Amazon Prime Video and Hulu might look like similar streamers on the surface but underneath the bonnet, their respective owners have experienced Covid-19 in considerably different ways. Sarah Henschel and Max Signorelli, analysts at TBI sibling Omdia, explore how subscription numbers at Amazon’s Prime operation and Disney-owned Hulu might fare against three different scenarios.
The implications of the Covid-19 virus are constantly developing, so Omdia has gauged its impact according to three distinct scenarios. We assume that at the end of each these scenarios, societies will return to pre-Coronavirus consumption habits.
Scenario one: The virus lasts from Q1 through Q2. Impacts and closures are staggered with events starting in APAC and moving to western markets in the latter half of Q1.
Scenario two: The virus keeps consumers home-bound for six months relative to regional outbreak start (Q1 through Q3). Long-term, global supply chains start to be increasingly affected by lockdown measures.
Scenario 3: The virus keeps consumers socially distanced for 12 months, as a result of a second wave of infections or otherwise (Q1 2020 to Q1 2021). Restrictions in certain areas may relax throughout the year, but people will be encouraged to refrain from international travel, gatherings and large events.
Amazon Prime Video
• As primarily an e-commerce and web services company, Amazon as a whole has a lot to capitalise on during the Covid-19 outbreak. In any scenario or event, these gains across several verticals will help insulate any single Amazon business division for the duration of the crisis.
• Over 95% of Amazon Prime Video users come from subscribers to the wider Amazon Prime bundle, available in 19 countries worldwide. As the crisis further drives consumer purchasing habits online, this Prime bundle is likely to see significant uptake and with it, Prime Video users.
• Any future market launches could be delayed significantly depending on duration.
• A number of Amazon Prime Video’s titles come from co-productions with local programming operators. As Covid-19 impacts markets in various ways, it may be some time before production of these, as well as original content, can be restored. The service will offer 2019 movie Knives Out later in June.
• Twitch viewership will increase as consumers stay at home, despite the downturn in the e-sports industry. As Twitch increasingly looks at content beyond gaming, the knock on effect from increased general user uptake could be profound.
* As Amazon is prioritising essentials over general goods, impacts on the growth of the total Prime bundle are directly tied to developments in the e-commerce sector.
S1: 2020 subscribers up 24% YoY to 90.7m
S2: 2020 subscribers up 32% YoY to 96.3m
S3: 2020 subscribers up 44% YoY to 105.4m
• As consumers become price sensitive with a potential upcoming recession and higher unemployment, pay-TV cord-cutting will accelerate. In the US, where 2019 pay TV subscriptions fell 6.7% year-over-year, this could provide growth for Hulu Live TV as well as regular Hulu. The streamer, which offers originals such as The Handmaids Tale and Ramy, is $5.99 per month with ads and offers a lot of content which is very affordable compared to other popular streaming services, making it one of the first subscription services consumers may add as they have more time at home.
• Now that Hulu is majority-owned by Disney, lost revenues from Disney’s other verticals (theme parks, stores, cinemas) may limit Hulu’s R&D investments. Hulu will also feel the impact of studio and network programming delays. But like Netflix, Hulu has a large library of content as well as the new FX deal to lean on throughout production lulls.
• Comcast still owns a share of Hulu in regards to revenues and costs. The NBCUniversal owner has also previously expressed that it is not in a hurry to sell, but large swings in stock prices may entice Disney to try to buy full ownership.
• With the future of live sporting events unclear, ESPN+ will likely lose its subscriber momentum. This may impact forecasted uptake of the Hulu/Disney+/ESPN+ bundle, and in turn cause Disney to lose out on higher Average Revenue Per User (ARPU) subscribers. Bundled users are normally less likely to churn, but the lack of new ESPN content could hinder its perceived value. ESPN+ has worked to provide further content to subs with esports and documentaries like Michael Jordan’s The Last Dance.
S1: 2020 subscribers up 20% YoY to 36.5m
S2: 2020 subscribers up 26% YoY to 38.4m
S3: 2020 subs/revs up 36% YoY to 41.5m
Senior analyst Sarah Henschel and research analyst Max Signorelli work for Omdia’s Media & Entertainment division. The findings above, and coverage of the impacts on Netflix and Disney+, are from their April report titled COVID-19 Impacts on Media and Home Entertainment, Streaming, Digital, and Physical.