Gongol.com Archives: April 2022

Brian Gongol

April 20, 2022

Broadcasting An eye on the prizes

Netflix has reported something both unexpected and unpleasant (for its prospects): A quarterly decline in subscribers. While it still claims more than 221 million subscribers worldwide (a figure that would make it the 7th largest country in the world, just ahead of Brazil), the idea of a shrinking subscriber base is enough to raise both internal and external alarm. ■ It's interesting to note that today's streaming services have many of the features of the classic Hollywood "studio system": They are capable of vertical integration, from producing their own original content (see, for example, Netflix Originals, Hulu Originals, and the entire Paramount and Disney catalogs) to distribution and delivery. ■ In important ways, the economics of owning a streaming service beat the vertical integration of the Hollywood studio system, because the customers not only pay for their own screens (saving the "studio" the enormous real estate and operational costs of owning theaters), they also pay subscription fees that are far more predictable than ticket revenues. ■ But while the old studio system was dismantled by the courts, the new streaming-based studio system is subject to blistering competition. Netflix has emerged as a serious contender for awards like the Oscars and Emmys (winning more in 2021 than any other network or service). ■ Yet Netflix's competitors are gunning for prestige and respect, too: Apple TV won seven Emmys in 2021 just for "Ted Lasso", and it won the 2022 Best Picture at the Oscars. Meanwhile, Amazon has gone off and spent $8.5 billion on MGM and its 4,000-movie library. ■ It seems likely that fierce competition -- even despite the advantages of vertical integration -- is going to keep modern incarnation of the studio system (a studio neo-system, perhaps) much more constrained than the Hollywood system of yore. It remains possible that new rounds of consolidation are yet to come, but it seems more likely that the future will end up resembling the fragmented landscape of cable and satellite television networks. ■ There's still a lot more of the game of musical chairs left to play, and it's unlikely that they'll all end up sharing one big sofa. If the awards-night successes of the various streaming platforms are any indication, those rivalries are going to be very good for the viewers.

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