CACHE IN HAND
Yes, Netflix won the Streaming Wars. Woot. And so The Great Media War begins. In this much larger battle, "Streaming Champ" will likely be little more than a pyrrhic title.
When diagnosing the strength of TV combatants by their heart rate of Net Margin and blood pressure of Cash on Hand, you can see clearly who is actually in good enough fighting shape to go the full ten rounds.
The data is blunt: Long-range, none of Hollywood’s TV warriors have the ammunition to fight the long battle ahead.
Sure, Netflix had a great year. But let’s all remember, it was the wall THEY hit just TWO YEARS AGO that sparked Media’s current spiral.
If you’ve tried to suss out their “shared plans” recently, you’ll understand just how much of their recent revenue has been predicated on punishing subs for sharing passwords. Netflix’s C-Suite knows their growth is plateauing, which is why they will stop announcing sub numbers in the new year. And their ad business, as I have oft demonstrated, must greatly improve to be considered a total mess.
Netflix personifies my Media War Game Theory. They are by far the best in breed of single-purpose TV platforms. Yet, crucially, when comparing historic net margins and cash on hand, in the next great battle for TV supremacy, even the Streaming Wars Champ brings just a knife to the missile fight.
(NOTE: The Walt Disney Company does not report 3Q earnings until November 14. However, recent history has shown them to be solidly entrenched in the OG Hollywood camp.)
For the next decade, the television business will be a long, expensive, bloody, and hard-fought battle for eyeballs, dollars, minds, and hearts. In the arms race for sports rights, customer acquisitions, and on the newly important front of ad sales, only the Big Tech flywheels have enough replenishing capital to outlast the field. It will be incredibly difficult for the pure-play TV combatants to fight off the Big Tech Death Stars who fuel their forces with profits from iPhones, search, retail media, clouds, chips, gaming, audio, social media, and productivity software, which throw off the mountains of moolah necessary to stay in, and ultimately win, the bigger battle.
What’s more, with the results of the recent election, as widely noted since by the C-Suites in Big Tech and Big Media, the regulatory environment is about to get far friendlier for the big boys. Google is a lot less likely to get broken up. Amazon and Apple will face far fewer anti-trust headwinds. Odds are bigly that Big Tech will seek much more M & A and loom even larger on the TV landscape.
If my Media War Game Theory holds (with the combo of margins & cash determining victory), then by the end of this decade, after consolidation and insolvency, only very few of these 👇 combatants will be left standing.
My version of The Art of War for the Media Business - across Streaming, Social Media, TV OS & Gaming - is at this handy-dandy link: https://bit.ly/ESHAPwar
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#earningsseason