanted to achieve a “new European dream” — akin to that of the American Dream — over the next decade.

According to Forbes, Ek is worth $3.6 billion, indicating he’s earmarking roughly a third of his own wealth for the investments.

Ek spoke of his frustration with the number of European tech companies being bought up by U.S. rivals, as well as a brain drain of talented entrepreneurs leaving the region for Silicon Valley. One of the most notable examples of European entrepreneurs heading to the U.S. is payments giant Stripe, whose Irish founders went to California to build their company.

“I get really frustrated when I see European entrepreneurs giving up on their amazing visions selling early on to non-European companies, or when some of the most promising tech talent in Europe leaves because they don’t feel valued here,” Ek said. “We need more super companies that raise the bar and can act as an inspiration.”

Europe is often seen as lagging the U.S. and China with respect to technology. While those two economic powerhouses have produced some of the world’s biggest tech companies — Amazon, Microsoft, Tencent and Alibaba, to name a few — Europe is yet to offer a similar scale of success in the industry.

Last year, a record $34.3 billion flowed into Europe’s fledgling tech start-ups, according to figures from venture capital firm Atomico. Companies in the region have continued to raise substantial sums of cash this year, with “buy now, pay later” service Klarna raising $650 million and digital banking app Revolut securing $580 million in fresh funds.

Ek said he will work with scientists, investors, and governments to make his investments. A $1.2 billion fund would see the Spotify founder competing with well-established venture funds like Atomico — itself founded by former Skype CEO Niklas Zennström — Balderton Capital and Northzone.

Another issue in the region’s tech ecosystem has been initial public offerings. Spotify, which is based in Stockholm, Sweden, listed in New York over two years ago, while London-based online luxury marketplace Farfetch also chose America for its market debut. Europe has lagged behind in terms of tech IPOs this year, while a raft of software companies are going public in the U.S.

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