With Streamers It’s the Same Old Story

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If you read any of the business, publishing or entertainment press you’ll see stories about hard times in streaming world. This means Netflix, Amazon Prime Video, Max, Hulu et al. This is undoubtedly true. You’ve likely seen this in the rising prices you pay and the declining offerings your subscription gets you. I don’t write to dispute any of this. But it’s nothing new under the sun. It is more or less exactly what we’ve seen in the digital new industry. The same pattern.

Entrants raise large sums of money (or use cash on hand from other business lines) and then spend substantially more than your subscription merits. They lose money in order to build market share. At some point the industry becomes mature and then they have to convert the business to one that can sustain itself and make a profit. That means substantial retrenchment. Inevitably that means spending less on the product and charging you more.

Another way of looking at this is that the product as you knew it was never viable. You were benefiting from the excess spending that was aimed at building market share. Now the market is saturated. So that era of great stuff for relatively little money is over. At a basic level what many of us enjoyed as a Golden Age of TV was really this period of excess spending. It was based on a drive for market share, funding lots of great shows with investments aimed at building market share.

This is no great insight. Everyone who knows the internal workings of the industry either from the inside or even from a distance knows this. I’m focused on this broader story, this pattern, which very little of the media or industry press seems to do. It’s the same pattern that allowed us all to read a lot of costly-to-produce journalism from Buzzfeed, Huffington Post, Mic, Vice and a bunch of other new media behemoths, all of which have now either shuttered or radically retrenched.

You might be saying that this isn’t really any different from any industry in a capitalist economy. There’s an inevitable shakeout as the industry matures. That’s true too. But it’s not identical. There are particular features to how it affects creative industries when creative industries have either tech adjacent VC money or are actually in the hands of larger tech enterprises: Amazon, Apple, etc. They tend to view market share through the path dependence prism which is central to the tech economy. Nothing is forever, even in tech. But if you win the path dependence race as Google did with search, Microsoft did with Windows or Stripe did with payments processing you really do own everything, at least for a pretty long time. But media or creative work generally doesn’t really work like that. So the shakeouts, the illusion of viable operations that never were is more severe.

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