Hulu Redux or Something Else for Disney-Warner Brothers Discovery-Fox

If they can work out the details, ESPN (owned by the Walt Disney Company), Fox and Warner Bros. Discovery have reached an understanding on principal terms to form a new joint venture to build a new sports streaming service. 

Those of you who remember what happened with Hulu--originally founded by News Corporation, NBCUniversal and the Walt Disney Company in 2007--might assume the venture ultimately will prove unstable, as the present concept is for each of the firms to own a third of the venture. 

Many of you will predict that management issues ultimately will arise, that interest in participating might wane or that other priorities will convince one or more of the owners to sell their interests. 

Keep in mind that the venture will only license content from each of the owner firms: there will be no transfer of content ownership rights. 

And Disney says it will continue to develop its own branded “ESPN” sports streaming service, while Warner Brothers Discovery will continue to add sports to its “Max” streaming service. On the other hand, some will argue that the new service will represent a sort of “super bundle” of sports programming that could appeal to sports fans who might see the “one service” as preferable to buying three. 

Studies often suggest the “sports enthusiast” portion of the viewing audience ranges from 12 percent to 34 percent of viewers. So it is a significant segment of the audience. 

Study	Methodology	Target Audience	Estimated Percentage	Key Findings
Parks Associates, 2022	Online survey	U.S. broadband households	34%	34% of respondents consider sports "very important" in choosing a streaming service.
Magid, 2022	Online survey	U.S. pay-TV subscribers	18%	18% of respondents said sports are the "primary reason" for keeping their cable subscription.
Ampere Analysis, 2022	Consumer survey	Global markets	20-25%	Estimated 20-25% of global SVOD subscribers watch sports regularly.
Nielsen, 2021	Streaming viewership data	U.S. adults	12%	Sports accounted for 12% of total streaming viewing time in the U.S.
Light Reading, 2021	Survey of industry executives	Global pay-TV market	20-30%	20-30% of pay-TV subscribers are considered "avid sports fans".

Though the new venture might not directly address the cost of sports programming directly, it is among efforts content owners must make to transition to a future where streaming is the primary model, not linear distribution. 

Content Type	Average per-subscriber cost per month (USD)	Range
ESPN	$8.00	$7.46 - $8.54
Other National Sports Networks (e.g., TNT, TBS, NFL Network)	$1.50 - $3.00	Highly variable depending on network and specific rights
Regional Sports Networks (RSNs)	$3.67 - $5.00	Projected to rise. Varies by region, team popularity, and number of teams carried.
Basic Cable Networks (e.g., USA, TNT, TBS)	$0.50 - $2.00	Wide range based on network popularity and content type.
Premium Cable Networks (e.g., HBO, Showtime)	$5.00 - $12.00	Highly variable depending on network and specific content.
Broadcast Networks (e.g., ABC, CBS, NBC, FOX)	$0.00 - $1.00	Primarily advertising-supported model, but retransmission fees charged in some cases.
Streaming Services (e.g., Netflix, Hulu)	$1.00 - $3.00	Varied pricing models based on content library and tiers.

To be sure, this venture could create some economies of scale. If it leads to higher subscriber volume, that could potentially command better deals from rights holders.

It is conceivable the partners might avoid competition for some sports rights and operating savings in marketing might be feasible.

But potential competition from the hyperscalers (Amazon, Alphabet, Apple) would still remain in place, especially as those contestants look to add sports programming.

Netlfix: New Boss Just the Same as the Old Boss?

One sturdy storyline is “new boss just the same as the old boss.” So it is that some observers criticize video streamers such as Netflix for raising prices, just as legacy cable TV suppliers do. 

That seems unfair, as it is a charge that could be aimed at all sellers of products and services over time, especially when inflation rates are higher. And find any publicly-traded company whose basic imperative is anything other than “grow revenue and earnings” every year. 

Also, except for Netflix, virtually all other public streaming services are unprofitable, which is one reason why prices are being raised. 

Of course, one might prefer that higher prices over time are accompanied by higher value as well. 

So when others might argue that streamers such as Netflix are facing greater risks of becoming monopolists with weaker value propositions for consumers, that is a greater risk only if Netflix cannot grow its value proposition. 

That again is a general issue with all potentially market-leading firms. “New and improved” is almost a necessity, over time. 

We might agree with those who argue the “lower prices overall” advantage of streaming services only sometimes seems to be the case. Since many, perhaps most, consumers buy multiple streaming services, “saving money” is often, but not always an advantage, compared to buying a single linear subscription. 

It might be fairer to say that the key advantage is “choice” rather than “cost,” as a rule. 

Sudy	Year	Sample Size	Recurring Cost per Service (USD)	Avg. Number of Services per Household	Total Spending per Household (USD)	Key Findings
Parks Associates	2023	10,000 US households	$12.40	3.2	$40	Households with higher incomes subscribe to more services. Gen Z and Millennials lead in streaming adoption.
eMarketer	2022	1,000 US internet users	$15.00	2.7	$39.50	Increased cost-consciousness leads to subscription stacking and “churning” (switching between services).
GlobalWebIndex	2023	120,000 internet users across 25 countries	$10.80	2.4	$26	Global adoption of streaming is rising, with regional variations in preferred platforms.
Statista	2023	2,000 US adults	$14.20	3.0	$42.60	Original content and exclusive programming drive subscription decisions.
Nielsen	2022	5,000 US households with streaming subscriptions	$13.70	2.9	$39.30	Cord-cutting continues, with younger generations relying solely on streaming.

We might also argue that streaming is to linear video as many other forms of “internet” content are to legacy forms of content: more on-demand; more user-generated; more platform-oriented; pull (algorithm driven) from push (linear packaging); more consumption of “stories” or “items” rather than specific media. 

In and of itself, higher prices over time are not unusual, nor specific to Netflix or other streamers. What will draw attention is inflation rates that are higher than “background” rates of inflation. 

One might note that video streaming retail costs have risen faster than the background rate of inflation since perhaps 2024. On the other hand, it is also fair to note that almost no streaming services are profitable at such rates, either. 

Providers still are searching for the better formula for a sustainable business model. 

Unicast Video Accounts for Most of the Internet Bandwidth Increases We See

Constant and significant increases in bandwidth consumption are among the fateful implications of switching from linear TV broadcasting to multicast video streaming. Consider that video now constitutes 52 percent to 88 percent of all internet traffic. 

Not all that increase is the direct result of video streaming services. Video now is an important part of social media interactions and advertising on web sites supporting consumer applications, though some studies suggest social media sites overall represent only seven percent to about 15 percent of video traffic consumed by end users. 

Also, there is some amount of internet video traffic between data centers, not intended directly for end users, possibly representing five percent of global internet traffic. 

Study	Date	Video Traffic Share (%)
Cisco Annual Internet Report (2023)	Dec 2022	88%
Sandvine Global Internet Phenomena Report (Q3 2023)	Sep 2023	83%
Limelight Networks State of the Real-Time Web Report (Q3 2023)	Oct 2023	76%
Ericsson Mobility Report (Nov 2023)	Nov 2023	72%
ITU Global Video Traffic Forecasts	Feb 2023	70% (2022)
Ookla Global Video Report (Q2 2023)	Aug 2023	65%
Akamai State of the Internet / Security Report (Q3 2023)	Oct 2023	60%
Statista: Global Internet Traffic Distribution by Content Type (2023)	Oct 2023	58%
GlobalWebIndex Social Video Trends Report (Q3 2023)	Sep 2023	55%
Juniper Networks Visual Networking Index (2023)	Feb 2023	52% (2022)

Ignoring for the moment the impact of video resolution on bandwidth consumption (higher resolution requires more bandwidth), the key change is that broadcasting essentially uses a “one-to-many” architecture, while streaming uses a unicast architecture. 

The best example is that a scheduled broadcast TV show, for example, can essentially send one copy of the content to every viewer (multicast or broadcast delivery). The same number of views, using internet delivery, essentially requires sending the same copy to each viewer separately (unicast delivery). 

In other words, 10 homes watching one multicast or broadcast program, on one channel, at one time consumes X amount of network bandwidth. If 10 homes watch a program of the same file size as the broadcast content, whether simultaneously or not, then bandwidth consumption is 10X. 

There are some nuances for real-world data consumption, such as the fact that consumption of linear video is declining or the fact that broadcasting uses a constant amount of bandwidth, no matter how many viewers in an area might be watching or not watching. 

Study	Comparison	Bandwidth Ratio (Streaming/Broadcasting)
"A Comparative Analysis of Video Streaming and Broadcasting for Live Sports Events" (2023)	Live sports streaming vs. multicast	10x - 15x
"Bandwidth Efficiency of IPTV vs. Traditional Broadcasting" (2022)	IPTV unicasting vs. terrestrial broadcasting	2x - 4x
"The Impact of Unicast Video Delivery on Network Traffic" (2021)	Unicasting video vs. multicast video	1.5x - 3x
"Comparing the Bandwidth Consumption of Live Streaming and P2P Delivery" (2020)	Live streaming vs. P2P for live events	3x - 6x
"The Bandwidth Efficiency of Video Streaming Protocols" (2019)	HTTP streaming vs. RTMP streaming	1.2x - 2x
"A Study of User-Generated Video Delivery on Social Media Platforms" (2018)	User-generated video streaming vs. traditional video streaming	2x - 4x
"The Bandwidth Implications of 4K and 8K Video Streaming" (2017)	Higher resolution streaming vs. standard definition	4x - 8x
"The Impact of Mobile Video Streaming on Network Congestion" (2016)	Mobile video streaming vs. fixed-line streaming	1.5x - 3x
"The Future of Video Delivery: A Cost Comparison of Streaming and Broadcasting" (2015)	Streaming vs. broadcasting for future content delivery	2x - 4x
"The Bandwidth Efficiency of Video-on-Demand Services" (2014)	Video-on-demand streaming vs. linear broadcasting	1.5x - 2.5x

There are other nuances as well. Since a broadcast video stream often is viewed on a television set, it is possible that multiple viewers “share” viewing of the same content. If one TV is receiving a program, and five people are watching, the “single delivery” supports five views. 

On a “per viewer” basis, X amount of delivery bandwidth is X/5 for each viewer of the same program. 

If five people watch a program of equivalent file size at the same time, data consumption is 5X. 

Study	Year	Methodology	Streaming Bandwidth (Mbps)	Linear Broadcasting Bandwidth (Mbps)
Nielsen	2022	Network traffic analysis	3.1-4.7 (average)	0.1-0.2 (average)
OpenVault	2023	ISP data analysis	1.8-2.5 (average)	0.05-0.15 (average)
Pew Research Center	2021	Survey and network analysis	2.3-3.8 (average)	0.1-0.2 (average)
University of Zurich	2019	Network monitoring and simulation	2.0-3.5 (average)	0.08-0.18 (average)
Akamai	2020	Global traffic analysis	1.6-2.8 (average)	0.04-0.12 (average)
Sandvine	2022	Network traffic analysis report	3.5-5.0 (peak)	0.15-0.25 (peak)
Netflix	2021	Open Connect content delivery platform report	0.5-1.5 (average)	N/A
BBC Research & Development	2018	HbbTV hybrid broadcasting analysis	1.0-2.0 (combined)	0.03-0.08 (combined)
Bitmovin	2023	Video encoding and delivery technology report	0.8-1.8 (efficient encoding)	N/A
Ericsson	2022	Mobile network video traffic report	0.5-2.0 (mobile average)	N/A

The point is that the shift from broadcasting (multicasting) to unicast entertainment video was destined to dramatically increase internet data consumption.