AT&T’s (NYSE:T) is now officially coming after Netflix after the unveiling of a new streaming service. Notably, the telecom giant has been looking for ways through which it would have a piece of the burgeoning content streaming after acquiring Time Warner. Dubbed WarnerMedia after the acquisition, the company is preparing to launch HBO Max in under 12 months.
Video streaming market is on a roll
The video streaming market is growing exponentially. A Grand View Research report noted that by 2025, the market size should grow to $124.57 billion. In the forecast period, the market is anticipated to expand at 19.6% CAGR. In particular, the growth of the market is powered by the exploding demand for on demand video.
Already, the number of people subscribed to video streaming services like Netflix, Hulu, Showmax, and soon to HBO Max exceed cable TV subscribers. As the demand for video streaming content grows, cable TV will continue to face an uphill task to generate comfortable revenue.
HBO Max will undercut Netflix
The launch of HBO Max is something of a nightmare to Netflix. Notably, WarnerMedia, which owns the rights to Netflix’s second most watched show, “Friends,” has made it clear that it will not offer the show to Netflix beyond 2020. This is because HBO Max wants to capitalize on the massive following that the show generated to give it a head start in the business.
For Netflix, the launch of rival streaming platforms is more than double trouble. Another one of the platform’s most popular show “The Office” will be exiting. According to Comcast, which owns the rights to the show, “The Office” will go live on NBCUniversal. Seemingly, this is the same strategy as that for HBO Max.
The exiting of the shows might not come as a rude shock to Netflix. In particular, the company might have anticipated the events because it has taken some time and resources to develop original content for about six years now.
Therefore, as much as the loss of “Friends” and “The Office” will hurt Netflix’s viewership, the company will have more money on hand to venture into more original content.