The Misalignment of Supply and Demand of Entertainment Content Providers

Andrew
Andrew
Aug 9, 2017 · 3 min read

This is largely the manifestation of conversations that my father and I have had many times. My father is a 20+ year veteran in the TV biz, historically selling air time and, of late, dealing in emerging media. While he has worked for various local and national stations, most of his time has been with ABC — his current employer. This means that his boss wears white gloves and has big black, round ears: Mickey Mouse.

Today Disney announced that it was pulling all of its content from Netflix. It is fascinating that a company with the powerful brand and breadth of content that Disney has built that they would so willingly let Netflix, or anyone else for that matter, license their content for so little. Even with Netflix on pace to reach $10 per month in the near future, its still safe to say that it is remarkably cheap to access all of that content. With roughly 6,500 movies and over 1,600 TV shows, Netflix has a huge selection of content and had driven costs down for consumers. This, however, has presented an obviously large shift in the way entertainment media is funded and produced. Whats good for the consumer may not be good for the supplier.

Growing up on the Northwest suburbs of Chicago, I am naturally a Blackhawks, Cubs, Bulls and (Bad News) Bears fan. Having left the Land of Lincoln in 2011 for Wisconsin and later California, I have not been able to follow my teams as closely as my friends and family back home. Catching a hometown ball game is now subject to national broadcasts and the occasional local broadcasts when Chicago comes to town. My only other (legal) option is to purchase cable packages provided by the NFL, NHL, MLB or NBA, giving me access to the whole league for a few hundred dollars. This frustration had led me to remark to my father on a recent visit home, “I wish that I could buy a package with just Hawks, Cubs, Bulls and Bears games without having to buy dozens of other teams’ games that I do not care for”.

Many times my father and I have discussed how the industry works, how air time is priced and how viewership is estimated. His insight is extensive. He very quickly was able to reason out that my Chicago Sports package is not feasible, as content often cannot be packaged the way consumers want it, as it would not be financially feasible for providers and producers. This is the misalignment of supply and demand.

This misalignment has been around for a long time now. Content has been packaged in a manner to benefit providers. This is demonstrable by many who know the feeling of not being able to find anything to watch within the thousands of channels they have. This is because we really only watch a few channels and don’t venture off that far into new content, nor do we want to. Regardless of what we wish to watch, the content packages we offered are often not suited to our desires. Content packages are indeed customized to be broadly or narrowly appealing, but we likely will never be able to pick the specific few channels we want on a mass scale — it would not be financially feasible on that scale.

Consumers want something that content providers cannot provide. Content providers will continue to innovate to better serve their customers — make no mistake, this is not a jab at content providers. This is just the observation of what I perceive to be a corrective but late move by Bob Iger and Mickey Mouse, as well as the airing of my grievances on the eve of puck drop, kickoff, and tipoff for the 2017–2018 season.

Maybe someday there will be an up-and-comer who can correct and realign our demands with the proper content. I just hope that it can be done without effectively killing the wider industry of entertainment media as we know it.

Andrew

Written by

Andrew

Urbs in Horto | Land of Lincoln | Climate Hawk | Conscious Capitalism | Jesuit educated