5 ms·

Seems like the economic logic of streaming has changed, and this article failed to explain how, merely hint at it.

kmeisthax 3y ago
The economic logic of streaming never changed, it's just that it never made sense. All of the decision making for what shows get made require, at a minimum, some kind of attribution for what people actually want to see, and remuneration commensurate with that attribution. That attribution and remuneration also needs to be transparent so that everyone involved in the production can negotiate their value. In movies, the attribution was ticket sales, later home video rentals and sales. TV was attributed with Nielsen numbers and ad spend. Streaming doesn't work this way: they don't sell ads[0], and they don't charge per view, they just charge a flat fee. How that flat fee gets remunerated to the producers of the shows and movies on their platform is a complicated mess. Attribution could be done with view counts, except streaming services have been very notoriously cagey with those numbers. In fact, part of the reason why SAG-AFTRA is getting stonewalled on streaming is that nobody in the industry wants those numbers to be public. What happens if you don't get attribution is that the actual creative work gets devalued. You can see this in the wording that the streaming services use: they no longer show movies or TV shows, but "content" - i.e. entertainment slurry. The value of their service is not in the creative work it can provide to you but the delivery mechanism used to get it there. It's a weird parallel to the net neutrality arguments of yesterdecade, where ISPs didn't want to be 'dumb pipes', but instead actively managing the traffic of their users. And to be clear, streaming services do a lot of active management. I suspect that if SAG-AFTRA wins, a lot of really embarrassing reports will come out suggesting that all these streaming exclusive shows were actually pulling in terrible numbers and that streaming is not nearly as much of a growth market as people thought. [0] Well, up until recently, anyway.
dv_dt 3y ago
I would suspect that the companies are shifting to slow release schedules in response to the writers and actors strike.
prepend 3y ago
I was hoping to learn more as well. I think the streaming accounting isn’t as directly attributable so it probably means that costs are allocated over long periods because the single show is a very small percentage of the overall library. So you spend $5B on shows and lump them into your library and some are watched and some aren’t, but they all pay out sort of the same. So you amortize that $5B equally over the whole schedule. By removing shows you think won’t get you viewers you amortize the whole cost immediately. But in the olden days revenue was more clearly attributed. So if you payed $5B for 100 shows each and the costs were equal (not really but let’s say) then each show has $50M in costs. You can run them all and when you don’t sell ads then you know they suck and can close those ones down. There’s no risk to run and see because you have revenue for each show. And with old cable, shows paid out based on plays. So you could just not play those old shows. But with streaming, just to have them available for streaming, even if no one views them, they make revenue for tax purposes.

The economic logic of streaming never changed, it's just that it never made sense. All of the decision making for what shows get made require, at a minimum, some kind of attribution for what people actually want to see, and remuneration commensurate with that attribution. That attribution and remuneration also needs to be transparent so that everyone involved in the production can negotiate their value. In movies, the attribution was ticket sales, later home video rentals and sales. TV was attributed with Nielsen numbers and ad spend. Streaming doesn't work this way: they don't sell ads[0], and they don't charge per view, they just charge a flat fee. How that flat fee gets remunerated to the producers of the shows and movies on their platform is a complicated mess. Attribution could be done with view counts, except streaming services have been very notoriously cagey with those numbers. In fact, part of the reason why SAG-AFTRA is getting stonewalled on streaming is that nobody in the industry wants those numbers to be public. What happens if you don't get attribution is that the actual creative work gets devalued. You can see this in the wording that the streaming services use: they no longer show movies or TV shows, but "content" - i.e. entertainment slurry. The value of their service is not in the creative work it can provide to you but the delivery mechanism used to get it there. It's a weird parallel to the net neutrality arguments of yesterdecade, where ISPs didn't want to be 'dumb pipes', but instead actively managing the traffic of their users. And to be clear, streaming services do a lot of active management. I suspect that if SAG-AFTRA wins, a lot of really embarrassing reports will come out suggesting that all these streaming exclusive shows were actually pulling in terrible numbers and that streaming is not nearly as much of a growth market as people thought. [0] Well, up until recently, anyway.

dv_dt 3y ago

I would suspect that the companies are shifting to slow release schedules in response to the writers and actors strike.

prepend 3y ago

I was hoping to learn more as well. I think the streaming accounting isn’t as directly attributable so it probably means that costs are allocated over long periods because the single show is a very small percentage of the overall library. So you spend $5B on shows and lump them into your library and some are watched and some aren’t, but they all pay out sort of the same. So you amortize that $5B equally over the whole schedule. By removing shows you think won’t get you viewers you amortize the whole cost immediately. But in the olden days revenue was more clearly attributed. So if you payed $5B for 100 shows each and the costs were equal (not really but let’s say) then each show has $50M in costs. You can run them all and when you don’t sell ads then you know they suck and can close those ones down. There’s no risk to run and see because you have revenue for each show. And with old cable, shows paid out based on plays. So you could just not play those old shows. But with streaming, just to have them available for streaming, even if no one views them, they make revenue for tax purposes.