How much market share loss can linear subscription services take to competitive “live TV streaming” services before the share of market share loss breaks the linear business model?
It’s an existential question for linear TV service providers without the ability to create their own live TV streaming services. At the moment, in the U.S. market, that might appear most clear for Fox, which does not have a significant live TV streaming alternative. Disney and Comcast already have significant live TV streaming operations: Disney with Hulu+ and FuboTV; Comcast with Peacock; Paramount with Paramount+. Warner Brothers Discovery might develop Max as such a venue.
Disney owns ABC; Comcast owns NBC; Paramount owns CBS. Each of those TV broadcast networks have streaming versions, with limited market share, it can be argued.
The existential issue hinges on how much more market share erosion linear video subscription services can take before the business case is unworkable. Perhaps we might argue that local broadcasters already have their own distribution (“free” over the air broadcasting).
The greatest danger lies ahead for networks that have relied on multichannel distributors (cable TV, satellite, telco TV) for distribution.
Looking only at the 10 or so largest video distributors, it appears that live TV streaming could already have as much as 30-percent market share, principally held by YouTube TV and the combined Hulu+ and FuboTV.
Using current market share, we might argue that 30 percent share loss is troublesome and growth destroying, but not an immediate case of unprofitability. The issue is more that stress will accelerate with additional share loss, as both subscription and advertising face revenue shrinkage and undoubtedly profit shrinkage as well.
Beyond that, it is hard to predict what the tipping point--in terms of market share--will be, even accounting for industry consolidation and other profit-enhancing measures.
Several decades ago, one might well have made the argument that a rural cable TV provider would be “out of business” if its take rates (a market share proxy) dropped from 90 percent to 70 percent. Recent contract negotiations between Charter Communications and key programming suppliers have seen Charter executives arguing they would abandon the multichannel video business entirely rather than pay the rates key programmers were demanding.
More recently, small and rural cable TV firms have gotten out of the video subscription business, which has always favored operators with scale.
And video streaming services are a prime example of the “direct to consumer” trend in video content distribution, much as DTC has been a trend in retailing and other content businesses.
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