According to Nielsen’s TV ratings, a media research company that determines audience size and composition, last month, for the first-time, streaming viewership has exceeded broadcast television viewing. According to Nielsen, streaming surged 22.6% on a year over year basis as viewers logged 190.0 billion minutes, surpassing the 169.9 billion minutes of broadcast television. Although this may seem like a good thing for the streaming industry, with so many companies entering the space, the market has become saturated. At this moment, Disney (Disney+, Hulu, ESPN+) and Netflix are leading the way with 221.1 and 220.7 million subscribers, respectively. Further back, but formidable competitors nonetheless, Amazon Prime Video has more than 150 million subscribers and Warner Brothers Discovery has another 93 million between Discovery+ and HBO Max. Up and comers, although further down are Apple TV and YouTube TV, services provided by the first and third largest companies by market cap in the United States.
As is illustrated within the chart above, with great expansion comes great costs. Last weekend HBO Max aired the long-awaited and much anticipated prequal to the Game of Thrones, House of the Dragon at a projected cost of $15-20 million per episode. Next month Amazon premieres a Lord of the Rings series “The Rings of Power,” an eight-episode season costing over $1 billion dollars to make and, as we saw over the summer, Netflix concluded the popular final season of the Stranger Things series where each episode cost an average of $30 million. Some of the streamers are even bidding for Major League Baseball and NFL games. For the consumer this is a double-edged sword. On the one hand they are getting great content. However, on the other, if subscribing to multiple streaming services, monthly costs can exceed that which we paid for broadcast TV as part of our cable bundle prior to these “streaming wars.” At some point in the future, we believe there will be a major consolidation of streaming services with 2-4 companies pulling away from the pack. Eventually, the consumer will get fed up with the continuous price increases (case in point was Netflix most recent quarter, during which they lost nearly one million subscribers) or bear the addition of ads, which makes us think “isn’t this the same as cable TV.”
