The pandemic has propelled major media companies to shift their focus almost entirely to their streaming direct-to-consumer businesses much faster than they otherwise would have, said a panel of journalists at Promax virtual session “The Year Ahead: Insider Industry Productions” on Thursday.
Dawn Chmielewski, senior editor at Forbes; Melanie McFarland, TV critic at Salon and president of the Television Critics Association; and Michael Schneider, senior editor at Variety joined moderator Kevin Broderick of entertainment and media communications agency The Lippin Group at Thursday’s online session.
“The pandemic accelerated the move away from traditional media businesses,” Schneider said. “These companies are saying ‘we give up’ and they’re getting out of the linear business. They’re turning these linear networks into zombie channels to chase that streaming dream. In some ways, the pandemic gave them more permission to accelerate what was going to be a good decade-long process.”
“This gave all of the major media companies the opportunity to endure the losses because there was a broader narrative they could explain to the Street,” said Chmielewski, who is writing an upcoming book on the streaming wars with Deadline’s Dade Hayes. “The pandemic gave media companies some cover to make this shift more dramatically.”
“And Disney, for example, was able to razzle dazzle Wall Street with Disney+,” Schneider added. Disney+ has racked up nearly 87 million subscribers since launching in November 2019.
“Disney+ is an object lesson in the power of an entertainment brand and how to price a streaming option so it appears to be affordable,” said Chmielewski. “It’s one of the cheapest offers. I think it was really architected to play to Disney’s strengths. Subscribers recognize that it has this constellation of powerful entertainment brands, and they are willing to pay the recurring monthly fee. It’s the strongest lesson in how a legacy business can transition, although it remains to be seen if it will be as lucrative as the old world was.
“Meanwhile, HBO Max, which was the entire reason for AT&T’s [$85.4 billion] deal to buy Time Warner, was late to market, overpriced with very little fresh [content] to offer the consumer, and launched with a confusing consumer proposition—it was the fourth branded HBO product in the market,” she continued. “Lastly, what it did wrong was underestimate the value of Amazon and Roku as distribution platforms. They saw really anemic initial growth. That’s when you got that Hail Mary pass by WarnerMedia to distribute all of its films on HBO Max to create some momentum.”
While it’s currently the Wild West of streaming, no one on the panel thought the current landscape was sustainable, with consumers not likely to be willing or able to support all of these upstart services.
“How many of these services are still going to be around [in a few years]?” said McFarland. “And what does this all mean for the consumer? What does this mean for local markets that are still reliant on broadcast? And what does it mean for people who need to get local news?”
The panelists all predicted that the streaming services would ultimately be offered by single suppliers as bundles, much like the cable bundle of old.
“The cable model is applicable here,” said Chmielewski. “We saw this happen in cable’s heyday. I don’t believe that 200-plus streaming services are sustainable.”
“Eventually, we will pay one source for different products,” said Schneider. “It will be like cable all over again.”
Along those lines, the panelists also expect many of the big tech companies—such as Apple and Amazon—to get bigger by swallowing up some of these smaller streaming companies.
“I see Apple acquiring something at some point to really get into the streaming business,” said Schneider. Apple just completed a record-setting quarter with revenues of $111.4 billion, and has plenty of cash on hand.