The zero sum game

Welcome back to the third installment of The Streaming Geek, a weekly article series about the latest news, trends and major changes happening in streaming television. I’m part of a Pilot Group that is helping LinkedIn launch a new Series feature. Subscribe to the weekly series by clicking the blue button on the top right corner of this page and you’ll receive a notification of the new article being posted every week. Let’s deep dive into the future of tv together – as always, you can find me at

It’s a crowd, not a party.

2019 is going to be a very interesting year in streaming television. Disney, Apple, AT&T have announced their own direct-to-consumer services (DTC) coming to the market – in some cases through carefully orchestrated hype and ridiculously long wait -, bringing also some superstar power to the streaming content (Oprah Winfrey has signed a multiyear engagement with Apple). The presence of multiple players in what already looks like a maze poses multiple questions:

  • Will this be an advantage for the consumers (unlikely, but could the competition lower the average price for end customers)?
  • What is going to happen to content? Will the maze become even more complicated and the abundance of offerings trigger a “my-content-only-on-my-platform” type of situation? Disney has already announced it will pull its content from Netflix once their current licensing agreement expires in 2019.
  • How will that content vacuum be filled? Will the average Joe end up subscribing to 4-5 video streaming platforms? Right now families subscribe mostly to Netflix (see recent data here) and one or two other platforms, usually Hulu or Amazon Prime Video. The data becomes even more skewed if examined by age groups.
  • What will happen to entertainment spending when recession hits? Leisure is one of the first cuts people usually make when struggling financially and, while $10/month don’t necessarily break the bank, $50/month definitely do for average families (think in terms of Netflix+Hulu Live, respectively at $10 and $40 each). Who will make the cut?

Netflix will make the cut, and there will be only one spot left.

Netflix enjoys the first mover advantage, the largest catalog of originals, the loyalty of “cord nevers” (as the users who never signed up for cable and have totally embraced the Netflix model, mostly the 18-34 age group), and the “innovator” label as the company that trained us on binge watching without ads, binge release (no more waiting one week to see what happens in the next episode) and easiness of navigation through an Apple-like design approach. Expecting users to give up on this is not a possibility.

What is much more likely instead is that Netflix, crippled by its enormous spending for original content – was supposed to be $8 billion in 2018 and it rapidly became $12-13 billion – , will start slowly introducing AVOD (advertising video on demand) as layers of membership to ease the impact of spending for original shows and foreign language productions (just this year Netflix produced 80 foreign shows, some of which received wide critical acclaim). In doing so, Netflix will follow Hulu’s lead of different pricing tiers with different amount of ads. Those experiments with limited ads might not necessarily happen in the US, given the large customer base the company has in the States. That should help offset the losses of original programming and, in the meantime, let’s not forget that Netflix is keeping up the momentum on original content by signing up the Obamas to executive produce original shows. It’s such an ambitious plan that you can’t help being curious about it.

Will Apple and Disney just sit and watch?


Apple is pulling a serious stardom effort for its original programming. In addition to Oprah, the company has already enlisted a wide group of actors (Reese Witherspoon, Jennifer Aniston) and directors (M. Knight Shyamalan, Damien Chazelle) to produce what appears to be a wide range of high quality content (more details here). However, considering how long Netflix has been in the streaming business and the effort it undertook to become the leader, it might still take time for Apple to catch up on video streaming. As it learned when it missed the boat on music streaming, catching up is a much harder business.

Disney+, the streaming service coming to the market late 2019, should be more interesting. Disney has obviously the advantage of already having studios, talent, and a marketing army trained on producing and advertising movies and television content. As Disney has announced it will pull its content from Netflix, it seems that Ted Sarandos, Chief Content Officer of Netflix, feels many studios and companies will still engage with Netflix even as they launch their own services, as they may find that Netflix will give them a better return on investment for some content. I believe he’s right. My prediction is that the latest and greatest releases will go on Disney+ but the rest will still stream on multiple platforms. The market is too big for these companies not to take advantage of each other.

Are we at “peak streaming” yet?

The short answer: not at all (and we’re drowning already). Since the launch of House of Cards on Netflix as the first original by a streaming service in 2013 things have grown so dramatically that we are out of control. Best ways to find a new show to watch now are social media, as browsing content has become just too time consuming. We are entering what is called “the choice paradox” commonly studied in behavioral finance: paralyzed by a plethora of options available, the user goes for what he/she knows best (familiar content) or just gives up altogether. The comfort of “not having to choose” is a strength that linear TV has, unlike streaming: viewers can still switch channel and not come back, but some audience gives real value to being surprised by the channel schedule and discovering a new show or movie. In a not-so-paradoxically way, this is what still keeps the audience attached to linear TV (and live TV conveyed through the internet).

For streaming companies, it’s even worse. If the user has the “first world problem” of figuring out what show to watch, companies have a serious challenge in keeping up with their own success. New stories, new talent, new narratives must be continuously cycled in and out to keep the momentum going. The creative community has seen production velocity and compensation levels unheard of before – but it won’t last. I will tackle the specific topic of how content is produced and distributed in two weeks so stay tuned!

Let’s cobble.

Surrounded by a massive amount of options, consumers started cutting the bundle and cobbling things together as they feel appropriate to their needs and taste. ‘Skinny bundles’ like DirecTV and Sling TV – with a reduced number of channels – have been successful.. until they started raising their prices and the licensing wars affected their lineup. Bundles have hit a wall and seem now to be “cratering”, according to analysts. And to understand the impact of the licensing wars when too many players have the same goal, let’s close with this: a few weeks ago HBO channels were yanked off Dish and Sling TV by AT&T, the new HBO owner and also owner of Dish’s largest competitor, DirectTV. Each party blamed the other for what happened pointing at issues during the negotiation, but in the end it’s the consumer who loses: more than 2 million Dish customers now have to pay the same for fewer options. This is what licensing wars can cause, making it a zero sum game.

  • For more reading on peak streaming, check out this insightful interview with John Landgraf, CEO of FX, here.
  • For a great (and free) tool to figure out what type of content we can combine by breaking the bundle check out this website founded by Virginia Juliano at

The Streaming Geek will be back next week with a piece on ad tech and why it matters so much to companies and consumers. Thanks for reading!

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