Ever since the Web was spun, over a quarter century ago, TV content providers have been getting squeezed out of the advertising market.
That’s not how it’s reported. But fewer people have cable than can watch a broadcast. Fewer still have access to streaming. What’s left of broadcasting now are mostly one-set news shows, cheap reality and game shows, endless re-runs of movies and old TV, people sitting around tables talking, or sitting in chairs yelling. Cable is evolving into the same wasteland.
Streaming is where it’s at because of ARPU. That’s Average Revenue Per User. Broadcasting is free, cable brings in very little to most channels, but a streaming subscription costs $10-15/month and the programmer only shares that with the producer.
Meanwhile, advertising revenue continues to crash. It’s all going to Google and Facebook, to Twitter and TikTok. There, programs cost the programmer nothing. But ad software can tell exactly who is watching and charge advertisers run of network rates for it. Google and Facebook also their own cloud data centers, bought with cash flow. Would you rather have a free theater and the show, or just the show? That’s what makes Google and Facebook “Cloud Czars.”
What’s wrong with streaming, then? Time. Streaming is losing time, to social networks with their free content, and to video games. You don’t need to spend $100 and get every streamer. Buy one and you’ll likely be satisfied. I have Amazon Prime, the IMBD app, and YouTube TV, which automatically tapes shows and movies I like. I broke down and got ESPN+ for live sports. (Have you ever seen Kabbadi?) I got the first two for the free shipping. I’m good.
Netflix and Disney don’t think they’re competing with Activision or Electronic Arts, but they are. They’re competing for time. They’re losing. The average viewer now spends 13 hours in front of the tube each week. They spend 16 hours playing games. As games have gotten better, they’re more expensive to make. Despite the rising cost, they’re profitable.
Games today are produced with many of the same tools, using the same talent, as TV. They’re also advancing beyond what TV can provide. They’re providing virtual reality, interacting in an immersive world that’s entirely artificial. They’re providing augmented reality, content painted over a real scene, as in Pokemon Go.
All these trends together, and more, are part of the metaverse. Games built in virtual and augmented reality are the entertainment of the future. They’re your grandkids’ movies. They’re where the world is heading. There will also be real world applications for the pieces that make up the whole. You’ll be buying without touching things, working together without being together. New careers will appear, there will be new ways of doing science and engineering, and change will continue to accelerate.
These changes will soak up money, and time. These will be coming from current ways of doing business, and current modes of entertainment. The streaming squeeze has just begun, and those players who don’t evolve will be squeezed out.
Once this becomes obvious, expect a lot of sad stories about how tragic it is. There will be funerals for the movie business, then the TV business. They’ll look just like the funerals for the journalism business I’ve been going to for a decade. Actors and producers will line up alongside writers, wondering where their next gig is coming from. You read it here first.
