Highlights From Matt Ball's "The Streaming Book"
Contextualizing how media got here, and where it may go moving forward.
The Streaming Book helps someone like me who knows the general talking points around contemporary media and streaming companies, but lacks the context as to how we got here, and by extension how things will progress. The Streaming Book being in 3 parts (“Access-Based Competition”, “Content-Based Competition”, and “Platform-Based Competition”), while not the most original names, does provide a coherent framework to understand these companies. It is free to read, and would highly recommend it to read all of its insights, but below will be passages that stood out.
Introduction
“As we head into Q2 2023, we’re more than halfway through the five-year streaming plans Hollywood laid out in 2019/20220. It’s now clear who will fall short or come ahead of their projections…”
“In announcing the changes, AMC Networks controlling shareholder James Dolan said, “It was our belief that cord cutting losses would be offset by gains in streaming. This has not been the case.”’ (Cannibalization is always present”
Access-Based Competition
“The quarter century I just summarized is what I call “access-based competition.” It is the first “wave” in a new entertainment technology, and it is initiated by key innovation in the delivery of content. The most obvious example is the audio industry’s evolution from live-only performance, to radio broadcast (NBC radio), then physical media (Atlantic Records), then download (MP3s), followed by streaming (Spotify).”
“Customer churn also tends to be low during the access wave, while acquisition costs are modest and content offerings relatively unfragmented. This means the lifetime value of the average customer is high, and those customers benefit from incredible value, too. In other words, it’s relatively easy for everyone to be happy. And thus this state cannot last for very long.”
“The arc of access-led innovations ends in commodification.”
“First-mover advantages, after all, can’t fight economic gravity.”
“If vMVPDs proved to be the worst “streaming business,” UGC video platforms established themselves as by far the “best” ones, offering more revenues, more content, more profits, more users, more engagement time, more valuable “data.”’
“An industry joke runs that there is one unequivocal winner of the non-UGC “Streaming Wars” – social media companies, such as Facebook and Twitter, that benefit from SVODs bidding endlessly against one another to advertise their (unprofitable) services to social media users (which will probably have a negative lifetime value).”
“At one point, WarnerMedia had nearly 10 SVODs (HBO Now, Cinemax, FilmStruck, Warner Bros Archive, DC Universe, Crunchyroll, Drama Fever, Rooster Teeth) with plans for more (TBS, TNT, Turner Sports, CNN) before consolidating them into HBO Max.”
Content-Based Competition
“During this wave, market participants will continue to grow by cannibalizing the old modality, but the fundamental increase in the number of competitors means that growth becomes increasingly zero-sum.”
“There is a roughly 18- to 36-month delay from the time a service increases its programming budget and when the resulting films and series premiere on the service. As such, operators worried—and often saw evidence—that their competitors were ratcheting up their spending. The result was a feedback loop where more spending at Service A prompted services B–Z to spend more, thereby affirming each service’s choice to invest while also diluting the benefits from those investments, thereby requiring more investment.”
“Content is both essential, but also with diminishing marginal returns”
“Log onto Netflix today and the rows of personalized recommendations have been displaced by popularity-based lists of “Trending Now,” “Top 10,” and “Popular on Netflix,” as well as Netflix’s featured Originals. This seems to reiterate the aforementioned role of network effects: while Viewer A might prefer Show A to Show B, ceteris paribus, they’ll enjoy Show B more if their friends B–E are watching it too.”
Platform-Based Competition
“…we need to recognize that for all of its innovations (on demand, ad free, recommendations, binge releases, the ability to offer all genres to all people at all times, etc.), streaming has not innovated on the cost side of production. In fact, competitive pressures and changing tastes have dramatically increased the cost of content, not reduced it.”
“For most of this millennium, U.S. network television EBITDA margins have been in the top decile of the United States…”
“Whether you start with 2019 or 2007 or even 2002, you’re ignoring a decade or more of development. In truth, streaming video is almost as old as the World Wide Web and ever since then, we have been testing various technologies, business models, content formats, and more.”
“As Hollywood continues to embrace gaming, we should consider that gaming is also embracing Hollywood.”