Netflix opens the floodgates for TV
It was the decade that altered the very definition of TV — Noun: Netflix. Verb: To stream.
The industry’s struggle to adapt to the new terminology sparked a merger mania that has rapidly condensed the market for entertainment content and pay-TV services into the hands of a powerful few. As viewers decided they didn’t need so many channels, the industry decided it didn’t need so many companies. Once-powerful corporations such as 21st Century Fox and Time Warner Cable were acquired by rivals better equipped to navigate the new age of streaming.
Fox’s studios joining the Walt Disney family probably came as the biggest shock, but Disney’s more meaningful acquisitions were of the Marvel and Star Wars franchises, giving it near-total domination of the big screen.
Of course, the big screen isn’t quite so big anymore: Netflix alone generates more revenue than the entire North American box office. Originally a DVD-by-mail service whose biggest competitor was the Blockbuster store, Netflix is now nearly as valuable as Comcast. For a time, it was even worth more than the US cable behemoth.
It has also lured some of Hollywood’s most sought-after directors and actors, while others have taken their movie-making talents to Apple and Amazon. But the mega-deal of the decade was AT&T, a once prosaic phone company, swallowing Time Warner, the parent of HBO.
The so-called streaming wars didn’t begin on any particular date, but an important one was April 2, 2010. That was the day the Netflix app appeared on the Apple iPad. Within a few months, it was in the iPhone app store and suddenly streaming could fit right in our pockets, travelling wherever we went. And just like that, an €8-a-month app became a viable and satisfying alternative to cable TV. Then came the mergers.
Few industries were maimed by technology these last 10 years more than media — print media absolutely, but also the entertainment giants, where the figures at stake were even larger.
By 2015, the industry’s centre of power was shifting as cracks formed in the traditional pay-TV model.
A now-infamous earnings report that summer from Disney showed cable subscribers were dropping the company’s ESPN channel, the most valuable network on the air — what was supposed to be the Teflon of TV. The typical cable bundle in the US that force-fed consumers far more channels than they ever needed was going the way of antennas.
It was a seminal moment when a usually tenacious Rupert Murdoch sold most of his company to Disney, a deal which also included valuable franchises such as The Simpsons and X-Men.
The recent reunion of Viacom and CBS was the Redstone family’s attempt to shore up the walls of its own vulnerable empire, bringing back together the broadcaster that owns Showtime and the parent of MTV and Paramount Pictures.
Sprouting from all these mergers are new Netflix-copycat services, such as Disney+ which launched in November and AT&T’s HBO Max, which is set to launch in May. Apple TV+ subscriptions also went on sale, while Comcast’s Peacock service — named for the logo of its NBCUniversal division — arrives in April.
The next decade will usher in a new roster of leaders tasked with trying to make financial sense of the industry shape-shifting.
Long-time media moguls such as Disney CEO Bob Iger and John Malone owner of Charter and Discovery, are on their way towards retirement. For investors and consumers alike, it’s an uncertain road ahead. My cynical prediction: An already shrinking industry will get even smaller.
