New direct-to-consumer online video subscription services from the Walt Disney Company, Apple, and Warner Media are expected to launch in 2019, with NBCUniversal following in 2020. These new services have the potential to add 53 million paying subscriptions to the United States market by 2023, effectively growing the total number of subscribers by 25 percent. This subscription growth would generate up to $3.6 billion dollars in incremental revenue for the direct-to-consumer channels business in the U.S. by 2023, according to business information provider IHS Markit (Nasdaq: INFO).

“Subscriber growth of this magnitude assumes an aggressive strategy from all the major services,” said Dan Cryan, executive director of research and analysis, IHS Markit . “This strategy could include making movies available earlier or bundling, either at no extra charge or as a low-cost add-on, with other products and services that already have large customer bases. Less aggressive policies would result in lower overall subscriber growth, but they would still expand the video subscription market.“

According to the “ Disney, Apple, Netflix: Scenarios for the Future of Online Video ” report from IHS Markit, Netflix and Amazon Prime will continue to lead the market for the next few years. However, Apple could potentially catch up with Hulu by 2023, depending on what happens to that service after Disney’s acquisition of Fox has been finalized. “A successful Disney service would also be among the top-tier services in the U.S. by 2023,” Cryan said.

Content alone won’t be enough to guarantee success

In all scenarios explored in the IHS Markit study, the market for pure-play video services will become exceptionally competitive. It also seems likely that high-quality content will soon not be enough to guarantee success, because there will be a large number of competitors with their own strong content libraries. Consequently, by 2023 there are likely to be very few pure-play subscription-video channels with significant scale in the United States.

“As the video subscription market grows and becomes more competitive in the long-term, the focus of the battle is likely to shift away from the questions about the available content, toward a discussion of the other assets these companies can leverage. Examples include heavy cross-promotion on traditional TV channels, theme parks and other properties, or packaging with other services, like mobile phones.”

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