We've had beer wars, cola wars and, for those who remember, the legendary Macy's versus Gimbels rivalry. Right now cellphone marketers are exchanging blow after blow. So who are the next combatants from the school of Coke and Pepsi, or Apple and Samsung?
So far the ascendant streaming services haven't waged much of an ad war, but that seems likely to change. The subscriber counts and video content of all three are continually growing by leaps and bounds, increasing their competition, costs and potential rewards at a rapid pace. Netflix, which offered about 1,000 movies and TV episodes when it began streaming videos in 2007, now has thousands more for its 29 million US subscribers. Just last week it signed a deal with the Weinstein Co. for exclusive rights to its movies starting in 2016, a pact Harvey Weinstein called "probably the biggest" in the company's history. One media analyst estimated the cost to Netflix at $30 million -- per year.
Amazon's free-shipping-and-streaming-video combo, Prime, has meanwhile accumulated the rights to 40,000 titles and episodes since 2011 and more than ten million subscribers. Hulu owners Comcast, Disney and 21st Century Fox just decided not to sell the service and instead increase their spending on it by $750 million. The Hulu Plus premium offering generated $695 million in revenue last year and counts about four million subscribers.
All three services are doubling down on exclusive original content, including Netflix's Emmy-nominated "House of Cards" and its just-announced forthcoming Aziz Ansari stand-up comedy special.
As a result, we are all streaming video more and more. The average person spent 8 hours and 20 minutes per month streaming video in the first quarter of this year, nearly three hours than a year earlier, according to Nielsen.
With every other vector on the rise, it's only a matter of time before the consumer marketing gets much more serious. Netflix spent a somewhat respectable $160 million advertising in measured media over the 12 months ending in March, over half of it on display ads online, according to Kantar Media. But Hulu spent under $40 million. And Amazon spent less than $10 million on Prime.
These ad expenditures are a fraction when compared to the dollars being invested in the more established products and hyper competitive categories such as automotive, quick service restaurants, movies and discount department stores.
The companies have also not yet begun directly targeting one another in ads. Netflix informs its investors that of its 100 most popular movies and 100 most popular TV shows, Amazon has only 74 and Hulu Plus offers just 27. In the future couldn't it create an ad highlighting that selling point to the general public?
The streaming video space is rapidly expanding, moreover, beyond Netflix, Amazon and Hulu. Redbox Instant with Verizon and Wal-Mart's Vudu service offer some competition, and there are likely more to come. A "Halo" TV-type series will be available on Microsoft's Xbox gaming console, and YouTube has scores of professionally made and long-form video channels. And then there are the "TV Everywhere" initiatives from the traditional TV industry, which will presumably eventually become more coherent and heavily promoted.
Netflix, Amazon and Hulu should follow the example of Samsung, a mobile competitor that is in a product category battle with Apple. Its U.S. ad spending in measured and unmeasured media grew 58% last year, according to Ad Age DataCenter estimates -- more than any other major marketer. In one sign of Samsung's success, many rivals now target the company in their ads instead of Apple.
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