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Call me pedantic, but the usage of the term "zero-sum" in this article makes no sense. They use it synonymously with "winner-take-all" which is so far from it's

Call me pedantic, but the usage of the term "zero-sum" in this article makes no sense. They use it synonymously with "winner-take-all" which is so far from it's original meaning that you have to question whether the author even knows what zero-sum means, or if they're just using the buzzword to attract clicks. In fact, increased competition leads to reduced profits (at least in the short term), making this a "negative-sum" game.

akiselev 7y ago
> In fact, increased competition leads to reduced profits (at least in the short term), making this a "negative-sum" game. I'm not an economist but I've never heard of competition described as "negative-sum." It's zero-sum because the consumer wins. "Negative-sum" would be a nuclear weapons manufacturer profiting off blowing up half the planet. The manufacturer might have made money, but overall everyone else loses far more than the manufacturer gained.
- asdfasgasdgasdg 7y ago
  > It's zero-sum because the consumer wins. That's not the traditional economic understanding of the *-sum expression either. In economics, competition forces efficiency improvements, which makes competition in cases where increased efficiency is possible positive-sum.
  - akiselev 7y ago
    What's the point of efficiency improvements to a business without a consumer? They could be another business, but at the end of day a member of the public has to pay for it with taxes or post-tax dollars. Economies dont exist without consumers to consume what the producers produce. Sure you could measure efficiency in widgets per human-hour but at the end of day, efficiency improvements do not happen in lock-step across industries so at some point you have to convert to a meaningful value dictated by consumers.
    - asdfasgasdgasdg 7y ago
      Efficiency improvements lead to an overall increase in the amount of goods produced given a fixed amount of input. The benefit devolves onto both the producer and the consumer (this is called "surplus"), each according to their elasticity of demand. That's the econ 101 model, in any case. In the televised video market, this "efficiency" might manifest as higher quality shows, or a wider selection of shows available to watch. You only need to look back to the early days of TV to see that what we have today is much better (more entertaining, more interesting, has higher technical quality). We also have a vastly expanded selection of shows to watch. This is the result of competition. The sum is positive, because the overall utility produced has increased. > What's the point of efficiency improvements to a business without a consumer? I am not sure what in my comment this is referring to. To a first approximation, there are no firms without customers. At least, none that are both legal and last very long.
      - akiselev 7y ago
        Thank you for the explanation, that makes more sense. How is overall utility measured in cases of intangible goods like TV shows and movies? I think I understand what surplus means in the context of industrial/agricultural production or simple services like hair cuts or deliveries but what about media? The success of movies or TV shows can't be quantified with an objective measurement like length or CGI per square inch or Rotten Tomato points, only by the profit they generate - which seems to only get more circular and complicated with Hollywood accounting. There are certainly more shows available to watch today, "interesting" or not, because the market for entertainment has grown massively but it seems to me they only have higher technical quality because human attention is zero sum and they've hit diminishing returns on their capital (which I don't think is all that different from most other industries).
        asdfasgasdgasdg 7y ago
        > How is overall utility measured In the sense of the model, it's not necessarily measured. There is an understanding that there is no such measuring tool as a "util measuring stick." Util being my made up word for a unit of utility. It is taken as a given that utils are roughly convertible to currency, or at least that people are willing to exchange a roughly consistent amount of currency for a given amount of utility. The amount of currency exchanged in a voluntary economic transaction represents both an upper bound on the seller's valuation of what they are selling and a lower bound on the buyer's valuation of what they are buying. All of this with the appropriate vast numbers of caveats about it just being a model. It's a tool for rough prediction. > human attention is zero sum This is not so. You could be forced to pay attention to paint drying on a wall, or you could watch a show that moves you to tears. Both consume the same amount of attention (by which I think you mean, "time spent paying attention"), but both do not provide you so the same amount of utility. You would obviously pay more for one of those experiences than the other.
- Akababa 7y ago
  That's a fair assessment, hence the quotations. My way of looking at it was from the corporations' perspective, who collectively have to spend more money innovating while having their margins squeezed. Thus in the short term, the harder everyone competes, the smaller the net profit "pie". You're right that in the long term it benefits consumers, and possibly the surviving companies after competition has died down and they can enjoy the fruits of their innovation.
- jayalpha 7y ago
  "I'm not an economist but I've never heard of competition described as "negative-sum."" It is obvious that, if competition is strong for a cake with a given size, that costs, e.g. for advertisement, may actually decrease the profits. While the size of the cake stays the same, the market players have less profits due to increased costs. So in the end everybody has a smaller slice. If I remember correctly, this has happened in a stagnant cigarette market where one player decided to increase his share. They spend a fortune on advertisement, as did the other since they don't want to lose their share. After some years the war stopped and everybody had more or less the same share as before, while having lost a tremendous amount of money on advertisement without gaining any benefit. This may also be a funny example: https://www.nytimes.com/2012/03/31/nyregion/in-manhattan-pizza-war-price-of-slice-keeps-dropping.html https://www.nytimes.com/2012/03/31/nyregion/in-manhattan-piz... "It's zero-sum because the consumer wins." A zero sum game has nothing to do with consumers in this example. It means, the cake has a given size. If you want to increase the size of your slice, you have to take something away from another player. A non-zero sum game would be were the cake (market) is growing. Every year you have a bigger cake. Then it is possible that you can increase your slice without reducing the slice of another player.
  - akiselev 7y ago
    A non-zero sum game would be were the cake (market) is growing. Every year you have a bigger cake. Then it is possible that you can increase your slice without reducing the slice of another player.j I meant zero-sum in the context of this article. Have Disney+, Netflix, etc stopped growing their offerings and market size? Has everyone who can afford to signed up to all of them at the same time?
- ajhurliman 7y ago
  It may be trying to estimate something like the "real value" (difficult to measure as it's very subjective) versus cost. In that case, the question at hand is: "Are consumers getting more real benefits per dollar spent?" I'd argue that there's another dimension to the conversation which is granularity. Most of the streaming services don't allow purchasing a single show (except for YouTube, Amazon Prime and a few others), and for the services that do let you buy a single show it's way too expensive for a series. If you try to buy an entire season of a single show it'll often cost you the price of 6 months of the streaming service.
parasubvert 7y ago
A zero sum game is by definition a game where one party’s loss is another’s gain. That covers “winner take all” situations, or purely competitive situations. The article’s overall point is that more streaming services can lead to more people paying for streaming services in general, enlarging the overall revenues in the segment than would otherwise be there without the new entrants. Most folks aren’t unsubscribing from Netflix or Hulu for Disney+. They’re spending more on streaming and less on Fortnite or iPad games, or a night at the pub. This may also accelerate the decline in cable/satellite over time, but even that will be sticky since they will find ways to stay relevant.

akiselev 7y ago

> In fact, increased competition leads to reduced profits (at least in the short term), making this a "negative-sum" game. I'm not an economist but I've never heard of competition described as "negative-sum." It's zero-sum because the consumer wins. "Negative-sum" would be a nuclear weapons manufacturer profiting off blowing up half the planet. The manufacturer might have made money, but overall everyone else loses far more than the manufacturer gained.

asdfasgasdgasdg 7y ago
> It's zero-sum because the consumer wins. That's not the traditional economic understanding of the *-sum expression either. In economics, competition forces efficiency improvements, which makes competition in cases where increased efficiency is possible positive-sum.
- akiselev 7y ago
  What's the point of efficiency improvements to a business without a consumer? They could be another business, but at the end of day a member of the public has to pay for it with taxes or post-tax dollars. Economies dont exist without consumers to consume what the producers produce. Sure you could measure efficiency in widgets per human-hour but at the end of day, efficiency improvements do not happen in lock-step across industries so at some point you have to convert to a meaningful value dictated by consumers.
  - asdfasgasdgasdg 7y ago
    Efficiency improvements lead to an overall increase in the amount of goods produced given a fixed amount of input. The benefit devolves onto both the producer and the consumer (this is called "surplus"), each according to their elasticity of demand. That's the econ 101 model, in any case. In the televised video market, this "efficiency" might manifest as higher quality shows, or a wider selection of shows available to watch. You only need to look back to the early days of TV to see that what we have today is much better (more entertaining, more interesting, has higher technical quality). We also have a vastly expanded selection of shows to watch. This is the result of competition. The sum is positive, because the overall utility produced has increased. > What's the point of efficiency improvements to a business without a consumer? I am not sure what in my comment this is referring to. To a first approximation, there are no firms without customers. At least, none that are both legal and last very long.
    - akiselev 7y ago
      Thank you for the explanation, that makes more sense. How is overall utility measured in cases of intangible goods like TV shows and movies? I think I understand what surplus means in the context of industrial/agricultural production or simple services like hair cuts or deliveries but what about media? The success of movies or TV shows can't be quantified with an objective measurement like length or CGI per square inch or Rotten Tomato points, only by the profit they generate - which seems to only get more circular and complicated with Hollywood accounting. There are certainly more shows available to watch today, "interesting" or not, because the market for entertainment has grown massively but it seems to me they only have higher technical quality because human attention is zero sum and they've hit diminishing returns on their capital (which I don't think is all that different from most other industries).
      - asdfasgasdgasdg 7y ago
        > How is overall utility measured In the sense of the model, it's not necessarily measured. There is an understanding that there is no such measuring tool as a "util measuring stick." Util being my made up word for a unit of utility. It is taken as a given that utils are roughly convertible to currency, or at least that people are willing to exchange a roughly consistent amount of currency for a given amount of utility. The amount of currency exchanged in a voluntary economic transaction represents both an upper bound on the seller's valuation of what they are selling and a lower bound on the buyer's valuation of what they are buying. All of this with the appropriate vast numbers of caveats about it just being a model. It's a tool for rough prediction. > human attention is zero sum This is not so. You could be forced to pay attention to paint drying on a wall, or you could watch a show that moves you to tears. Both consume the same amount of attention (by which I think you mean, "time spent paying attention"), but both do not provide you so the same amount of utility. You would obviously pay more for one of those experiences than the other.
Akababa 7y ago
That's a fair assessment, hence the quotations. My way of looking at it was from the corporations' perspective, who collectively have to spend more money innovating while having their margins squeezed. Thus in the short term, the harder everyone competes, the smaller the net profit "pie". You're right that in the long term it benefits consumers, and possibly the surviving companies after competition has died down and they can enjoy the fruits of their innovation.
jayalpha 7y ago
"I'm not an economist but I've never heard of competition described as "negative-sum."" It is obvious that, if competition is strong for a cake with a given size, that costs, e.g. for advertisement, may actually decrease the profits. While the size of the cake stays the same, the market players have less profits due to increased costs. So in the end everybody has a smaller slice. If I remember correctly, this has happened in a stagnant cigarette market where one player decided to increase his share. They spend a fortune on advertisement, as did the other since they don't want to lose their share. After some years the war stopped and everybody had more or less the same share as before, while having lost a tremendous amount of money on advertisement without gaining any benefit. This may also be a funny example: https://www.nytimes.com/2012/03/31/nyregion/in-manhattan-pizza-war-price-of-slice-keeps-dropping.html https://www.nytimes.com/2012/03/31/nyregion/in-manhattan-piz... "It's zero-sum because the consumer wins." A zero sum game has nothing to do with consumers in this example. It means, the cake has a given size. If you want to increase the size of your slice, you have to take something away from another player. A non-zero sum game would be were the cake (market) is growing. Every year you have a bigger cake. Then it is possible that you can increase your slice without reducing the slice of another player.
- akiselev 7y ago
  A non-zero sum game would be were the cake (market) is growing. Every year you have a bigger cake. Then it is possible that you can increase your slice without reducing the slice of another player.j I meant zero-sum in the context of this article. Have Disney+, Netflix, etc stopped growing their offerings and market size? Has everyone who can afford to signed up to all of them at the same time?
ajhurliman 7y ago
It may be trying to estimate something like the "real value" (difficult to measure as it's very subjective) versus cost. In that case, the question at hand is: "Are consumers getting more real benefits per dollar spent?" I'd argue that there's another dimension to the conversation which is granularity. Most of the streaming services don't allow purchasing a single show (except for YouTube, Amazon Prime and a few others), and for the services that do let you buy a single show it's way too expensive for a series. If you try to buy an entire season of a single show it'll often cost you the price of 6 months of the streaming service.

parasubvert 7y ago

A zero sum game is by definition a game where one party’s loss is another’s gain. That covers “winner take all” situations, or purely competitive situations. The article’s overall point is that more streaming services can lead to more people paying for streaming services in general, enlarging the overall revenues in the segment than would otherwise be there without the new entrants. Most folks aren’t unsubscribing from Netflix or Hulu for Disney+. They’re spending more on streaming and less on Fortnite or iPad games, or a night at the pub. This may also accelerate the decline in cable/satellite over time, but even that will be sticky since they will find ways to stay relevant.