The Video Streaming Industry: Competition and Exclusive Content

The Video Streaming Industry: Competition and Exclusive Content

As economics students, one concept that we hear over and over again is the concept of competition – and for good reason. Competition drives innovation, and encourages businesses to improve their quality of goods and services at lower price points.[1] The stronger the competition, the more pressure there is to beat the competition – whether that be through lower prices, or more innovative products. This article explores the background of the video streaming industry and considers how competition has impacted the market.

Behind the scenes

The video streaming industry revolves around monthly subscriptions that provide viewers unlimited access to a large range of TV shows and movie content. The pioneer of the video streaming industry is Netflix, when it successfully launched its streaming service back in 2007.[2] Prior to this, content was often difficult and expensive to access, either through cable TV or DVDs.

Netflix revolutionised the industry, providing consumers quick and easy access to thousands of movies and TV shows for a relatively lower price. It grew rapidly, as more and more consumers shifted from traditional media to streaming services. The ease of legal access to shows and movies from Netflix and other services reduced the incentives for many individuals to pirate content.[3]

Where success lies, there are incentives for other firms to enter the industry. Numerous video streaming services such as Peacock, HBO Max, and Disney + have since joined the competitive industry, and are projected to reach over $70 billion USD in revenue globally in 2021.[4]

Streaming wars

With increasingly tough competition, streaming services ultimately needed a way to differentiate their services. To stand out to the audience, video streaming services have made significant investments into acquiring the rights to exclusive content – both originals and existing series. With video streaming services investing billions into original content each year, subscribers receive fresh content in addition to the thousands of other existing titles available. Some of the originals have even been critically acclaimed, most notably Netflix’s Stranger Things and Orange is the New Black. No doubt, competition has driven video streaming services to produce enticing originals to hook consumers’ attention.

However, there have been concerns regarding anti-competitive behaviour in the video-streaming industry. Consumers become forced to subscribe to a particular service if they want legal access to the series. Many series that were once available at a particular service are no longer available as the exclusive rights to the series were later purchased by a competitor. In many cases, they were simply withdrawn by the content owner to form part of their own streaming service! Netflix has lost many fan favourites, most notably The Office to Peacock[5] and Friends to HBO Max[6]. Disney has also pulled many of their series from Netflix in favour of their own streaming service, Disney+.[7] In particular, Peacock won The Office with a winning bid of $100 million per year for five years – beating Netflix’s bid of $90 million per year[8] – further emphasising just how crucial having the exclusive rights to popular series is in attracting subscribers. The streaming war has been more intense than ever before.

The streaming services’ dilemma

Game theory can be used to understand why it is rational to compete so intensely for exclusive content. The following table considers a market with two competing video streaming services. Based on the assumption that both services are identical, it arranges the competitor’s choices to purchase exclusives and the impacts on their profit into a grid:

If both services choose not to purchase exclusives, both services will earn $100 in profits. However, if one of the streaming services chooses to purchase exclusives to attract more subscribers and increase their profits, the other is at risk of losing their subscribers and profits. Due to competition, there is a clear incentive for each competitor to purchase exclusives. Evidently, buying exclusives yields a higher profit for each competitor regardless of what the other competitor chooses, resulting in the outcome known as the Nash equilibrium. The game highlights the intense competition in the streaming industry, and how the Nash equilibrium may not be the best overall outcome for both firms, as the combined profits of both services buying exclusives are lower than that of both services not buying exclusives. This is due to the additional costs incurred in purchasing exclusives.

Subscription fatigue

With different streaming services owning different exclusive content, consumers are forced to purchase multiple subscriptions to access their desired content. According to Deloitte US, those who subscribe to a video streaming service have, on average, four subscriptions which is up from three subscriptions pre-COVID.[9] In Australia, the average household spent $35.30/month for 1.9 services in 2019[10]; the statistics likely increasing due to COVID. While consumers are frustrated to have to purchase multiple subscriptions, it is naive to expect all the content you desire for just $10/month. However, the reality is that with so many streaming services available, consumers are experiencing subscription fatigue.[11] Although the incentives to pirate content had initially declined, the fact that many beloved series are now locked behind countless different services – combined with the increasing costs of multiple subscriptions – will likely cause many to return to piracy.[12]

Ultimately, video streaming services have provided enormous value to consumers by providing a cheap, easy, and legal way of accessing media content. Despite the anti-competitive issues in relation to exclusive content, video streaming services continue to offer great entertainment value to consumers. It will be interesting to see whether such services are sustainable under intense competition, and whether exclusive content will continue to dominate the industry in the future


[1] ACCC. (n.d.). About the ACCC. Retrieved March 4, 2021, from

[2] Hosch, W. L. (2020, November 9). Netflix. Encyclopedia Britannica. Retrieved from

[3] Choice. (2015, September 4). Piracy drops with “Netflix effect”. Retrieved March 6, 2021, from

[4] Statista. (n.d.). Video streaming (SVoD). Retrieved March 4, 2021, from

[5] Carman, A. (2020, December 14). The Office is leaving Netflix, but its first two seasons will be free on Peacock. The Verge. Retrieved from

[6] Alexander, J. (2019, December 23). Friends, once the second most streamed show, is about to disappear for five months. The Verge. Retrieved from

[7] Kastrenakes. J. (2017, August 8). Disney to end Netflix deal and launch its own streaming service. The Verge. Retrieved from

[8] Whitten, S. (2019, June 27). Why NBC is paying $500 million to stream ‘The Office,’ a show it already owns. CNBC. Retrieved from

[9] Deloitte. (2020). Digital media trends survey, 14th edition. Retrieved from Deloitte website:

[10] AMPD Research. (2020). Australian SVOD market reaches 10.2 million paying subs in April 2019. Retrieved from AMPD Research website:

[11] Deloitte. (2020). Digital media trends survey, 14th edition. Retrieved from Deloitte website:

[12] Feldman, B. (2019, June 26). Piracy is back. New York Magazine. Retrieved from