Undergraduate Dissertation
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Undergraduate Dissertation
Brand Management: Movie Theaters and Streaming
Platforms in the Context of Covid-19
Author
Eduardo Lope Ruiz
Supervisors
José Miguel Pina Pérez
Elena Oliete Aldea
Degree in Business Administration and Management
Faculty of Economics and Business
2021
Abstract
The aim of this dissertation is to study the importance of brand management in the cinema
sector for both movie theaters and streaming platforms in the context of Covid-19. To do so,
an analysis of the situation for cinemas has been performed, together with some measures
applied in order to palliate the negative effects caused by the pandemic. This situation
generated an increase in competitiveness for streaming services, which have been examined
with the aim of finding the competitive advantages created by their respective brand image.
Afterwards, a survey has been carried out for the purpose of finding patterns in the population
regarding their perceptions on both movie theaters and streaming services, all of it in the
pandemic context of the migration that has occurred from the former to the latter. Findings
confirm the opposite market tendencies for both of the areas studied, and verify how good
brand management is key in order to create an identity that will turn into future better results.
The absence of planning regarding brand image can be very detrimental, although most
companies are well aware of that. Regarding the relationship between movie theaters and
streaming platforms, the only solution points towards mutual cooperation.
Keywords: Movie theaters | Streaming platforms | Pandemic | Brand management | Image
Resumen
El objetivo de este trabajo es estudiar la importancia de la gestión de marca en el sector del
cine tanto para las salas de cine como para las plataformas de streaming en el contexto del
Covid-19. Para ello, se ha realizado un análisis de la situación de los cines, así como de
algunas medidas aplicadas para paliar los efectos negativos provocados por la pandemia. Esta
situación generó un aumento en la competitividad de los servicios de streaming, que han sido
examinados con el objetivo de encontrar las ventajas competitivas creadas por su respectiva
imagen de marca. Posteriormente, se ha realizado una encuesta con el propósito de encontrar
patrones en la población sobre sus percepciones tanto en las salas de cine como en los
servicios de streaming, todo ello en el contexto pandémico de la migración que se ha
producido de los primeros a los segundos. Los hallazgos confirman las tendencias opuestas
en el mercado para las dos áreas estudiadas y verifican que la buena gestión de la marca es
clave para crear una identidad que se traduzca en mejores resultados en el futuro. La ausencia
de planificación sobre la imagen de marca puede ser muy perjudicial, aunque la mayoría de
las empresas ya son conscientes de ello. En cuanto a la relación entre salas de cine y
plataformas de streaming, la única solución apunta hacia la cooperación mutua.
Palabras clave: Cines | Plataformas de streaming | Pandemia | Gestión de marca | Imagen
2
Contents
1. Introduction ........................................................................................................................ 4
2. Movie Theaters ................................................................................................................... 6
2.1. Context and causes of the situation.............................................................................. 6
2.2. Actions ....................................................................................................................... 10
3. Streaming Services ........................................................................................................... 16
3.1. Netflix ........................................................................................................................ 17
3.2. HBO ........................................................................................................................... 20
3.3. Prime Video ............................................................................................................... 23
3.4. Disney + ..................................................................................................................... 25
3.5. Others ......................................................................................................................... 27
4. Field Research .................................................................................................................. 28
5. Conclusion ........................................................................................................................ 39
Bibliographical References................................................................................................... 42
Appendix .............................................................................................................................. 49
Illustrations ....................................................................................................................... 49
Tables ................................................................................................................................ 53
Graphs ............................................................................................................................... 53
Survey ............................................................................................................................... 54
3
1. Introduction
Martin Scorsese, Oscar-winning director and admittedly one of the bests directors of all-time
once said: “Movies touch our hearts and awaken our vision, and change the way we see
things. They take us to other places, they open doors and minds. Movies are the memories of
our lifetime, we need to keep them alive” (The Film Foundation, 2021). It is this sentence
that gains importance nowadays, as it takes a crucial meaning when the focus is shifted
towards the movie sector situation we are currently facing. The Covid-19 pandemic has not
exactly “killed” movies, but instead has forced the industry to find a way of keeping them
“alive” in another ecosystem.
As expected, the closure of movie theaters worldwide following the spread of the
pandemic did not take long, and was followed irremediably by the cancellation or
postponement of several cinema festivals, as for example the worldwide known Cannes
festival (Crucchiola, 2020) and the equal delay of movie premieres, either temporarily or for
an indefinite time. Furthermore, the complete stoppage regarding film production lasted
months. As expected, movie theaters suffered tremendous losses, and even nowadays, with
some establishments open and new movies premiering, they are struggling to survive the
pandemic. So, how can movies be still alive?
There are always two sides of the same coin, and streaming services belong to the
benefited part of this study. They were already within us, identified as competition to movie
theaters, but from the moment the latter ones were closed, the numbers from the former ones
skyrocketed. According to some data from the Internet Madrid Exchange, the days following
lockdown in Spain, internet usage grew 23%, most of it from online video, which was 70%
of the total. The European Commission even asked the main streaming service providers to
lower the video quality available on their respective platforms, due to the fear of internet
traffic collapse (Neira, 2020).
Several movies planned for theater release ended up on streaming platforms, and some
of the newly produced ones landed there as well. This is how, without doing much noise,
streaming services have rescued some films during the pandemic. Nevertheless, and even
taking into account that online video companies have undoubtedly come out well from the
4
pandemic, their environment is still unstable. Entertainment is nowadays “A giant house of
cards that shakes” (Neira, 2020).
A couple of years before the pandemic, when Netflix produced the highly praised
movie Roma (A. Cuarón, 2018), a debate arose. The discussion was whether movies coming
from streaming services could participate in film festivals/awards or not. This happened in
2018, when few award-worthy movies were coming from online platforms. Now, the
environment for this kind of films regarding production and distribution is much different.
As an example of how the current situation stands, an analysis should be performed about
where, in Spain, the movies nominated to the 2021 Best Picture Oscar award have been
released. Out of the eight nominees in this category, only three of them were released solely
in cinemas, while one of them is planned to be on both the small and the big screen. The
other four are just available on streaming platforms (Ferreirós, 2021). This is a reflection of
not only today’s circumstances, but also of what is to come, as the future seems to have a
place for both movie theaters and streaming services, as this study intends to show.
Reactions to the pandemic have not occurred by themselves. This work focuses on
movie theaters and streaming services, where there has been a constant management, filled
inevitably with uncertainty and doubt, made by several companies from around the world.
Movie theaters, once reopened, have had to find a way to bring people back to the big screen,
with some strategies that will be mentioned later in this study. On the other hand, streaming
services have faced a lot of opportunities, which were seized whenever possible, thus
generating a bigger competition than the already existing one. Many companies have fed
themselves from the pandemic and are now in a much better position to challenge the rest.
Risks have been taken, decisions have been made, and different results have been obtained
depending on those choices. Both sides of the coin have been obliged to react, one of them
in order to significantly boost their business and the other one to minimize the damage and
ultimately, save it.
This is where the object of this study comes in. In order to understand the brand
management that has been made and its consequences, it is crucial to analyze the environment
where movie theaters and streaming platforms have had to coexist in. For the former ones,
their situation caused by the pandemic will be explained, and measures taken in order to
5
palliate the negative effect will be studied. Within this last part, a case study on the brand
image of a known cinema chain from Zaragoza, Spain has been included. Afterwards, the
main streaming platforms available in Spain will be analyzed, more specifically their
respective competitive advantages (or disadvantages) and how they want themselves to be
perceived by consumers. All of it in the context of the growing competitiveness they are
currently facing. Finally, a field research has been carried out, where key insights about both
movie theaters and streaming platforms were obtained, always taking into account the
changes provoked by the pandemic and the image of the companies studied in both sectors.
The relevance of the brand in the migration phenomenon from movie theaters to streaming
services is of essential importance in this dissertation.
2. Movie Theaters
2.1. Context and causes of the situation
2020 was one of the worst years in history for movie theaters. According to the agency
ComCore, from its annual report, the pandemic has produced, in Spain, ticket office losses
of around 446 million euros. This means a decrease of 72% with respect to the previous year.
Regarding viewers, only 28.3 million viewers were achieved, compared to the more than 105
million achieved in 2019, year in which a decade record was obtained. The negative impact
to be considered, which started in March with the total closure of cinemas, is even bigger if
the numbers from January and February are studied, as the tendency was positive with a 7%
growth (López, 2020). By the end of 2020, according to Federación de Cines de España
(FECE) (Spanish cinema federation), it was estimated that around 96% of the companies
from the sector could face solvency problems (Martínez, 2020). Once the next year started,
less than 30% of movie theaters around the country were open in January (Casas, 2021).
In order to reach a better understanding of this situation, causes should be looked upon.
Aside from the pandemic and its consequent restrictions, some other circumstances have
contributed to the bad figures obtained.
Majors
6
One of them is undoubtedly the absence from the majors (Hollywood big companies), which
have either postponed their releases or moved them to streaming platforms. For example,
Universal & Metro Goldwyn Mayer’s No time to Die (C. Fukunaga), the new Bond movie,
starring Daniel Craig as 007, was initially set to reach the big screen on April 2020. After
several delays, it was decided for it to be available in movie theaters, if everything goes
according to plan, on December 2021. A similar situation can be spotted with Warner &
Legendary’s new adaptation for Dune (D. Villeneuve). The film’s initial release month was
December 2020 and was later set to be in cinemas for September/October 2021 (Belinchón,
2020). Other companies have preferred the help of streaming services, allowing their own
films to be bought by the latter. If, added to all this, we consider that even before the
pandemic streaming services already produced original films, a somber environment for
movie theaters can be recognized. It is not as if the option was created from scratch due to
the virus. Instead, it was available for majors way long before that, which means it was very
easy to switch sides once cinemas were closed. In the end, and once movie theaters were
open, the absence from big releases caused the absence of viewers, and vice-versa, thus
creating an identifiable loop. A loop that was meant to be broken, as it will be explained later
in this study.
Accessibility
Another cause to be mentioned has to do with the quantity of cinemas present in some places.
In a time when constant mobility limitations are being imposed, it has been impossible for
some people living in minor cities or even villages to reach a movie theater, considering
restrictions were respected. According to the Asociación para la investigación de Medios de
comunicación (AIMC) (Association for media research), more than one third of the Spanish
population lived in a location without any permanent cinemas in 2018. This happened mostly
in places with less than 50,000 residents, but even in cities such as Móstoles (206,589
inhabitants), Parla (125,898), Algeciras (121,133), Santa Coloma de Gramanet (117,597) or
Avilés (79,514), the same situation could also be found (Koch, 2018). Cinemas from small
locations are almost extinct, and have now been substituted by multinational companies
settled in shopping malls. Knowing this, and considering the scarce movement that has been
allowed during the pandemic, it seems reasonable to contemplate this situation as yet another
cause for their weak results.
7
Change
The next cause is related to social and even technological transformations. Nowadays, many
majors seem to only focus in making a profit rather than trying to create something unique,
and they do this because it works. In 2019, Disney achieved 70% of the total ticket office in
Spain (Belinchón, 2019). At the top ten box office films, as seen in Table 2.1, it can be
perceived that seven out of those ten movies belong to the aforementioned company, which
is both admirable and worrying.
Table 2.1: Top 10 box office 2019 in Spain
Source: Audiovisual451
Some of those eight movies were The Lion King (J. Favreau, 2019) remake, Aladdin
(G. Ritchie, 2019) and Dumbo (T. Burton, 2019) live action films, or even Marvel’s
superhero movies. Some may think that their success relies on the fact that these films are
family targeted, which is partly true. But for example, the second highest grossing film in
Spain from that year is Joker (T. Philips, 2019), which is not a family movie at all. This
Disney predominance tells a lot about the average consumer, like for example the current
tendency towards movies characterized by the use of expensive visual effects, which is not
necessarily a negative trait. Instead, it is a reflection of the transition we are facing for the
last years, a transition towards a more rapid-consumption and mainstream public, which
feeds itself mainly from big releases. The presence of global audiences in a global market
also supports this transition, as “clean” family movies with universal plots are easily
consumed all over the world, regardless the country or continent. The majority of these
movies are quite expensive, which does not automatically mean that they were made only for
company earnings, but it is commonly a synonym for expected high profits. The problem
arises when, in this pandemic situation, as commented above, no enormous releases like the
8
ones from Disney reach the big screens. The budget for this type of movies is tremendously
big and, in order to reach a profit, revenues should surpass the costs. This is when fear takes
over the majors, and consequently, movies are not released. Without movies such as the ones
from the 2019 top ten ranking, the number of people going to the cinema is significantly
reduced. So, knowing the general trend regarding films, with not many blockbusters on sight,
the questions to be answered in this section of the study are who is going to the movie theaters
and what kind of product is being offered.
Safety and Health measures
Cinemas have also had to deal with a lot of restrictions since they were allowed to re-open.
Several health safety measures have been adopted, which can be a disadvantage for them in
terms of attracting clients. For example, one measure established has been the mandatory use
of face masks (Cines Palafox, 2021), which is somehow detrimental, as many people would
rather watch a movie from the comfort of their homes. Other pernicious action has been the
prohibition to eat inside the establishments (Cines Palafox, 2021), which is unthinkable for
some people when going to the cinema. Here, there is a clear difference between cinephiles
and people who only want the movie theater experience every once in a while. Without this
full experience, some potential clients are lost. The capacity reduction provoked by the social
distancing measures has also worsened the numbers, even though the vast majority of
sessions have not been fully complete. The problem here is more focused towards the seat
arrangements, as in some companies, in order to comply with the measures, big groups must
be separated (Cinesa, 2021). This might make, for example, some groups of friends to think
about it twice. All these tough actions have been taken to ensure that cinemas are a perfectly
safe space, where people can enjoy a movie without any fear.
Prices
Prices may also be seen as a problem for some people. In Spain, the price of a ticket can vary
a lot depending on the day or the location. Without taking into consideration discounts,
differences on weekends can even reach a 130% (IPC, 2020). The importance of price when
going to the cinema will be studied later, in the empirical part of this paper.
Fear
9
The last factor to be discussed is fear. For this purpose, the historic movie theater Paz from
Madrid (the fourth oldest in the city) is going to be taken as an example. This cinema is
characterized by their independent movie genre voiced-over projections, more targeted
towards adults or even elderly people. They had the pleasure of a loyal and faithful clientele.
Nevertheless, once reopened, they have faced a different scenario. Carolina Góngora is a
member of the Góngora family, which has been running the place since 1978 (although it
was opened in 1943). She stated that, despite their product not being blockbuster movies, the
ones from small-medium distributors are indeed arriving to their screens. The problem is that,
despite all the health safety measures taken, a high percentage of their usual public did not
go to the cinema, as they were afraid of getting sick. This situation forced the cinema to close
temporarily in October 2020 (Belinchón, 2020).
Movie theaters have had to fight against all of the aforementioned factors. One obvious
negative cause that has not been directly mentioned yet is the rise of streaming services. They
will be analyzed in depth during the next chapter, which has its main focus on them. After
having provided an explanation on the context and main factors that are impinging negatively
on cinemas, the next section will be devoted to the strategies performed by the movie theater
industry to survive and succeed again.
2.2. Actions
Movie theaters are now, halfway 2021, in a slightly better position since the pandemic started.
It only took 3 weeks for the new Warner Bros blockbuster Godzilla vs Kong (A. Wingard,
2021) to become the highest grossing film of the current year in Spain. Nevertheless, not
every big studio movie has had the same fate, as some releases have not been as lucky as the
abovementioned product (Martín , 2021).
However, before reaching the current situation, cinemas have had to try different
options in order to survive. Blockbusters have not always been there since the pandemic
started, which has obliged some movie theaters to take another strategic route. Some of these
cinemas have been open for a longer time than others, mainly because they had a higher range
of films to offer, which could be seen as product diversification. Once reopened, all theaters
have also faced a similar issue. This issue is the health safety measures problem, which has
been solved in pretty similar ways that will be brought up in this section.
10Now, the focus will be shifted towards the actions cinemas have carried out in order to
reactivate the business. Later on, an analysis of those actions and other potential ones to be
adopted will be performed through the field research.
Blockbusters
The most obvious way to save cinemas is, undoubtedly, thanks to blockbusters. These high
budget movies usually provide the highest possible earnings and, even though they have been
scarce, some of them actually ended up being released in movie theaters. This is the first
possible action cinemas have carried out. A measure too dependent on the majors, but used
when available.
In Graph 2.1 we can see the top blockbusters first weekend box office evolution in the
United States since the pandemic started. The ones in green are pre-Covid-19, and serve as a
reference. The X-axis represents the time and the Y-axis shows the earnings during the first
weekend. We can perceive how by March 2020, some big releases like Onward (D. Scanlon,
2020), by Disney, were already in the process towards the bad situation the industry was
about to face. Since that point, a big gap can be appreciated, where no big budget movies
were released. Then, in September, what seemed to be a miracle happened. Cristopher Nolan,
currently one of the best blockbuster directors in the world, with movies such as Inception
(2010), Interstellar (2014) or the Batman trilogy, strongly defended his position towards the
release of his new movie in theaters. Thus, Tenet (2020) reached the big screen. Some called
it “A love gesture towards theater-watched cinema” (Pina, 2020). In a pre-covid scenario,
this movie would have easily surpassed the ones on the left of the graph, but the pandemic
situation did not allow it.
Graph 2.1. Evolution of blockbuster earnings in EEUU during their release weekend ($).
11Source: Hipertextual
If the United States sneezes, Europe catches a cold. This sentence is now, ironically, a
good reflection of the fact that this trend has also happened in Spain. Until Godzilla vs Kong
came by, Tenet had the best release weekend numbers since the pandemic started in the
country (Agudo, 2021). This last movie achieved good numbers internationally, including
Spain, considering the current situation. Meanwhile in the US, the results were relatively a
bit weaker than expected (there, it was surpassed by Godzilla vs Kong as the highest grossing
film of the pandemic (Zorrilla, 2021)), due to the delicate lockdown situation they were going
through (Jabato, 2020). In the end, the 200 million euros budget film earned around 350
(Rubin, 2020), which makes a profit but still, it is quite far from what would be expected
from a film like this. Now, with the “Monsterverse” film (Monster + Universe) blockbuster
numbers, motivated by fewer restrictions and the vaccination, cinemas start to see the light
at the end of the tunnel. It is quite curious to see how the main cause for their bad results
(runaway from majors and consequent absence of blockbusters) seems to be the first cause
for their good future expectations.
Independent movies and national product
The effect blockbusters may have on the box office is beyond questioning. However, when
this type of movies is missing, what can be seen in cinemas? Here we can see one of the
pillars which have held theaters since the pandemic started: Independent distributors
(nondependent from Hollywood).
12Around 93% of 2020 releases since cinemas were reopened were coming from an
independent distributor (Bermejo, 2021). Movies such as Best Actor Goya award winner No
matarás (D. Victori, 2020), Best Picture Goya award winner Las niñas (P. Palomero, 2020)
or Vigo Mortensen’s first feature film Falling (2020) have been crucial for theaters to provide
a product when it seemed impossible. If the nominees for the 2021 Best Picture Goya award
are analyzed, it can be understood how important this kind of cinema has been during this
time, as 4 out of the 5 nominees are from independent distributors. France is the perfect
example, as from 77 French movies that were released post lockdown, 76 were independent
(Belinchón, 2021). Adicine, the Spanish association that comprises 14 companies dedicated
to this kind of distribution, blames the majors for the situation. They also hope that, once the
blockbusters come back, movie theaters do not forget who was there when it was most needed
(Bermejo, 2021).
In the previous paragraph, two national independent movies have been mentioned.
Nevertheless, movie theaters have also trusted national movies produced by majors. The best
example is the Sony sequel for Padre no hay más que uno (S. Segura, 2019). As it can be
seen in Table 2.2 (Appendix), this movie has managed to be the highest grossing film post
lockdown in Spain, beating others such as the already mentioned Tenet (2nd) or Godzilla vs
Kong (3rd) (Taquilla España, 2021).
For all the aforementioned reasons, Spanish cinema is another pillar for national movie
theaters, whether it is independent or not.
Special events
This type of events somehow differ from the main products a cinema has to offer.
Unfortunately, their peculiarity relies also on the fact that not many movie theaters carry out
this kind of activities. Nonetheless, some companies have incorporated them or even
reinforced them (if they already provided this kind of activities) as a consequence of the
pandemic. For the purpose of studying this type of measures, the
Palafox/Aragonia/Cervantes cinemas, popularly known as Cines Palafox, owned by
Zaragoza Urbana S.A, will be now analyzed as a conspicuous case study. This company has
always facilitated, even before the pandemic, many more options than others (for example,
the multinational Cinesa).
13First of all, the Aragonese group offers documentaries. At the time this part of the study
is being performed, three of them are being offered to the public: Amanece en Calcuta (J.M.
Zavala, 2021), El agente topo (M. Alberdí, 2021), Crock of Gold. Bebiendo con Shane
Macgowan (J. Temple, 2021). Another product that is being provided are operas, with El
lago de los cisnes, Rigoletto and Giselle being the chosen ones for May and April. All the
aforementioned ones can be seen in Illustration 2.1 (Appendix).
Furthermore, their added value services are wider than that. They have also started to
offer on a more constant basis, mainly due to the pandemic, the possibility of re-watching
cinema classics. Some of these magnificent titles have been Dersu Uzala (A. Kurosawa,
1975), The Kid (C. Chaplin, 1921) or 8 ½ (F. Fellini, 1963) (Losilla, 2021). Another way to
review this type of movies is through their cinema cycles. As an example, during May/April
the company has brought to the big screen the whole David Fincher filmography, The Lord
of the Rings trilogy and three musicals, which can be seen in Illustration 2.2 (Appendix).
Another admirable measure to mention is their constant support towards movies shown
in their original language, accompanied with Spanish subtitles. It is estimated that only
around 4% of Spanish viewers prefer to watch a movie in the cinema in its original language
(Ochoa, 2018). This is quite a low percentage, consequently, most theaters do not provide
this option. Nevertheless, for people who see the beauty of acting dialogues in the exact same
way it was filmed, this is a true gift. Palafox offers this type of service in almost every new
movie that is released, and on many of the events abovementioned.
Renting of their theaters is also an option, and can be considered as an extra service
provided by them. Between the various suggestions on how to use it we can find private
passes or events, projections for schools, courses or seminars, press conferences, corporate
acts or even photo shootings (Cines Palafox, 2021).
Lastly, even in new releases the company manages to outperform. On October 2nd
2020, three times Best Actor Oscar award-nominee Viggo Mortensen visited Palafox movie
theater in order to present his first feature film as a director, Falling. After the projection, he
held a colloquium with the attendants, time when the film was discussed and questions were
answered. Events like this rarely occur, even for companies that try to offer a wide variety of
14services. This is a reflection of the power Palafox has, and concerning their knowledge on
how to use it.
Illustration 2.3: Viggo Mortensen in Palafox movie theater, Zaragoza
Source: Own
All these events provide numerous ways of entertainment, knowledge and overall,
culture embracement. Their main strength is that, due to the diversity of their offer, they can
reach a whole spectrum regarding clients, which is vital considering the post pandemic needs
of movie theaters. This is why Cines Palafox has created an image for themselves as not only
a cinema but also as an active cultural center, playing a significant importance in the
perception generated towards the company.
Cinemas have also taken advantage, as always, from the Oscar awards competition.
With the exception of the movies solely released on streaming platforms, all of the nominees
for best picture in 2021 have been offered. These are: Nomadland (C. Zhao, 2020), The
Father (F. Zeller, 2020), Minari (L.I. Chung, 2020), and Promising Young Woman (E.
Fennell, 2020). Another Round (T. Vinterberg, 2020), nominated for best director and best
foreign language film winner has also been in movie theaters. The management of cinemas
with this type of movies is brilliant. First, they are offered to the public around a month or
two before the ceremony, when opinions and debate on who should win arise. As a
consequence, most of the movies are watched. Then, once the Oscars have been awarded,
15movies with no awards soon vanish from the offer and the winners stay there for a longer
time. It is after the Oscar ceremony when more people decide to go to the cinema in order to
see the officially (at least for the academy) best movies of the year.
Safety health measures
This last action has been performed by all movie theaters, with no exception. When reopened,
in order to secure a safe return to cinemas, Covid-19 protection procedures were
implemented. As commented above, these measures may have had a negative effect in some
ways, but they were most certainly necessary. This necessity has turned into an advantage,
thus creating in some ways a positive effect. For example, the fear some people had regarding
the spread of the virus has been reduced thanks to this protocol. At the beginning, people
were reticent about it, but now, it has been proven that movie theaters are a safe space, and
several people from all ages who were once scared are coming back to cinemas. As it can be
perceived in Illustration 2.4 (Appendix), some measures include: limited capacity,
contactless access, disinfection services, social distancing, blocked seats, mandatory mask
use at all times, prohibition to eat or drink, etc.
3. Streaming Services
Online video platforms are unquestionably one of the winners from the pandemic. Streaming
services rose by 28% in 2020 compared to the previous year (La Vanguardia, 2021).
Nonetheless, some of the current existing platforms were already in an excellent position
before, and now face a much better one. However, the growth of the already settled ones has
not come alone, as many others have also taken advantage of the situation. Some smaller
streaming companies have significantly grown and even others that have recently been
created are now in a very good position to compete with the rest (Refojos, 2020). Some of
them, although still leading the market, have already suffered this competitiveness (Heraldo
de Aragón, 2021). Right now, the offer from the platforms is quite big, which has created a
difficult context for consumers, especially when deciding their preferences on what
platform/platforms to use (Neira, 2020). For movie theaters, it is more difficult to perceive
the strategic differences between the several companies in the sector, but with streaming
services, clearer trends and characteristics can be studied. Each of the existing ones has their
16own key features, and consumers perceive them differently according to those features. In
this part of the study, the most relevant streaming services available in Spain will be analyzed,
in order to know their strengths, weaknesses (if any) and how they want themselves to be
perceived, according to their respective strategies.
3.1. Netflix
The first online platform to be analyzed is the one that forged the concept of what it is now
known as streaming services.
There is a certain myth or “convenient fiction” according to co-founder Marc Randolph
(who left the company in 2002) (Castillo, 2017) about the creation of Netflix, which suggests
that the idea for the creation of the company came from co-founder Reed Hastings, when he
was charged forty dollars for trying to return a videotape passed the deadline. Nevertheless,
the official webpage of the company does not mention anything about it. Instead, it traces
their origin back to 1997, when Hastings and Randolph had an idea for an electronic rental
of DVDs by mail. They tested its feasibility by sending themselves a DVD by mail, which
arrived intact. This way, the company was born and the creation of the first-ever DVD online
site rental was a reality. The service did not have late fees or rental limitations regarding
quantity. What used to be their website can be seen in Illustration 3.1 (Appendix)
During the next decade, a lot of subtle improvements were starting to be made, which
are a reflection of some of the current strategic strengths of the company. For instance, some
excellent ideas were included, such as a personalized movie recommendation system
influenced by ratings or titles already seen, in order to forecast the user’s future selections.
This is one of the best characteristics Netflix currently has. Due to the wide range of
cinematic productions in their catalogue, they need to optimize what part of the offer each
user sees on the platform, with the help of a mathematical algorithm (Blattmann, 2018).
During that time, they also went public, reached five million memberships and allowed their
users to perform different actions in their respective profiles such as, for example, creating
personal lists (Netflix, 2021).
It was not until 2007 when the company changed everything. In that year, the online
streaming was implemented, providing users the option to immediately watch shows or
17movies. After that, their growth was exponential. Thanks partly to their internationalization,
they reached twenty-five million memberships in 2012, figure which was doubled two years
later. In 2013, their first originally produced series, House of Cards (2013), starring Kevin
Spacey and Robin Wright, won three Emmy awards, being at that moment the only online
platform to ever do so. They later produced their first original film, as well as the first non-
English original shows and added features such as offline downloads or even tools for
inclusion such as special audio for visually impaired customers. Their first ever Oscar award
came in 2017 for the documentary The white helmets (O.v. Einsiedel, 2016), although it was
not until 2019 when people started to see the potential regarding own production that the
company had. This realization occurred when their movie Roma (A. Cuarón, 2018) was
nominated for ten academy awards (it ended up receiving three) (Netflix, 2021). In 2021,
triggered by the pandemic, the company surpassed the two hundred million subscribers
barrier (Lozic, 2021).
All of the aforementioned events, together with others that have not been mentioned
yet, make Netflix, objectively, the biggest streaming service in the market. Their price, for
instance, is the highest one in the Spanish market for both the premium and the standard
option, as seen in Graph 3.1. Their market share at the beginning of 2021 was the highest
one from all streaming platforms, although followed closely by Prime Video, as it can be
seen in Graph 3.2 (Appendix).
Graph 3.1: Prices of the main streaming services available in Spain in 2021
Source: Statista
A big competitive advantage Netflix has is the quantity of their catalogue, which is
extremely large with respect to other streaming services. One of the reasons for this could be
18that the streaming service is the main and only core activity of the company, unlike others.
They include a wide variety of films, shows, documentaries and much more. It should be
noted that all of this is achieved with an important percentage of it being originally produced.
In fact, an official objective of the company, stated since 2016, is that 50% of all their
catalogue is produced in house (Millán, 2020). Nevertheless, they are still far from reaching
this goal, and a steady growth regarding original production can be expected from Netflix in
the coming years. (Capapé, 2020)
Nonetheless, controversy has also arisen concerning the quality of these originals. In
Graph 3.3, we can see the yearly evolution since 2015 of both the quantity of newly released
Netflix originals (left column) and their average rating out of 10 in the known movies
webpage IMDb (right column). It can be perceived that, as the quantity of own production
releases increases, their average rating on the mentioned website decreases substantially,
although not catastrophically.
Graph 3.3: Yearly evolution of newly released Netflix originals and their respective
average rating (0-10) on IMDb
Source: Hipertextual
It is data like this that activates the debate on whether Netflix is quantity or quality-
based. The fact is that, they try to achieve both objectives. Nowadays, with the rapid growth
that has occurred in this sector, it is time to prioritize. Other streaming services are being
more concrete with their offers and maybe more specifically targeted, so they cannot risk it
by having an excess of catalogue. For others, the excess on quantity could be a disadvantage,
but Netflix has found a way to turn it into an advantage by improving even more the
personalization of their offer and adapting it depending on each specific user, mainly thanks
to the aforementioned algorithm (Vicente, 2016). The quantity problem is now clearer than
19ever, as Netflix incorporated in the platform a shuffle button (which plays something at
random depending on the customer’s preferences) at the beginning of 2021, with the aim to
palliate any possible indecision caused by their wide catalogue.
Their strategic choices regarding the user experience are endless, but there are some
excellent examples on how this algorithm works. Netflix discovered that by adapting the
artwork to the user preferences, chances of more views increased (López , 2019). The first
example is regarding their chameleonic images, taking as reference the widely popular
Stranger Things (2016) series, as seen in Illustration 3.2 (Appendix). If a user is keen towards
mystery or horror, s/he will more likely be shown dark images such as the cornered ones. If
the user prefers adventure or teenager shows, he will probably be shown less somber images
such as the ones on the middle row and middle column.
Another interesting trick, also related to the so-called thumbnails, has to do with the
actors. For example, as seen in Illustration 3.3 (Appendix), if someone watches many Uma
Thurman movies they will probably be shown the first image, as they will more likely react
in a positive manner to the Pulp Fiction (Q. Tarantino, 1994) artwork where she is present.
On the other hand, if the user is a fan of John Travolta who has watched some of his movies,
s/he will be shown the second one, where he is included. This increases the chances of the
user to watch the movie. As said before, there are a lot of impressive algorithmic decisions
made by the company, but these two are enough to reflect a point that this section tries to
prove: the user experience provided by Netflix is extremely sophisticated.
Even though they have brought us some magnificent movies such as Roma (A. Cuarón,
2018), Mank (D. Fincher, 2020) or The Irishman (M. Scorsese, 2019), and quality series such
as Ozark (2017), House of Cards (2013) or The Crown (2016) (let alone the good films or
series included within their catalogue that were not produced by them), it can be said that
their service is slightly more quantity based. A good example to support this statement could
be that Netflix promised at the beginning of 2021 to release at least one original movie every
week (Donely, 2021). Nevertheless, their know-how in terms of managing that variety
appropriately is admirable, and can be said to be their main competitive advantage.
3.2. HBO
20“It’s not TV, it’s HBO”. This is the famous slogan of the veteran company born in 1972,
Wilkes Barre, Pennsylvania. Home Box Office can be understood as a reference to movie
theaters’ box office, although without the need to leave your own house (Home + Box
Office). The company, with its slogan and the name itself, showed from the beginning what
their intentions were. They wanted to bring the big screen experience to the small screen, and
they did this by the creation of one of the first premium channels ever in the history of
television, which allowed users to contract that channel in their TV by the monthly payment
of a fixed quantity. The company performed some rebranding in order to perfectly reflect
their intentions, as the current “O” in the logo symbolizes the power button of a TV remote
control, as it can be perceived in Illustration 3.4. They offered movies coming from cinemas
before non-subscription channels did, which was their clear and only advantage. The problem
was that this advantage was very easy to copy, and other channels with similar characteristics
started to appear. Competition rose, prices to buy the movies did as well, and the total offer
decreased, as it had to be divided between all the channels (Contreras, 2019). Their turning
point was no other than the decision made in 1990 to produce original series. Every company
has its key moment in history, and this was HBO’s.
Illustration 3.4: HBO logo evolution
Source: Medium
Since then, they have produced shows such as The Sopranos (1999), Band of brothers
(2001) or The Wire (2002), which aired on their TV channel before their streaming platform
was released in 2010. After that, shows like Game of Thrones (2011) or Chernobyl (2019)
have been some of their productions. It is here where, with the help of the shows just
mentioned, their main competitive advantage will be introduced. If the IMDb top series list
21of all time is analyzed, it can be seen that all of the five aforementioned series are within the
first six spots in the ranking (6th, 3rd, 5th, 4th & 2nd, respectively) (IMDb, 2021). These are just
some of the shows considered as quality-made, but there are plenty of other cases such as,
for example, Sex and the City (1998), which was a pioneer regarding this type of content for
HBO. As it can be inferred, their principal strength is quality. They may not have the best
user experience of the market or the biggest catalogue, but what they do have is quality
content, which has been and is being created thanks to a clear identity strategy followed by
the company.
It is quite hard to specifically define what “quality” or “good content” means, but HBO
has tried to follow some parameters in order to achieve it. The first question to assess quality
could be if the product is different, distinctive, although it has to comply with certain user
expectations depending on the genre of the show. Some balance between the two can be seen
as the first quality checkpoint. The second one is purely cinematic, as it has to do with
technical excellence, solid plot writing, genre innovation, excellent performances, character
development, etc. In general, HBO always tries to allow creative freedom to their
screenwriters, directors and actors, in order to provide higher flexibility, which turns into a
better final product. The third item could be said to be the achievement of a loyal and faithful
audience. They know that a satisfied client reinforces a certain brand, so for HBO, numbers
are not that important, whereas brand value actually is. It cannot be denied that public
recognition is with no doubt a pillar of key importance. Good critic reviews, examples as the
one from IMDb or awards are a consequence but also a cause for their “quality” label. Others
also believe that their success comes in part due to the controversy of their polemic products,
dealing with violence (The Sopranos), explicit sexuality (Sex and the City), political
corruption (The Wire) (Iriarte, 2010) or the recent entrepreneurial satire drama Succession
(2018). Nevertheless, quality depends on perspective. It can mean a totally different thing for
academics or film critics than for a teenager, a businessman or even general audiences. This
is where HBO has to decide to whom are they creating that quality, and then adapt it
accordingly.
Their reputation regarding quality has persisted through time. Nevertheless, AT&T, the
company that owns Warner Media, which owns HBO, saw the potential streaming services
22had, and they managed two options. The first one was to create a new streaming service and
the second one was to use the existing one. The solution was a mixture of both, and HBO
Max was born. At the moment it is only available in the USA, but it is expected to arrive in
Spain by the end of 2021. The service includes all of HBO’s catalogue (own produced or not)
and much more, as for example most of Warner Media products. The idea for the creation of
this extended online service arose before the spread of Covid-19 started, and at that time
nobody believed that movies targeted for the big screen could end up in a platform, but the
company saw an opportunity with the pandemic and their plan is to maintain this tactic for
all 2021 (GQ, 2020).
3.3. Prime Video
Prime Video is probably the most unorthodox streaming service of all. First of all, the
company created by Jeff Bezos launched their now famous Amazon Prime service in 2005,
which allowed for a 2-day delivery on over 1 million stock items (Savage, Schandorph, &
Hansen, 2017) (nowadays their delivery can take less than 24 hours, with no minimum
purchase and access to special offers) (Fernandez, 2019). In 2006, the company decided to
dive into the video sector, and thus created Amazon Unbox, which allowed users to download
movies or shows, but not to watch them instantly. It was not until 2011 that what we now
know as Prime Video (previously Amazon Instant Video) (Failory, 2020) was created. Due
to the rapid growth of interest in streaming services, Amazon Unbox disappeared in 2015, as
the company decided to focus all its video-sector efforts on the streaming business (Hatch,
2020).
There are many competitive advantages for Prime Video, but the most obvious one is
the price. In Spain, as seen in Graph 3.1, the service manages to achieve the lowest price of
all streaming services, with quite a significant distance from others. To exemplify it: It costs
half of Netflix most basic plan. Their price would be enough to convince many people, but
the benefits do not end there. Their second biggest advantage, although it is pretty much
linked with the first one, is that Prime video is included with Amazon Prime, or vice versa.
This is why, when the price of either of the two services is searched for, the same number is
found (€3.99 per month). This situation has caused a lot of confusion, as many people who
had Amazon Prime were not aware that Prime Video was included in the price. Some data
23shows that, during the pandemic, Prime memberships rose by 33% (Rodríguez, 2020), which
was probably driven by both the lockdown-generated necessity for online shopping (Amazon
Prime) and for TV entertainment (Prime Video).
It may be thought that, if their price is so low and the service includes extra benefits,
then the content inside the platform might not be that good. Although their product is still
clearly behind Netflix and HBO’s, Prime Video has produced recent hits like the superheroes
satire The Boys (2019) or Golden Globe and Emmy awards winners such as The Marvelous
Mrs Maisel (2017), Transparent (2014) or Fleabag (2016), which surprised everyone in the
2019 Emmy ceremony and gathered most of the attention, even ahead of series such as Game
of Thrones (2011) (BBC Mundo, 2019). Amazon also has big plans regarding the future, as
for example is planning to produce the new series based on The Lord of the Rings, which is
expected to be the most expensive show in history (Miranda, 2021). Furthermore, on May 26
2021, Amazon bought the famous studio Metro Goldwyn Mayer, which owns, for example,
the James Bond saga (including No time to die (C. Fukunaga), mentioned previously on this
paper), the Rocky saga, classic films such as 12 angry men (S. Lumet, 1957) or TV series like
The Handmaid’s tale (2017) and Vikings (2013) (Porter, 2021). This is Amazon’s second
biggest acquisition ever, as seen in Illustration 3.5 (Palmer, 2021).
Illustration 3.5: Amazon biggest acquisitions by deal size
Source: CNBC
Taking into account the price and the benefits that the service provides, it can be
expected for Prime Video to have a lot of users. The expectations in this case are true, as they
have surpassed, by the end of April, the 200 million barrier of Prime users around the world
(Rentero, 2021). This makes the company the second streaming service regarding number of
24subscribed users, positioning them slightly behind Netflix. Nevertheless, Amazon Prime still
has, like HBO, a lot of room for improvement regarding user experience (Casillo, 2020).
Another smart strategy performed in Spain from Prime Video has been their alliance
with Mediaset España, a Spanish communication media group (Noragueda, 2020). The
objective is to perform a combination between the past and the future, the old and the new
television. This way, Amazon Prime works as a showcase for Mediaset products, which will
allow them to have a life inside the platform. The importance of this opportunity provided
by Prime Video is quite significant, as in the past, some historic events have proven us that
the new audience dimensions that online platforms provide to regular TV shows can be
crucial. The best example for this is the case of La Casa de Papel (2017), from Atresmedia,
another Spanish communication and media group. The show was released as usual in their
linear television channel Antena 3 with a fixed timetable, achieving very moderate numbers.
The surprise was that, when Netflix acquired the show, and placed it in their catalogue, it
became a massive hit, to the point that it is currently the most viewed non-English spoken
show in the history of the platform (Neira, Clares-Gavilán, & Sánchez-Navarro, 2021).
It seems as if Amazon started their streaming service knowing that they were not the
best one in the market, which would have been a correct reasoning. Nevertheless, by
acknowledging the importance the sector has been gaining and the potential it has, Prime
Video is now one of the best streaming services available, and their ambitions regarding the
future aim very high.
3.4. Disney +
For all streaming services, the process towards their current position has been rather slow or
at least, gradual. This has not been the case for Disney+, platform whose stats have
skyrocketed since it was launched. As it can be perceived in Graph 3.4, since it was made
available to the public in November 2019, it has only taken them around one year to get close
to the one hundred million subscribers barrier. They have achieved in just one year and two
months what their forecasts said it would take around four years (Gartenberg, 2021). To put
this in context, Netflix took a decade to reach similar figures (Kemp, 2021). Now the
25company is expected to, according to a new study, overtake the throne around 2024 as the
streaming platform with the highest number of clients (Gillbert, 2021).
Graph 3.4: Disney+ evolution in number of clients and availability of the service globally
Source: Statista
Nevertheless, the reasons for their enormous and rapid success should be analyzed. The
first and most obvious one is their reputation. Disney has been for decades one of the most
valuable brands in the world. Sooner in this study it was mentioned that 70% of the Spanish
box office and of the top ten grossing movies in 2019 belonged to Disney, which gives a hint
about the relevance of the company. This reputation allows for another strength, which is
their appeal towards nostalgia. There exists a current trend which started some years ago,
although not only from Disney, that seeks to make profits by exploring old hits or more
accurately described, by re-shaping them. As an example, from the seven Disney movies in
the ranking aforementioned, three of them were remakes and four of them were sequels. None
of their films in the list included a new Disney story with completely new characters. This
tells us that the customer has a certain preference towards a product that is somehow familiar
than when a new one needs to be discovered. Customers purchase on the basis on what they
feel, and in this case most of them think of their childhood (Aten, 2021). According to a study
by GlobalWebIndex, 42% of the surveyed stated that they would subscribe to the platform
in order to watch older films from the company (Frankel, 2019).
26Their catalogue is also one of their best weapons in the now popularized concept of the
“streaming wars”. According to a survey carried out in 2017, the most representative symbols
from the company are the Disney typography, their mascot Mickey Mouse and the castle, in
that order, with the latter ones having the same percentage of votes (Martín A. M., 2017). At
a first glance, one might think of the company as the family- animation-movie studio they
are, but their current reality is wider than that. Besides their Pixar ownership, which allows
for their animation catalogue to be even wider, and their National Geographic proprietorship,
it should not be forgotten that Disney also owns franchises such as Star Wars or the Marvel
cinematic universe, which has allowed them to attract many fans from both of them. The
Mandalorian (2019), their original series based on the Star Wars Universe was an enormous
success, as well as their recently own produced Marvel show WandaVision (2021).
One downside from the platform since the moment it was launched was the fact that
their content was just for specific audiences, as they only included products from the studios
they had ownership upon. Aware of this problem, Disney found a solution. On February
2021, “Star”, a new section within the platform that includes products from other studios,
was added to the service. Right before the launch of this section, the company promised that
it would double their existing catalogue (Tones, 2021). This decision was also a synonym of
their ambition, as it was a way for the company to better compete with Netflix, HBO and
Prime Video. The platform includes non-original content such as Lost (2004) or How I met
your Mother (2005), alongside with other series and movies. With Illustration 3.6
(Appendix), Disney announced in Spain the existence of the upcoming service, as well as the
movies that were going to be included on it firsthand. Without short notice, Disney+ has
become a serious threat for the rest of streaming services.
3.5. Others
Although not even close to them, there is life outside the “Big Four” streaming services. For
example, Apple TV+ is a platform that clearly has a lot of potential. As seen in Graph 3.1,
their first advantage right now would be, paradoxically, the price (this is quite curious
considering that the main activity of Apple is usually known, among other things, for their
extremely high prices). Nevertheless, having the second cheapest subscription fee in Spain
is, at least in this case, a synonym for low content quantity. This happens in part due to the
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