We are definitely in a period of instability for — well, everything. In the entertainment industry, the cable-cutting chickens have come home to roost, and the things people knew would happen eventually, are all happening very quickly instead of very slowly. Eight years ago I was writing my silly posts about what these behemoth companies ought to do, when Richard Plelpler was on stage to introduce HBO Now for the Apple TV 3rd generation, and I wrote about things like why we have bundles (a bunch of things is cheaper than à la carte) and why there needed to be ad-supported tiers when Apple introduced their Over the Top Service (remember when that never happened?) What I wrote that companies like Apple should do was laughable garbage, but the problems they needed to navigate around are still the problems they face today. This is what consumers thought for the past eight years:
- Consumers hated paying for channels they didn’t watch. They believed they were paying only for what they were watching when they made the move to cut the cord and subscribe only to streaming services they used.
- Consumers hated to see ads because they didn’t need that junky stuff in their life.
That was always wrong because when you pay for a bundle you’re getting a discount on the things you don’t usually watch — something that has perturbed people interested in watching live TV events in this streaming era is that they realized they did actually use some of those channels a couple of times a year. That’s how they have money to pay for those events that you can’t miss. That’s what the money is for!
I also regret to inform everyone that advertising, as a general concept, absolutely works. People think that they magically gain awareness of media and products through a reliable word-of-mouth network where a carefully cultivated list of friends guide what they watch and what products they use using only their friends’ discerning taste alone!
Everyone is swimming in ads, especially your friends. Your exposure to irritating ads might go down if you only use premium on-demand services, at their highest-paid, ad-free tiers, but that’s also a lie. The preroll ads before a show tell you about what the streamer would like you to watch. The officially branded podcast and websites where you can hatch dragon eggs and shit.
The app, and system interfaces are an ad, which is why companies will do everything they can to try and keep you in their interface, looking at their banners and promoted shows. Steering a person’s attention and behavior, and thus a person’s money, is the whole game.
Of course there are people that just don’t care about ads cut into video, and will gladly accept them for free, or discounted service. They’re not fools, because they’ll be able to watch a wider variety of things for less money at the people who can’t abide seeing them.
The reality is that there isn’t a single group of consumers. MIND BLOWN! KABOOM!
We, as consumers, like to think that all the other right-minded consumers agree with us. This has a lot to do with the echo chambers we find ourselves in on social media where we talk about watching the same shows as if we’re all on the same living room sofa.
Companies are way ahead of people here. Part of the reason cable has been so slow to address cord cutting in any meaningful way is because they knew they still had people who did not want to cut the cord, despite high prices, and ads. Invariably this comes down to how we use television to adjust the balance of chemicals in our brains.
Not everyone wants on demand content that they specifically select from a menu like they’re looking through the wine list at a restaurant. Some people just want whatever the happy hour specials are. That’s not an indictment of the consumers, or the restaurant/streamer, but simply a function of preference. Sometimes people go back and forth in their behavior based on their mood. Stop the presses: People have moods!
This is why Free Advertising Supported Television (FAST) services like Pluto, Tubi, and FreeVee (née IMdBTV) are all able to grow by offering something like a worse cable TV experience. Grids of “channels” that are really playlists of antique reruns, or bottom-shelf no-name fare, all populated with repetitive ads. These companies promise stuff in a very similar way to bloated cable TV packages.
However, even the snootiest of snooty à la carte subscribers should notice that their à la carte choices aren’t the incredibly specific fare that they thought they were getting. All these streamers have been trying to “bulk up” or merge to get enormous catalogs of stuff so that you must stay subscribed to them even when they don’t have a specific thing you want at this moment.
Speaking of that stuff, here’s Bob Iger in February, via CNBC:
“We are intent on reducing our debt,” Iger said. “I’ve talked about general entertainment being undifferentiated. I’m not going to speculate if we’re a buyer or a seller of it. But I’m concerned about undifferentiated general entertainment. We’re going to look at it very objectively.”
Disney currently owns 66% of Hulu, with Comcast owning the rest. The two companies struck a deal in 2019 in which Comcast can force Disney to buy (or Disney can require Comcast to sell) the remaining 33% in January 2024 at a guaranteed minimum total equity value of $27.5 billion, or about $9.2 billion for the stake.
Just five months ago, then-Disney CEO Bob Chapek said he’d like to own all of Hulu “tomorrow” if he could. Chapek’s strategy revolved around eventually tying Hulu together with Disney+ to give consumers a “hard bundle” option in which viewers could watch programming from both the family friendly Disney+ and the adult-focused Hulu. Comcast’s stake in Hulu prevented Disney from moving forward with his plans.
It would be pretty easy to say that Chapek was a happy hour guy, and Iger is a wine list guy, but I don’t think it’s so clear cut with Iger. Iger knows, and is aware of, the desire people have for stuff but Iger also knows he can’t charge premium prices for stuff and he is worried about turning highly desirable, specific things into stuff by taking away anything that makes it special.
As absolutely absurd as it was to see those brand tiles revealed for the Disney+ launch they do mean something. They are a way to direct people to choose.
Does FX on Hulu mean anything? Does a Hulu Original mean anything? Hulu, despite being outside the Disney+ app at this time, is also a brand in North America. Whether Hulu branding stays, it seems pretty clear that Disney needs a brand tile for undifferentiated stuff.
What about ESPN? The wine list and happy hours apply to sports too. Sometimes people want to watch any game that’s on, and sometimes people only want to watch their team, or The Big Game. The current sports media landscape is very, very, very bad. I wouldn’t personally know, because my monocle pops out whenever I even think about watching a sportsball game, but Jason Snell and Julia Alexander do an excellent job of explaining the never-ending ways in which the sports media landscape is a mess in the Sports Corner segment of their Downstream podcast, including ESPN.
We’ve seen this dynamic play out slightly different with Warner Brothers Discovery, which is run by a greedy, unlovable caricature of an executive that no one likes, David Zaslav. This happy hour guy ran Discovery, and it wasn’t red or white wine and some beers, it was a chain of bars where you could get novelty plastic cups filled with a variety of watered-down, bottom-shelf, sugary, fruit-flavored, frozen daiquiris. Happy-hour-slushy guy bought Warner Media, and declared that the quality of Warner Brothers, and HBO, would be the same, he was merely going to cut out of control costs.
This is weirdly not how things were run before where there was a fine dining restaurant with wine list, and then a second slightly-not-as-good fast casual version was opened up. Anything worth saving from that fast casual place was folded back into the restaurant. Then the restaurant was razed and replaced with a Daiquiri Deck but one that had a discerning wine list available upon request for a little more than you were paying before.
The new slogan says it all: Max - The One to Watch.
Max - The One to Guzzle.
One of the big happy hour players, for a long time, has been the various entities that have been spawned from and reabsorbed by Paramount, CBS, and Viacom. Just a burbling primordial soup of happy hour specials (don’t order the primordial soup special). They are Darden Restaurants in this happy hour analogy.
Their whole deal, in all iterations, was to diversify out to different channels in the bundle and increase the amount of money that they got out of the cable subscription carriage fees. It didn’t matter to Viacom which channels people were watching, or what they watched on them, as long as they had a lot of channels. It also didn’t matter how many of their channels were showing new content, overlapping content, or never-ending marathons of old stuff.
That sounds like a perfect fit for streaming, but they were so dependent on those carriage fees that they couldn’t do anything meaningful to adapt to changing consumer demand, and their high-prices and low-quality were what people were exactly complaining about in their bloated cable bills.
They had some very bad apps, and very bad websites, that all wanted to leverage your cable login to see stuff a day later — it was a mess. This lead them to look outside for a possible solution and that was Pluto TV, which they acquired in 2019. Instead of making a bad clone of cable, they could buy it.
CBS, the old people channel (that had been spun off as it’s own company by Sumner Redstone in 2005 because it was losing money, but then became worth more than Viacom) made CBS All Access and Showtime’s separate app. Shari Redstone, daughter of Sumner Redstone, maybe kinda-sorta-possibly-maybe-allegedly had something to do with Les Moonves getting fired for sexual misconduct, replaced most of the board, and got the companies to merge again. Then CBS All Access became Paramount+ and could start absorbing bits and pieces of the former chain restaurant empire, including Showtime, which only ever has one good wine.
Pluto TV, as a FAST network, is still separate from Paramount+ with Showtime because they don’t conflict with each other in terms of how people want to watch shows. However I wouldn’t be surprised to see attempts to cross promote and try to get the people buying Star Trek licensed wine to buy into the happy hour lifestyle, and vice versa.
Shari wanted the companies together to make them worth more as a whole thing to sell to someone else though, not because she wanted things tidy. She knows that Paramount Global, even after merging with CBS, is too small, and too strapped for cash, to be a complete destination. Before their mediocre fare could take up as much space in the mall and adjacent buildings as possible, but now the mall is dying and they need you to want to choose to go out of your way for them.
Amazon’s main driver has never been their video products, it’s been their shipped-to-your-home retail empire. Despite this, Prime Video often has shockingly good movies and TV shows that rotate in and out of their library, but it’s mostly surprising because people don’t think to go Prime Video. Their original content was supposed to be a big driver, but it’s not apparent the money they spend on originals has directly lead to any kind of general improvement in their video brands.
This disorganized approach has led them to try all kinds of categories, genres, and business models. Like injecting the IMdB brand into the name of their FAST service, and then injecting that into Prime Video to somehow entrap people expecting ad-free video to watch ad-supported video. Then rebranding that as FreeVee, which is kind of a repellant and genius name all at the same time.
Lest I neglect to mention it, they also bought MGM, which they absolutely did not need to do. It seems to not have benefited them or led to any kind of substantive plan other than more reorgs.
It’s always seemed like they’re flailing and they don’t know what to do. One minute, they’re practically giving away high-priced Bordeaux, and the next minute they tricked you into drinking a Zima. But it all comes back to shopping, I guess?
Apple is in a more straight-forwardly weird spot. They were late to the game, and they’re not a restaurant, or wine bar. They’re a winery that has a few estate-bottled wines that have aged enough to sell, but they mostly fill up their cellar with grapes they’ve bought elsewhere. The only wine that’s been a clear success every vintage is a collaboration with another winery and that is going to end soon. They bought up a lot of billboards, and entered their wines into many contests, but they’re still a single winery that just doesn’t scale up to offer much variety, or historic depth in their library.
That’s fine, if that’s where their ambition ends, but I don’t believe it is. At some point they’re going to acquire or partner with another company that caters to a broader clientele. They already sort of tried to do something loosely along those lines with Apple TV Channels, but it didn’t really benefit their partners much.
Cash-strapped Paramount Global is a likely target. Or bundle-friendly Zaslav who won’t sell HBO, but would likely be willing to consider an Apple+ Max — the name is so bad it’s already perfect.
That leaves us with the one that got us all into this mess, The Cheesecake Factory. Netflix has the length, and complexity of a wine list, but one constructed from just about whatever they could produce as quickly as possible. A laminated, spiral-bound monstrosity where there’s no clear vision or purpose but to have something for anyone and everyone.
Just like The Cheesecake Factory, you can have a pretty good time if you have to spend time there, but you’re there to consume in a liminal space between a fancy meal and every stall in a mall food court. Much like The Cheesecake Factory adapted to changing economic conditions, I’m absolutely certain Netflix will be fine, financially, but the way they fit into people’s lives might change. Growth is no longer the game, and neither is quality, but there’s plenty of room to work on what costs what.
People have been sleeping on bundles. Every cord cutter with two brain cells tweeted, posted, or kvetched at some point in the past year about how much they’re spending on all these streaming services, and realized “it’s just like cable”. These companies are going to get their money for making the media that you consume. The illusion of it not costing much, and being able to pick and choose has been replaced by the same basic reality we had before.
Where these companies would bloat up to try to command as much of your cable subscription from the cable companies, they are the cable companies now. They all need to be necessary to you. If they can’t make enough movies and TV shows to be necessary, they’re going to offer more discounts for yearly, or longer, subscriptions. They’re going to offer discounts between companies to pay for one and get the other half off. They’re going to push people to subscribe directly through them so they can put people through a more onerous, and painful cancellation process.
Sure, we’re more or less back where we started, but we were always going to be there. Even the people that want to choose what they watch don’t want to choose the subscription enrollments every month. They just want stuff.
But don’t worry about it too much. Let’s go grab a drink.