Floating on the Stream

Is streaming the end of TV?

Photo: Ki-keh. Source: Picography

Streaming services have been multiplying, with Netflix, Hulu, and the recently announced Disney Plus service. Now, you can take your PC anywhere and watch whatever content you want any time you like. Is sitting in the living room and arguing over who gets to control the remote just over?

TV used to be mass entertainment. People had a set in their living room, and programmers created content that could appeal to almost everyone. This programming was supported by intermittent ads. The business model was a cash cow: consumers liked their “free” TV, advertisers loved reaching millions of households, and networks raked in the cash. But it didn’t serve some rural customers who lived a long way from a signal. So communities banded together to capture broadcast signals with a big antenna and ran cables to their homes. This corresponded with a dramatic fall in the prices of individual TV sets.

Source: St. Louis Fed

Pretty soon we had TV sets in every room for every family member, each with their own preference: cartoons, documentaries, sports, drama. With new technology came a new business model. Cable companies collected money on their own behalf, but for the individual cable channels. Content companies realized they could bundle popular offerings with experimental niche programming and raise prices. Despite the fact that everyone grouses about their cable bill, bundling still makes economic sense.

Photo: Julian Tysoe. Source: Wikimedia

Broadband internet changed this model. Now folks could get whatever they want whenever they want it. Documentaries and educational programming are tailor made for streaming. And all new content has to compete with the greatest of older content. I’m not sure there will ever be a black comedy as zany as “Dr. Strangelove.” And producers don’t need to be part of a bundle.

Shortly after broadband became widespread, reality TV emerged: shows like “Survivor” and “The Weakest Link.” Of course, the ultimate reality shows are sports competitions: NFL Football, baseball’s World Series, March Madness, the Olympics, and so on. There’s no substitute for live action sports, unless it’s breaking news. And most competitions have natural breaks for commercials.

It makes sense now for a premier sports network, like ESPN, to have its own service. This channel is owned by Disney, which just started an additional streaming service for movies, shows and other branded entertainment. The new service is priced at a loss to appeal to new subscribers, but the important thing to remember about Disney is that everything serves the Mouse. The Disney brand is a corporate flywheel that gains energy from all the properties: studio productions, theme parks and resorts, merchandise, networks, cartoons. Disney has a powerful global image, and the flywheel just keeps turning.

Disney Studios in Burbank. Photo: Coolcaesar. Source: Wikimedia

With mobile technology, we can now watch whatever we want, whenever we want, wherever we want. But the social side of television remains – the cheers that erupted around the country when Tiger sunk that last putt, the astonishment of Election Night 2016, Super Bowl and World Series and Game of Thrones parties. Streaming hasn’t killed TV. It’s just pulled it apart into its components.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2019-04-22T05:40:21-04:00April 22nd, 2019|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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