With the number of new subscription video-on-demand (SVOD) services coming to the market over the next few months, understanding what drives consumers to subscribe can help determine winners and losers in the so-called streaming wars.

There are really only two factors that impact sign-ups for SVOD services: original content and perceived value.

The impact of both original content and perceived value on gross additions was on full display in Netflix's (NFLX -0.83%) second-quarter earnings results. Netflix blamed a smaller slate of original releases for its U.S. subscriber losses last quarter. At the same time, the price increase it announced in January fully rolled out to existing subscribers.

It wasn't just last quarter that demand for Netflix's original releases lined up with its net additions. Data from Parrot Analytics shows a strong correlation between expressed demand for Netflix original titles and the number of subscribers the service added, going all the way back to the start of 2016. Let's take a look at what that means for the forthcoming competition from Apple (AAPL -1.00%), Disney (DIS 0.09%), AT&T's (T 1.27%) WarnerMedia, and Comcast's (CMCSA -0.02%) NBCUniversal.

A person holding a tablet streaming video.

Image source: Getty Images.

Original content is king

There's a clear odd man out in the race to acquire and produce original content for a streaming audience. NBCUniversal's Peacock service will feature a few original series when it launches in April. It'll rely on some fully original titles like Rutherford Falls from Mike Schur, some adaptations like Dr. Death based on the podcast, and some reboots like Saved By the Bell. Overall, however, the original content slate seems thin compared to the competition.

Disney has an original content budget of a little more than $1 billion for fiscal 2020, and it's producing new stories around its popular IP (intellectual property) from the Star Wars and Marvel universes as well as various other Disney properties. Apple is spending billions on big-budget productions starring big names, including the Jason Momoa-led See and The Morning Show starring Jennifer Aniston, Reese Witherspoon, and Steve Carrell. Meanwhile, WarnerMedia plans to increase HBO's content budget by about $500 million to fuel new originals for HBO Max along with some exclusive original series and films for the service.

Apple TV+ will exclusively offer original content, while all of its big competitors will feature originals alongside a back catalog of older films and series. But if originals are what drive consumers to sign up for a streaming service, Apple may be spending most efficiently for new users. WarnerMedia, NBCUniversal, and Netflix are all spending hundreds of millions for the rights to series that first aired between 10 and 30 years ago. Disney expects to pay itself licensing fees between $1.5 billion and $2 billion per year.

Ultimately, it only takes a few big hits with audiences to drive new subscribers. But the more bets you place and the more you can shift the odds in your favor (with content based on popular IP), the more likely you are to succeed.

Giving subscribers a good deal

There's no doubt that price is a consideration for consumers when considering their entertainment options. The pay-TV industry has seen millions of subscribers leave as less-expensive alternatives like Netflix have increased in popularity. AT&T has notably seen hundreds of thousands of its video subscribers cancel over the last year as it focused on more profitable customers and raised prices for its services.

While blockbuster originals might get consumers interested in an SVOD service, they're not going to sign up unless they think they can get good value for their money.

Apple is offering a tremendous value for anyone planning to buy one of its devices -- a free year of Apple TV+. As a result, Apple TV+ will have tens of millions of "subscribers" in just a few months. Disney+ is also offering considerable value for its service at just $7 per month or $70 per year. It'll also offer a bundle of Disney+, Hulu, and ESPN+ for just $13 per month. The bundle could increase the perceived value for the price.

Meanwhile, WarnerMedia finds itself in a pricing dilemma. HBO Max will include all of the content of HBO Now, which currently costs $15 per month. It's not able to lower that price due to existing relationships with distributors, which still account for the vast majority of HBO's subscribers and revenue. But in order to scale to the levels AT&T wants it to, it'll need to offer much more value for subscribers. WarnerMedia hasn't announced pricing for HBO Max.

Peacock may present a great value to some consumers and a terrible value to others. Comcast plans to offer an ad-supported version of the streaming service to all of its video subscribers, and it might partner with other distributors to include the service with their cable bundles as well. It'll also offer a paid ad-free version to anyone. For cable subscribers who don't mind ads, Peacock is a great offer, but it's not clear Peacock will be able to compete for entertainment budgets for the ad-free version.

What to watch

With the big new streaming services hitting the markets, investors will want to pay very close attention to how critics and consumers respond to the originals on each service. Investors should fully expect Disney's and Apple's marketing machines to push their new series and films into the cultural zeitgeist as best they can, but that also carries an added expense and additional risk.

Meanwhile, we still await additional information from WarnerMedia and NBCUniversal. Pricing will be key for both of their services, and it'll be important to see how consumers respond and whether they can see yet another service fitting into their budgets.