Content creation

Many companies are competing in the content creation market. Apple, Netflix, Disney are all offering subscription services to their clients. The price for subscription is between $5 and $10 per month. This is not cheap, if we combine all music, game and film contents. At the moment, it seems these companies are competing for creating better contents instead of prices.

Price competition is the easiest competition strategy but also it is the least profitable strategy. Once one company starts to launch a price competition, the others will follow and the price is racing to the bottom. Under such circumstance, there will be no winner until someone wins the entire price competition and get the whole market share. Such competition will not help companies to earn profits for a long period of time. So they are competing for creating better contents to attract more clients.

These companies are investing millions of dollars in creating good contents. They make their investment based on how many subscribers they expect to have given the expected quality of their contents brought by the investment they make. Of course, they are trying to make enormous investment to create very good contents, so they may suffer losses for a short period but win a significant market share.

However, when every company in the business has enormous resources, they do not want to play the game so aggressively. Then their success is based on the return from the contents they create, and it is a very risky investment since the success of contents is dependent of too many heterogeneous factors.