Attack on Netflix: The billion-dollar battle for the streaming crown

It's been less than five years since Netflix landed its first big series hit with "House of Cards. Since then, the television market has changed so rapidly that time seems like an eternity. The success of the political drama starring Oscar winner Kevin Spacey in the role of the unscrupulous U.S. Congressman Frank Underwood made it clear once and for all: TV entertainment works even without cable providers and thick channel packages - no one can get around streaming anymore.

Increasing importance

Business is booming: Online video services that offer movies and shows on the Internet for a fee have by no means replaced traditional television, but their importance is growing steadily.

In the USA, more and more customers are cancelling their cable connections and becoming "cord cutters" who get their TV entertainment exclusively via the Internet. The trend is closely linked to the success of Netflix - the company that has shaped the business model from the start.

Founded in 1997 in Los Gatos, California, the company initially operated as an online video store, renting DVDs and Blue-ray discs. A steep rise followed: Netflix went public in 2003, and the company's value has since risen from $300 million to more than $86 billion. Behind the share price explosion is the thriving streaming service - the number of customers has grown from around 23 million to 104 million since 2011. Netflix is now available in over 190 countries.

Competition awakens

That's attracting competitors - even in the long-established entertainment industry. While U.S. media giant Disney only recently announced an online video service for 2019, Time Warner's popular pay-TV channel HBO has been available in the U.S. as an Internet subscription since 2015 with blockbuster series such as "Game of Thrones. Hulu, like Netflix a pioneer in the market, now also has financially strong industry giants behind it in the form of NBC Universal, Fox and Disney.

However, the strongest streaming rival so far is not based in Hollywood. Internet giant Amazon is best known for its aggressive expansion in online retail, but its Prime Video service has also been competing with Netflix for a long time.

Silicon Valley has also been getting more involved recently: Google is increasingly upgrading its Youtube video service with subscription models and professionally produced exclusive content. Facebook and Apple are planning to invest billions in exclusive video content, according to US media.

In the battle for the streaming crown, in-house productions, so-called "originals," are considered the key to success. These can be documentaries, films or talk shows, but above all series. HBO made a name for itself early on with classics like "The Sopranos" and "The Wire" and is still considered the quality leader today.

Megahits wanted

Despite a few notable successes, Amazon still lacks a big hit. Netflix also shines with some newer series, but is having a hard time catching up with "House of Cards" or "Orange Is the New Black.

The hunt for the next streaming megahit has sparked a veritable spending battle. Netflix plans to spend six billion dollars on exclusive content this year, Amazon 4.5 billion dollars according to an estimate by the bank JPMorgan.

Youtube doesn't name a budget, but is also upping the ante and can rely on Google's enormous cash reserves. Disney, meanwhile, is opening its war chest for its ESPN sports channel, which is set to launch as a streaming service in 2018.

In-house productions can turn out to be expensive flops, but if they are successful, they are not only lucrative as customer magnets. Attractive purchased content is also costly, and rights acquisition is often time-consuming. (Hannes Breustedt/SDA/DPA)