How Many Video Streamers Have Sustainable Models?

Nobody can yet be sure how the TV business will reform for broadcast, linear video and streaming, except to note that streaming viewership is growing, while broadcast and linear subscription TV are shrinking.

Eventually, viewing audience share matters. So fragmentation also matters. So does consumer preference. Each medium, long term, has to find its greatest value and its sustainable model. As much as viewership of streaming services has grown, the economics of the business have remained challenging for most providers.

So a consolidation of video streaming services always was inevitable. The economics of a direct-to-consumer business, as attractive as the idea always has seemed for programmers, simply does not scale, for most content providers. Most networks do not have the audiences to operate DTC. Limited audience means  limited advertising upside and limited subscription revenue as well. 

At some point, most networks and content providers are going to have to become content suppliers to one or more streaming services, and get out of DTC. The advantage of the cable TV model was that smaller networks did not have to worry about distribution costs. 

The cable operators handled that. Moving to DTC means building a new distribution network, and investing in marketing as well. At least so far, that has proven daunting for most networks. 

In the linear model, smaller networks had a way to gain carriage (shelf space). Sometimes payments to operators worked. In other cases, “must-have” lead programming could be signed by a distributor only when lesser-viewed networks operated by the same content owner also were carried. 

As streaming providers rethink their business models, reducing investments in original content and adding advertising models, most content owners might eventually conclude that DTC simply does not work. 

Streaming is gaining viewing share, of course. The issue is how many entities will be able to survive long term, and what various competitors will have to do to sustain themselves. Up to this point, sports have been the enduring value of subscription video as pre-recorded content viewing has moved to streaming services. 

Even that could change as more sports rights are acquired by streamers. So some believe broadcast television's future is as a home for unscripted series. Major sports events and, for some, news also should contribute. 

Most consumers are eventually going to look at their actual viewing habits and conclude that the whole cable bundle comes down to a handful of networks or channels, with most of the pre-recorded content being watched on streaming services. 

In my own experience, live news and sports are the only forms of content being viewed on a linear service. Others might report reality TV as the key content type being watched. But that obviously shapes the value proposition of linear video, broadcast TV and streaming services, as well as the magnitude of possible monetization models.