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If The Streaming Wars are a War…Than What War Are They?

In November, a war started. 

Fortunately, in this war, no one will die and the biggest risk is to the stock price of ViacomCBS. If the biggest war our current generation is a streaming war, then the future isn’t all gloom and doom.

Since I’m writing an “intelligence preparation of the battlefield” for the streaming wars, it sort of begs the question: if the streaming wars are a war, what kind of war are they? To prove I’m not making a straw man here, here’s a host of articles asking about the streaming wars, but no one tying them to the best comparable war.

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I was a history major and in the military. I should be able to figure this out. Let’s do it.

The Plan

1. Will rank wars from “easily discarded” to “Pretty darn close”. Scroll down to the bottom to find out the winner(s).

2. One imaginary war per section. 

3. I’m fairly “American” so all of these wars will inevitably come from that bias viewpoint.

Easily Discarded

The Civil War (and most other civil wars)

The case for the Civil War—and other civil wars—is that the entertainment industry itself is like a country riven by sectarian strife. The Confederates would be the traditional studio conglomerates and cable MVPDs clinging to their profits, while upstart streamers are, I guess, the Union? Trying to impede the new movement? Or maybe switch the two and the streamers are the Confederates splitting off from the Union? See, it doesn’t really work.

The Persian Gulf War or Franco-Prussian War

The problem with these wars is they were too darn quick, each lasting under a year. The streaming wars won’t end any time soon.

Alexander the Great, The Huns or The Khans Conquer the Known World

Every so often, some military leader just up and conquered most of the known world. Four years ago, we probably would have said Netflix was set up to do just this. Yet, unlike the foes who fell under Alexander, Attila and Genghis, the traditional studios may have a fighting chance to defend their territory.

Independence Day War

This is the fictional version of massively powerful invaders taking over everything, just this time with aliens. We only have two sides in this war, where the streaming wars are multi-polar, so we’ll need some better analogies.

Closer, but Key Flaws

Punic Wars

We have our first “traditional” war where two massive powers square off for domination of, literally, Western civilization. If Carthage had defeated Rome, all of human history may have taken a different course. (Instead of Rome, the Western World would have been centered around North Africa.) If the upstart tech streamers defeat the traditional entertainment conglomerates, the results for investors may be similarly momentous.

The challenge is we’re not dealing with two united sides in the streaming wars. Disney+ is fighting for control from HBO Max as much as they are fighting Netflix and Amazon. However, if I did make this analogy, it would mean Ted Sarandos is Hannibal and his elephants are Netflix originals powered by algorithms. Which could mean Bob Iger is Scipio Africanus, but now we’re going too far.

The French Revolution

Revolutions are like Civil Wars, just without sides or uniforms. Which make it tough to compare to our streaming wars. Sure, our combatants don’t wear uniforms—well, NBC Pages do, but you know what I mean—but you have to like the symbolism of revolution. Streamings isn’t a war, but a “digital revolution” in how we receive content! 

That has an ethos of “power to the people” who are rising up and saying, “No more high cable prices, I’m cutting the cord!” Of course, the data doesn’t support that—most Netflix subscribers have cable; most cord cutters pay well below costs for content—but it sounds good.

The Cold War

If I took points from The French Revolution for not wearing uniforms, well no one wore any uniforms in the Cold War either. This war was waged via proxies, spies and nuclear stock piles. All of which I have a tough time comparing to the streaming wars. In its favor, The Cold War was a global enterprise, with battlefields from a divided Germany to Vietnam to Latin America to China to Korea to Afghanistan. The streaming wars will match that scope.

War of the Ring (Lord of the Rings)

Human-Covenant War (Halo)

Lots of science fiction or fantasy works have two sides squaring off for all the marbles just like the Punic Wars:

Lord of The Rings. This is the literary equivalent of the Punic Wars. The humans battled Sauron for literal survival. And somehow a hobbit saved humanity.

Halo. This is the video game equivalent of the Punic Wars. The humans battled the Covenant for literal survival. And somehow a super-soldier saved humanity.

Pretty Darn Close

Peloponnesian and Corinthian Wars

Now we’re getting there. While the wars between Sparta and Athens had two sides, each city state had its own power and made its own decisions. Each city state picked a side and either allied with the Spartans (Peloponnesian league) or Athenians (The Delian League). These city-states also struggled with civil wars and popular up risings, depending if they were winning or losing. That’s a lot like the streamers disrupting traditional movie studios, but each city-state still working for its own end and switching sides as needed.

These wars also were bloody, inspiring later theorists to develop the concept of “total war”, when war isn’t just a show of force, but a fight for survival. Like the streaming wars: instead of shedding blood, though, the plan is to shed cash flow.

One Hundred Years War and/or War of the Roses

These two wars were the inspiration for countless fantasy novels, especially one of our “co-winners” of the streaming wars analogue crown. Like the Peloponnesian Wars, two sides squared off for power (first, in France, then in England), with the nobles switching sides and betraying each other whenever needed to stay in power. Still, as much as these previous wars resemble the streaming wars, neither quite captures the scope of conflict. We need a really big war, when the War of the Roses is really squabbling over England’s crown. Not like our next contender.

World War II

Most Americans when they think of wars, they think of World War II.

World War II is America’s favorite war, and Hollywood’s too. Just look at their regular output of Greatest Generation films. The problem for this analogy is that, well, I can’t make either side the Axis. Otherwise they’ll be horrifically offended. 

Not to mention, if this analogy were really true, it would be as if the British turned their guns on the Americans midway through the fighting. Because Disney is squaring off as much against fellow conglomerates AT&T (HBO Max) and Comcast (NBCU/Peacock) as it is Netflix and Amazon. (And those two started the price war in the first place for content.)

Finally, at the end, the Allies won partly because they developed one tremendously destructive weapon. There are no nuclear weapons in the streaming wars. Speaking of which…

Star Wars

This galactic battle was allegedly a “civil war” between two sides—Rebels versus the Empire—that each squared off in decisive battles like a traditional war. Like World War II, though, there isn’t some giant super weapon of streaming which one side or the other can destroy to win the war. I tried to imagine this as “data”, but every streamer has that. 

The best case for Star Wars is that The Force is a mysterious force that rules our lives that no one individual can master, sort of like “creative excellence” is the force that rules Hollywood that no one individual can master.

Runners Up – The Iraq War or Vietnam War

I could make a better case for these insurgencies than the civil wars of old. Where civil wars pit uniformed soldiers against each other, in Iraq, militias faced off against the traditional military against insurgent groups versus terrorists all mixed in with organized crime and genuine political parties. It’s as confusing a web of relationships as my “value web” for entertainment.

What I particularly like, too, is the role of persuasion in this type of war. Insurgencies aren’t just about defeating the enemy in the field, but persuading the population at large to support your side via propaganda, ideology, bribery or threats. Which is how AT&T plans to woe it’s customer base too. I really wanted to make one of these multi-sided insurgencies the winner but…

Again no uniforms! Or even enough cohesion to form coherent battle plans. So we need two other wars to take our crown.

The Winners – The 30 Years War and Game of Thrones

The 30 Years War

Whoa! Went off the “American only” board. Most of my readers don’t know what this war was really about, so let’s just slam off a summary from my AP Euro textbook, A History of the Modern World by R.R. Palmer:

The Thirty Years War…was therefore exceedingly complex. It was a German civil war fought over the Catholic Protestant issue. It was a German civil war fought over constitutional issues, between the [Holy Roman] Emperor striving to build up the central power of the Empire and the member states struggling to maintain independence…It was also an international war, between France and the Habsburgs, between Spain and the Dutch, with the Kings of Denmark and Sweden and the prince of Transylvania becoming involved, and with all these outsiders finding allies within Germany, on whose soil most of the battles were fought. The wars were further complicated by the fact that many of the generals were soldiers of fortune, who aspired to create principalities of their own or refused to to fight to suit their own convenience.

Here’s that paragraph on the streaming wars:

The Streaming Wars were therefore exceedingly complex. It was an entertainment civil war fought over new content distribution models, from streaming to theatrical to cable. It was also an entertainment civil war fought over technology, between new sticks, devices and UX. It was also an industry wide war, between giant tech companies striving to enter entertainment and traditional studios struggling to keep them out. It was also an international war stretching from Sweden to Japan, to Australia to Brazil. It was further complicated by the fact that many of the new entrants were deficit financing their streaming efforts to support other businesses, while all the while clinging to “data” as the raison d’être.

I’ve always had a soft spot for this war in my heart because when it finished, Europe was never the same. Arguably, the Peace of Westphalia established the modern conception of the nation-state. When the streaming wars finish, we’ll have new entertainment nation states ruling our lives. That connection was enough to make this our winner, but there are even better reasons.

This war had it all,. Like a traditional war, there were two sides, the Catholics versus the Protestants, which connects to our “entertainment” versus “tech” narrative. Like the Peloponnesian or Hundred Years war, there were also tons of city-states in the German heartland, like our various streamers, FASTs, vMVPDS and more. Plus there were giant empires funding the fighting on each side, the way Apple, Google and Amazon are funding their streamers. Plus, each side was trying to convince local populations to support their side, so you have influence campaigns like the Iraq or Vietnam insurgencies. The Thirty Years War lasted so long and covered so much territory, it fits almost any analogy.

Finally, if you factor in the size of the population at the time, this may have been the most destructive war in European history in terms of casualties. (Over 8 million by some estimates.) Bet you didn’t know that. 

If we could take a lesson, the bloodshed only ended via diplomacy. In entertainment, this means a tacit agreement to collude on price setting, as has happened in entertainment since the golden age of studios, the golden age of broadcasting, the golden age of cable and someday the golden age of streaming. Just wait.

Game of Thrones

This analogy was written perfectly by Dylan Byers in his must read piece here. Game of Thrones captures the nuances and destructiveness of the Thirty Years War in fictional form. (Even though George RR Martins says he based his epic series on the War of the Roses, the Thirty Years War fits better.)

 

Unrolling the Map – The Video Value Web…Explained

(Welcome to my series on an “Intelligence Preparation of the “Streaming Wars” Battlefield”. Combining my experience as a former Army intelligence officer and streaming video strategy planner, I’m applying a military planning framework to the “streaming wars” to explain where entertainment is right now, and where I think it is going. Read the rest of the series through these links:

Part I: An Introduction
Part II: Defining the Area of Operations, Interest and Influence in the Streaming Wars)

As an Army officer, getting lost is sort of the death knell for your career. For the Band of Brothers junkies out there, I’ve always had the “hot take” that if Captain Sobel could have read a map he would have stayed in charge of Easy Company. 

Having had to pull out a map and lead a group of soldiers somewhere, I can testify it’s a nerve-racking experience. There was always this moment when I started planning a mission—from my time in ROTC with squads to training in Ranger School with platoons to being on the ground in Afghanistan—that I essentially had to “unroll my map” and figure out where we were going.

Every time, my stomach would start to churn as I looked to see if I could understand what a bunch of squiggles on paper meant in the real world. Inevitably, I could. We’d start and finish planning and head out. Honestly, my stomach is churning thinking about it.

Today we unroll the map for digital video. But where is the map? There are a few lay outs I’ve seen, like this one from the Wall Street Journal. 

IMAGE 1 - WSJ Map

Or this map from Recode, which is probably the most commonly linked to image I’ve seen in the streaming wars.

IMAGE 2 - Recode Map

Unfortunately, each has flaws. In both cases, neither links how the various companies relate to each other, merely the sheer size in one case, or the type of business in the other. The challenge is that while you can see the various areas, the concept of the “value chain” is totally missing. Who is producing content versus who is distributing it? Yes, ad-supported is different than subscription, but don’t they fill the same customer need? I’d argue they do. (Also, while the Recode map looks really cool, you know I sort of loathe “market capitalization” as a measure of size.)

So I made my own lay-out. This has been an idea I’ve been tweaking for over a year. Essentially, I’m not just reading a map, but drawing my own of the entertainment landscape. Which is even more nerve racking then just reading the map.

Today, I’m going to explain the two business school frameworks that inspired my map of the entertainment landscape. Next, I’ll talk about the “jobs” completed by various steps in the process. Then, I’ll show the “Digital Video Value Web”, with some explanations about the key pieces. Finally, I’ll highlight the most important terrain of the streaming wars.

A Quick Reminder on Value Chains, Porter’s Five Forces and the “Value Web”

The value web is the name I picked for a mashing together of two well established frameworks for business. The first is this little guy, “the value chain”, who I explained back in May:

True Full Value Chain(I use potato chips to explain concepts.)

Reread that article for a fuller description, but a value chain is essentially every step of a business process that results in a good. So suppliers provide the raw materials to factories that turn it into goods, which go to distributors to send to stores, who sell it to customers. The “value” component is really asking creates or captures the most value along the way. 

The limitation to “value chain” analysis is revealed by the WSJ image. I could make a value chain for ad-supported video on demand, for streaming TV hardware, for sports, subscription video and traditional cable bundles. All those value chains would start to get confusing. But to understand the landscape, we need to understand those connections between the value chains.

We have another tool for that, fortunately. In the past, I’ve also explained “Porter’s Five Forces”. (It’s one of my most popular articles, actually.) Read that article here. Here’s a visual of that…

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Porter’s Five Forces is a good organizing tool to lay out the potential threats and opportunities for a specific business. Its limitation is its focus: it only looks at one specific company in one part of the value chain. For example, if I used it for “cable companies”, it would leave out the studios distributing the content, merely the channels providing them content. That’s like a map that is zoomed in to one hillside when we need to look at the whole mountain range.

My insight was simply to realize that the value chain is going across the middle of a Porter’s Five Forces diagram. If I combined them on one table, I could make essentially an overarching view of any rough industry. My name for this is a “value web” because I couldn’t find anyone else making a similar layout and I elevate value above all other business concepts. Here’s my version from my Porter’s Five Forces article.

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Now we can make one for digital video.

The “Jobs” Done at Each Step of Digital Video

The first step was to pull out my value chain for streaming video. I’d previously made that here:TV Value ChainThe challenge was that I left out a fairly big component of the video value chain when I focused on distributors. Really, after a distributor sells their film to a cable channel, they don’t care how customers get that cable channel. But someone is “providing” that feed of cable channels. For the streaming wars that matters.

To borrow a phrase from Clayton Christensen, essentially the cable companies do the “job” of providing access to bundles of entertainment. I like putting “ing” after a step of the process because it gets at the type of work being performed. Applying this to my value chain you get:

Talent (acting, writing, directing, so on)
Producing
Distribution
TBD
Providing

The challenge is that “TBD”. What is it that a cable channel is doing? Or a movie theater? Or a streaming video service? I’d argue they’re all providing the same job, which is creating a library of content to watch, even if they use different monetization methods for those libraries. Frankly, the best word to describe that is “aggregating”. (And yes, we’ll get to Ben Thompson’s Aggregation Theory later in this series.)

That explains part of the “TBD”, but not really the whole thing. Because cable companies then aggregate the “aggregators” or channels. So what do we call them? They are definitely NOT in the same step of the value chain. A a group of cable channels is a separate business from the channels themselves. In reality, they’re providing access to a “bundle” of content which they charge for one price. I call that bundling.

(To quote a second business thinker—cited by Mike Raab recently—James Barksdale has said all business is either bundling or unbundling.)

With that, we have our six jobs being performed (with customers waiting at the end). 

The Video Value Web

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Read My Latest at Athletic Director U and My Database for Sports Media Rights Deals

Today, I published a guest article for Athletic Director U looking at the value of sports media rights deals across professional, amateur and college athletics have grown over time. Take a read!

Moreover, for the first time, I’m sharing my work. I had so many links that I couldn’t fit them in the article. Plus, I thought this may be a nice tool for ADs and their ilk to use. Here is the link to the Excel document with my references for sports media rights over time:

ADU Media Rights

A TV Murder Mystery: Who Killed Game of Thrones?

Most of the time, when Hollywood kills off one of its TV shows, we know why. The ratings had been sinking or the talent asked for too much money. (Or recently, it was produced by a rival TV network/conglomerate.)

And yet, HBO killed off Game of Thrones, a TV series that was getting more popular with every season and making its parent company billions in the process. Meanwhile, other long-running series—with worse ratings—from The Simpsons to Grey’s Anatomy to The Walking Dead march on like, well White Walkers. The corpse of Game of Thrones is now—spoiler alert—as cold as Jon Snow’s after season 5.

Why? Who had the motive? And who issued the order?

We Officially Have a Murder Mystery

Frankly, there isn’t a great explanation for why HBO cancelled this series. In the past, I’ve estimated that this series was making an estimated $300 million a season for HBO. (And potentially much more. Read the original, and my director’s commentary here, here and here.) Sure, HBO has a great (on paper) slate premiering the rest of this year and next year, but you know what helps launch a great slate? The biggest show on TV.

Have no doubts this series was growing. The number of viewers rose in every territory that I could find that releases data. Over 44 million were tuning in per episode in America alone, up from 9.3 million in season 1.

GoT Viewership

Of course, in some circles—like HBO creator circles—the story is what matters. Maybe the creators wanted to wrap it up nicely. Except most of the criticism of the last season related to the fact that the series felt rushed. Here is just a sampling of critics and fans complaining that season 8 felt rushed. More episodes and more seasons would have solved this problem, and who knows, by a hypothetical season 9 maybe 50 million people are tuning in in America each year!

Who kills off a money making show? Who are our suspects?

The Suspects

HBO

The buck stops there. So we should start with HBO. Their motive in killing this show would be simple: It’s the most expensive show on television. And since it is already insanely profitable, any additional profits have to be split with talent who are negotiating tougher and tougher deals with more and more back end. Each additional season is less lucrative for HBO, and if the marginal benefits meet the additional costs, well economically HBO should cancel the series.

George R.R. Martin

Listen, George, you’re a part of this. You probably didn’t finish the plot of A Song of Ice and Fire, because if you had, you’d have published that book. Which you haven’t. Maybe you told HBO to stop the series. Or you never provided enough details to fully flesh out 3 to 5 more seasons of the show.

The Actors

When in doubt, blame temperamental actors. Am I right? “Talent” is what you bitterly mumble in Hollywood when you can’t control the situation.

The motives for these suspects—and really I’m talking the big five actors of Jon nee Kit, Cersei nee Leda, Jaime nee Nikola, Daenerys nee Emilia and Tyrion nee Peter—is pretty simple: they’re sick of working on this series. Or more precisely, as artists, they’re ready to make other movies about Greek Gods, Han Solo and Terminators. (Too far?)

Further, even if you don’t mind working on a TV show for the rest of your life—including shoots in both scorching deserts and freezing tundras—you do know how valuable you are. You can’t have a GoT without a Daenerys and Jon Snow/Stark/Targaryen. Knowing that, the actors negotiated phenomenally expensive payments per episode, over $1 million per actor. They also likely demanded higher back end percentages.

The Showrunners

If the actors are sick of this series, imagine the two people at the lonely top of the creative pyramid, David Benioff and D.B. Weiss (D&D in Reddit parlance). I can’t describe adequately how insanely time consuming this series was for these two individuals. They wrote a majority of the episodes, supervised the entire production from set design to costumes and oversaw all the editing and post-production; and oh by the way (NFL announcer voice), it was the largest TV production in history. 

Meanwhile, they had plenty of opportunities to do other things, from Star Wars to a new overall deal to ideas in their notebooks we can only imagine. If you’re worth hundreds of millions of dollars (my tentative figure for D&D once they collect GoT royalties), do you want to keep spending your winters in Iceland and dealing with the most demanding fans in television history? That would be enough to say, “Eight seasons and we’re done!”

AT&T

Is there a thing that AT&T hasn’t managed to screw up since it acquired Time-Warner turned into Warner Media? Since taking over, they’ve lost the head of their movie studio, the head of HBO and plenty of other executives. Meanwhile, they named their new streaming service HBOMax, which was universally derided, and DirecTV is hemorrhaging subscribers. Oh, and AT&T is the most indebted company in America. Maybe they killed GoT to keep the losses from piling up. 

Netflix

When you discuss TV on the internet, you’re contractually obligated to mention Netflix at least once. While we give Netflix a lot of credit and blame for, they’re not involved here. 

The Evidence

Like a detective in Law & Order, it’s time to interview the witnesses. Which in this case means various articles that describes the suspect’s state of mind. Supply your own “dum dum”.

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