How Streaming TV Beat Cable
Complacency opened the door to competition and ultimately significant market share loss
There are a few additional thoughts I wanted to expand on from my last story on why streaming is so unprofitable versus traditional pay-tv.
The first is that on the streaming side, you need to do everything yourself: content creation (or licensing), marketing of that content, and customer acquisition (and retention).
On the other hand with pay-tv, these were neatly siloed — content companies like Disney and Time Warner produced content and cable companies like Comcast acquired customers.
In the pay-tv world, bundling made everything easy. Cable companies bundled internet with cable TV to sell more cable TV subscriptions. And content companies put their channels into the cable companies’ entertainment bundles to reach more subscribers and subsidize each other’s production costs.
Bundling is awesome
The companies on the supply side benefited from bundling because the ultimate result was more subscriptions. Whether you were a popular channel or a niche one, bundling ensured more reach. To see why, imagine there’s ten potential TV subscribers: 5 sports buffs, 2 history buffs, and 3 casuals who are alright with both…
