THB #244: Another Way To Look At Streaming

So, I was watching this Bob Chapek interview…

The actual video starts about 3 minutes in.

About 11 minutes in, the discussion turns to the streaming market. He says, “I think that not everybody that is out in the market today will be there ultimately, unless there is some kind of recombination of secondary players in the marketplace that combine to create something greater. Streaming is a critical mass buiness. Scale is really, really important in order to be able to thrive. I think there will fewer than more.”

And what hit me was the concept that what streaming is doing is taking us from the centralized idea of cable, which we have had for 40+ years, and for which, the cable companies went market-by-market and were, essentially, given local monopolies… and more than we realize, simply decentralizing that market.

Imagine a world in which supermarkets became more expensive and irritating than buying item-by-item and suddenly, you “had” to buy each of the 20 things you use every week from 10 different suppliers. Madness, as anyone who gets any one weekly food delivery can attest. Every delivery system has kinks and managing 20 of them is an onerous burden.

Disney and Netflix want to be our post-cable supermarkets. And there is great value in that. But we still can buy bread from a bakery or meat from a butcher while still using the supermarket every week. Some people would buy everything at farmer’s markets. Cool, man. But for most people, do we really want or need more than 2 or 3 supermarkets in the neighborhood?

In today’s streaming market, look at each of the large scale players - Netflix & Disney, increasingly Amazon and Apple… ambitions from Warner Bros Discovery… and the 2 network legacy companies, Paramount+ and Peacock.

For all the new magic tricks that streaming allows, from the consumer side, it is still TV, albeit a much wide-reaching TV. I believe firmly that the spending per household, at least domestically, will not increase much in the transition to and eventual stabolization of streaming.

But now, each of these companies is their own cable company, essentially. Each company has to make the proposition to every single household and convince them to sign up, install the app, charge you directly each month, and yes, program in a way that keeps you happy.

It’s not “à la carte,” as was the dream in years passed. Just yesterday, Universal’s Donna Langley was crowing (deservedly) about the studios Premium Video on Demand model that kicks in 15 or 45 days into a theatrical release and the revenue it has produced. That IS à la carte. I personally don’t think that part of their model is going to remain as strong as it’s been during COVID, that individual sales are an endangered species. On the other hand, if exhibition collapses, maybe. But we haven’t seen numbers from this segment since Trolls 2, so… a lot of guessing…

But I digress…

Where we are right now is much harder than the cable era of the last 4 decades because there are, really, no rules. The battleground is what each company decides it is. It all changes based on what one or two companies might try.

I both agree and disagree with Chapek on scale. If you want to be one of the Big 3 or 4 (that sounds so familiar… hmmm…), you will need massive scale, absolutely.