Commentary

The Fallacy Of The Streaming Wars

This week saw the launch of Disney+. It has been hard to avoid, given the media and PR blitz the company rolled out across the U.S. 

In response, other streaming and subscription platforms like Hulu, Amazon Prime and HBO also upped their ad spend significantly. It all adds up to what has been dubbed the Streaming Wars.

Not so long ago, the movement toward cord-cutting began. Consumers, wary of their forced marriage to their phone/cable/internet provider, rebelliously cut their ties with said company, opted for an internet-only subscription, subscribed to a streaming platform and then told all of their friends how wonderful (and cheap!) their newfound freedom was.

The cable companies initially poo-poohed the movement, but soon enough the numbers started adding up. It is predicted that by 2023, one in five US households won’t have any TV/cable or telephone landline relationship anymore. 

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And the trend might accelerate even faster, especially since all sorts of companies are now jumping on the “you don’t need cable anymore” bandwagon: mobile carriers, content companies, digital media companies — and even cable companies. My cable provider, Spectrum, offers a streaming service. My local ABC TV station offers a streaming service via Roku. Everybody offers a streaming service to everybody across a bewildering number of platforms.

So yeah, cord-cutting is here. Or, perhaps better said, the end of the traditional, cable-distributed TV service is here.

The problem is that the emerging streaming TV landscape is getting so cluttered that a viewer, seeking diversion after a long day of working the gig economy, and tickled by previews for shows across all kinds of platforms, would need about 537 subscriptions to see all the shows they want. That number (537) is a made-up exaggeration (it is 493 — no, that’s made up, too. But you get my point.)

You want to see “Stranger Things” or “The Crown”? You’ll need a Netflix subscription. Marvel’s universe or Star Wars’? Disney+. “Star Trek: Discovery”? CBS All Access. “Catherine The Great”? HBO. The reboot of “Mad About You”? Spectrum TV subscribers only! And so on. And sure, many services will start you off at a promotional rate of below $10, but that price point simply isn’t sustainable.

Netflix just announced it is planning to offer $2 billion in debt to fund the creation of original content. Apple TV is rumored to be spending around $6 billion on original content. Others are spending in the region of $1 billion each. And they all charge too little to offset these enormous costs in the long run, and many do not generate ad income to balance their books.

If the Simpleton family wanted to subscribe to Disney+, ESPN, HBO and Netflix, they’ll spend $38/month for these services (Disney at the current $6,99 which will probably go up after the initial hype). Add to that the U.S. average reported monthly subscription cost of internet-only at $50, and you can see the cord-cutting savings disappearing pretty fast. And this is the cost for one room only: there are additional costs associated with adding rooms/devices.

So the streaming wars are probably going to be a war of attrition. There are simply too many services spending too much money on content that no human can keep up with anymore. As with the airline industry, we can predict a streaming TV future of consolidation, rate hikes and cost-cutting. The current model simply doesn’t fly.

3 comments about "The Fallacy Of The Streaming Wars".
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  1. Richard Reisman from Teleshuttle Corporation, November 15, 2019 at 1:30 p.m.

    Agreed, but there is way to harmonize many providers.  The problem is the all-you-can-eat pricing model, which does not work across many providers. A “risk-free” model could generate more profit from more viewers for every provider who has content that viewers want, for any number of providers. See The Streaming War to End All-You-Can-Eat Streaming Wars at http://bit.ly/AYCEwar.
     

  2. Paula Lynn from Who Else Unlimited, November 17, 2019 at 12:38 p.m.

    Casandra over and out. Cannot believe that this is an all of a sudden realization.

  3. John Grono from GAP Research, November 18, 2019 at 3:55 p.m.

    Erudite as ever Maarten.

    What's the bet that the next 'innovation' will be a streaming aggregator service.   I still have its predecessor - my Foxtel (an AU brand) box (satellite not cable) with several hundred diverse channels from all over the world, which bundles with our telco so we get a fat-pipe for any streaming outisde of he channels they have.

    And as a matter of interest, any data on the allocation of the increased ad-spend?   Is it TV-heavy?

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