Analyzing Trends Related to the Growth and Economic Sustainability of Streaming Services

Abstract

The video streaming market, dominated by platforms such as Disney+ and Netflix, is a multi-billion dollar industry that is rapidly redefining the ways in which Americans consume their entertainment. During the COVID-19 pandemic, hundreds of thousands of new users, limited in entertainment options and in desperate need of escapism, turned to these platforms, leading to unprecedented year-over-year growth for many of the biggest players in the space. Many different methods helped us in the task of analyzing said growth in order to predict the market’s future behavior.. Through the use of statistical analysis, we garnered an understanding of the current state of the market in the wake of the global pandemic. Consumer surveys helped us to better understand trends in individual behavior. Game Theory models proved useful in formulating theoretically optimal strategies for the production and release of original content. We even analyzed historical trends in the growth of similar, more established platforms, particularly music-streaming services, in the hopes that comparisons between the two types of services will allow us to better forecast video streaming’s future. We hypothesized that consumers’ post-pandemic behavior will likely depend on the individual platform; those that rely on acquired content may plateau or even regress in terms of monthly active users. On the other hand, platforms such as Disney+ that are attractive to many largely because of their established franchises will likely retain their boosted subscriber bases, though growth will still slow, perhaps disappointing investors. Due to this position, we proposed that the increasingly exorbitant costs of original content are perhaps the biggest threat to the market. Our findings revealed the future of the market to be more complicated than we had initially predicted. It seems apparent that the optimal production of original content is key to long-term platform viability, and is best analyzed through the lens of Cournot competition. However, survey results indicated that original content was a primary driver for only approximately half of all respondents, and music trends highlighted the perpetual need for ad-supported platforms.