Streaming video has been ascendant for more than a decade now. Even as the U.S. market reaches what could be the streaming saturation point, other markets are helping the business grow faster than ever.
While the ever-growing market presents a lot of opportunity, it hasn't exactly been a free-for-all. A decade has been more than enough time to establish a firm pecking order. Some streaming services are simply bigger and more important than others. Here are the top services in subscribers as things stand right now -- and how they got here.
Netflix: 137 million subscribers
Netflix (NASDAQ:NFLX) has the most subscribers of any streaming service, but saying so understates the point. It's not just that it has more subscribers than, say, Hulu. It has way more subscribers than Hulu: more than six times as many, reporting 137 million around the world at the end of the most recent quarter.
So how did Netflix get to the top of the heap?
For starters, it has been in the space the longest. When it debuted its streaming service in 2007, there was nothing else like it on the market. There weren't even many ways to actually watch Netflix on TV yet; Roku's first streaming box arrived shortly after Netflix's big streaming debut.
That early arrival gave it a head start that has proven impossible for others to overcome, at least so far. Netflix is the streaming service "everyone" already has, which means it's an indispensable app for every new streaming platform or device to offer. Not one major streaming platform (Roku, Fire TV, Chromecast, Apple TV, and Android TV) lacks support for Netflix.
Content providers have been reasonably cooperative, too. Netflix cut streaming licensing deals before there were competitors to help drive prices up. It gained a huge library, and when the competitors did finally arrive, it began making smart investments in original content to keep future content costs down as licensing costs rise.
Amazon: 100 million Prime subscribers; 26 million U.S. video viewers
Amazon (NASDAQ:AMZN) has more than 100 million people subscribing to its Amazon Prime service, which includes a SVOD [streaming video on demand] service. The total number of Prime subscribers is close to Netflix's number, but the streaming video perk isn't used by all Prime subscribers.
Amazon has not been keen on sharing too much in the way of specific user counts for its various Prime perks, but a document that Reuters acquired earlier this year suggests a figure of about 26 million U.S. viewers of video content on Prime.
Amazon's secret sauce for success is integration, making Prime Video part of the Prime subscription that most people probably buy for the free two-day shipping. It has also pushed Prime Video through its Fire TV platform. And those Fire TV devices are pushed on Amazon.com, where Prime memberships offer two-day shipping as well as Prime Video, and...you get the picture. Amazon uses its size and the breadth of its offerings to connect its different investments and cross-promote them whenever possible.
Hulu: 20 million subscribers
Hulu looks small compared with Netflix, but its "more than 20 million" subscribers in the U.S. are pretty impressive relative to many other competitors. It exists somewhere between Netflix and tiny niche streaming services that struggle to survive. And Hulu is trying to grow: The company launched a "skinny bundle" live TV streaming service in 2017 called Hulu with Live TV that offers live sports, news, and entertainment in addition to the Hulu library. The number of Hulu with Live TV subscribers is relatively low -- it just hit 1 million -- but that's a solid number in a competitive, low-margin skinny-bundle market.
Hulu gained its popularity by offering subscribers more current content than other streaming services. It presents episodes of shows from seasons in progress, rather than waiting for an entire season to end.
There is another reason it's here, though. It's owned by big, big companies: Walt Disney (NYSE:DIS), Comcast (NASDAQ:CMCSA), and AT&T (NYSE:T) all own a chunk, with Disney now controlling a majority of the company thanks to its acquisition of Twenty-First Century Fox, which had its own share.
The studios at those companies produce TV shows and movies that air on network television channels and then on Hulu, and those studios don't want it to fail. Hulu is likely to become more important to its parent companies as their studios' content become less appealing to its competitors. Big corporate backing has kept Hulu afloat in tough times and has helped subsidize the brand's entry into the notoriously low-profit live TV streaming space. Hulu got here by being able to weather storms and keep finding a niche.
Tubi TV: 20 million installs; "millions" of active users
Tubi TV is a free service, so it's hard to accurately measure its user or "subscriber" base. Lots of people have downloaded Tubi TV, and plenty have made user accounts (while free, Tubi encourages users to create accounts so that it can sync activity across devices and serve up customized recommendations). It is a private company, and it hasn't been forthcoming about user counts, but CEO Farhad Massoudi said earlier this year, according to Forbes, that the service boasts "millions" of active users. Multiple millions would put Tubi TV above most, if not all, skinny bundle services, but still pretty far behind Hulu and Amazon.
Still, millions of users are impressive. So how did Tubi TV get here? By taking ad-supported video on demand (AVOD) by storm. It launched with a library of TV shows and movies that was bigger than that of its main AVOD competitor, Crackle. Parent company Sony has since rebranded Crackle as Sony Crackle.
There's precious little differentiation in the AVOD market, because content deals are rarely exclusive. Being the biggest AVOD service among such otherwise similar options gave Tubi TV the inside track, and gave Sony Crackle a doomsday scenario at the same time.
The future of streaming dominance
The current state of the streaming market suggests that arriving first gives services a massive advantage -- but not one that is insurmountable. Amazon's powerful integration of its services has helped it become something close to a peer of Netflix. And Tubi TV's big up-front investment in content helped it to shock-and-awe its way ahead of Crackle.
There may yet be a new streaming service that will rise to challenge these established ones. If that streaming service comes, though, it will have to find a way to replicate the success of Amazon and Tubi TV in rocketing up the pecking order.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Stephen Lovely owns shares of Amazon, AT&T, and Netflix. The Motley Fool owns shares of and recommends Amazon, Netflix, and Walt Disney. The Motley Fool has a disclosure policy.