Hollywood was born 110 years ago based on the control of distribution channels.
The theaters made the films. The “studio heads” all started as theater owners.
Since then, control over distribution has determined the industry’s direction. When the Supreme Court took away the theaters’ power, it transferred to TV networks. Then it went to cable.
Now it’s in the hands of the Cloud Czars.
I’ve been writing about this since 2019l. Apple, Amazon, Google and (eventually) Meta will control our entertainment options because clouds control distribution. Microsoft may join them, but they were so burned by their efforts at the dawn of the Internet Age that it will take time.
The companies that became heirs to the studios made the previous jumps, to the small screen and then the multi-channel screen. They haven’t made this one. They don’t own clouds. The survivors will be those who can sell out.
What this means for investors is that Warner Brothers Discovery is dead money. Paramount Global is dead money. Comcast is dead money. Fox was right to sell. All the other little streamers, whether selling their own programming or those of fake “cable” packages, are dead money. A motivated seller doesn’t get their price.
The jury is out on Walt Disney, Apple’s most likely target. They can turn entertainment into merchandise, through theme parks and cruise boats. But their ship is going to be tossed around before the story’s end. As of June 21, Apple could buy Disney 17 times over.
The only true survivor is Netflix. They built a studio around streaming, streaming economics, streaming data, and streaming technology. They’re global, something the other players can’t claim. But the buyouts of rivals will transform Netflix from behemoth to scrappy underdog by the time they’re done.
All the Czars need to do is wait for the studios to fall into their laps. The decisions by WBD CEO David Zaslav to trash his best assets, like CNN and TCM, for short-term profit will accelerate the move. Once you start eating the seed corn, starvation is just a step away.
