Hello and welcome to "pokematic rambles in what would be a podcast if I could get my thoughts together." I am your host, pokematic. So streaming services, every media company seems to have one now adays, and it's very much "self select cable but cheaper." Is it sustainable? Is it a ripoff? Are there too many providers? Is it cable 2.0? What even is the proper business model? How does this fit into the world of television? I'm going to try to answer some of these with my own opinion.
First, some history. Many people would star with netflix introducing streaming or the launch of hulu in 2007, maybe the rampant TV piracy on youtube in 2004, but I'm going to start earlier than that, a lot earlier. The turn of the 20th century saw the introduction of projected motion pictures, where people would go to movie houses to watch a feature film, news reel, short subject, and/or animation. These would then be played on a loop where people would come in whenever and leave after watching the loop. Here we saw the rise of media production companies like Columbia and Warner Brothers, where they would make the movies, shorts, and animations for the movie houses, where they would send the film reels to the movie houses on a weekly basis. Since movie houses would only need 4 films a week studios had urgency to make content, but a lot could be made "in parallel" since one week they could send a Tarzan serial while the monster movie was in production, and then work on slapstick comedy movie while the monster movie was in rotation, and after enough was produced they could send some old movies back to the movie houses for the people that missed it the first time or just want to see it again.
The 1950 then saw the advent of television, a "personal motion picture" event. In general television replaced the need for movie houses to show short subjects, animations, and news reels, leaving just the feature films. Since directors were experimenting with continuous narrative movies, where people would just come in at the beginning and leave at the end instead of coming in part way through, movie houses still had their business, but back to television. The question of "what do we show on this new thing called television" was the primary question. This was back when there were only 2-3 major stations with maybe a local independent station, and only broadcasted 12-16 hours a day, but there still had to be things for people to watch. Since people could watch every day of the week for possibly more than 2.5 hours straight, they couldn't just loop the same 4 things all week. Lucky for the broadcasters, there was half a century of theatrical shorts and animations that could be played on this television. This could easily fill 10 of the broadcast hours, but people eventually would get bored of these and new content would be necessary. This is when we started getting television shows such as I Love Lucy and The Andy Griffith Show, along with soap operas and variety shows. When television started broadcasting 24 hours a day and more networks started popping up, the older television shows could be shown again. I don't know the exact ratios, but it would probably be 5-10% new content and 90-95% acquired content.
While broadcast television was all well and good, there were plenty of limitations with range and reception, which saw the invention of cable television. Cable started with transmitting the main broadcast networks with consistent reception for a fee, and while that is good there needed to be something else, a benefit for paying for this service. This is when we saw the invention of cable television channels, channels that can only be received from a cable subscription. This really started to take off in the 70s and 80s, and like with early television the question of "what do we put on these channels" came up. Once again, the creators went to what already existed. 50 years of theatrical content and 20-30 years of television history, with a lot that wasn't being reaired on the broadcast channels since they had a backlog of their own content, that's plenty to show, and there could be dedicated networks to different things. Want children's programs, there was Nickelodeon. Want music videos, there was MTV. While people definitely enjoyed watching old sitcoms and saturday morning cartoons, they needed their own shows to stay relevant, and so they made their own original programming as they grew larger, but probably also kept 5-10% original and 90-95% rerun.
Now we get to the part of history that I witnessed first hand, the rise of streaming. In 2007 netflix introduced on demand streaming and hulu launched, and those were basically the 2 games in town. Netflix had a giant library of content commercial free for $8 a month, including previous seasons of major shows like Futurama and South Park, and hulu had a smaller ad-supported library with next day streaming of major shows like Family Guy and The Simpsons for free. Since I didn't have a credit or debit card I was kind of limited to hulu, but there was plenty on it that I wanted (Inspector Gadget, Super Mario Super Show, Sitting Ducks, and loads of anime). Back then it was 100% acquired content (since hulu was owned by the networks that did next day streaming "acquired" is a bit of a loose term, but it wasn't "first run on hulu).
One of the problems hulu and netflix had were they would lose the license for various shows, so if a popular show left the platform viewers didn't really have an option. 2013 Neflix decided to do something about that, something TV channels had done before in the past, make their own original content they owned outright. Viewers didn't have to worry about House of Cards (the first Netflix original program) leaving netflix because this was a netflix show. This seemed like a pretty smart business move; instead of investing in licensed content that could one day leave the platform, invest in your own content that could stay forever. This seemed like an especially good idea since Disney started pulling their content off netflix and hulu in order to launch it's own streaming service. Disney's pitch for Disney Plus was "all of Disney's library in one place" (though that's not entirely true, Songs of the South, Teamo Supremo, Lloyd in Space, and Buzz Lightyear of Star Command just to name a few at the time of writing). They were also going to make some original movies and series. Once this proved to be successful (at least by some definitions), the other major media companies followed suit with NBC-Universal with Peacock, Viacom with Paramount Plus, Warner Brothers with HBO Max, Discovery with Discovery Plus, and others that have come and gone or I just don't really think about. It's also probably about time netflix and hulu started making their own content since many cable channels transitioned to mostly original or completely original programming at this point in their lives.
With this history recap, we are now at January 2023, every company has their own streaming service, Netflix is struggling to stay relevant, HBO Max was growing like crazy until it collapsed, paramount plus originals are airing on viacom cable channels, and people are predicting the streaming bubble to pop any day now. Here's my opinion on how we got here; the media companies put too much effort into original programs for their streaming services and not enough effort in their backlog. While streaming television is very similar to traditional television (people enjoy watching old stuff, but eventually they'll need something new), but there are some very major differences between how streaming is consumed vs how traditional television is consumed, most notably "on demand individual viewers that will likely watch an episode once and that's it." While there may be a new episode of Spongebob on Friday at 6 PM and Nickelodeon intended to air 3 episodes a day for the whole week, that only came out to 21 episodes in total. Then there's also the fact that all of these episodes were pre-selected, so when someone watched 3 episodes of Spongebob that day, everyone watched the same 3 episodes, and with everything being scheduled people watched the same episodes over and over again (I know that's how I am able to recite full episodes of Spongebob from memory, and how my mom can recite full episodes of the Brady Bunch from memory). Basically the choice was "watch this or nothing," so an original program got a lot more mileage since it wasn't a "one and done" deal since there wasn't really something else to watch; sure there were other channels, but it wasn't guaranteed that those would be showing something you wanted to watch (the age old "100 channels and nothing to watch").
So here's where I think the main "unsustainability of streaming" comes from. In the past if it cost $1,000,000 to make an episode of an original program, you could probably expect to get $2 worth of revenue from each viewer in the lifetime of them watching, so if at least 500,000 viewers consume the episode the episode breaks even, but this is including the repeat viewing on reruns and syndication revenue. On initial viewing, there might be $0.50 worth of revenue from the initial viewing, so if that episode was only shown once it would take 2,000,000 viewers for that episode to break even. Now here's the thing with streaming services, episodes are basically "only shown once;" sure, it's available all the time whenever the viewer wants, but I estimate that most users are just going to watch it once so that "lifetime revenue per viewer" is "just view once." Now here's where things get even crazier, with streaming services (especially ad-free ones), there aren't 8 minutes of advertisements that come out to $0.50 per viewer, streaming services are probably looking at $0.05-0.10 per view when distributed over the cost of the subscription, meaning it will take 10,000,000-20,000,000 viewers to break even with the episode. Now when you consider this is "per episode" and most series need at least 6 episodes per season, and people aren't guaranteed to keep watching, it's very easy to lose money on investing in original programs. This is basically why HBO Max imploded after Discovery bought Warner Brothers, Discovery said "we're losing money with all of this, might as well get the tax write off and make this an official loss." Sure, there's no real risk of Orange is the New Black leaving Netflix or Wandavision leaving Disney Plus because both companies own them in full, but it's going to take a lot more time for these shows to make money since they're basically "watch once and done," especially when that money is immediately put into a different original program, like what seems to be happening on a lot of these streaming services.
OK, so it's "completely unsustainable, streaming is going to die and we're going back to traditional TV," right? Well no, I believe that Hulu and probably Disney Plus isn't going anywhere, for one major reason, syndication. While Disney Plus promotes their originals and makes many, they only seem to make 1 or 2 originals a season and really promote their backlog, and while hulu has originals they are still very focused on syndicating other people's content, and this is why I think they're going to succeed. While 1 episode of Wandavision may cost Disney $3,000,000 to get on Disney Plus (mostly from making it), it costs Disney next to nothing to put an episode of Pepper Ann on Disney Plus (I know there are residuals, which was also part of HBO's problem, but there's no way it's anywhere near what it costs to make an episode of Wandavision), and from what I can tell Disney still very much is saying "come watch our pre-existing stuff that costs us nothing." Even on the low end of $0.05 per viewer per episode, if it only costs $5,000 to host that episode that only requires 100,000 views, and while there might not be THAT much of a draw to it than the original stuff, it's a lot easier to break even on that. If hulu spends $10,000,000 getting a series with 200 episodes, that's $5,000 per episode and with hulu being ad-supported it's probably more of the $0.10 per view, which only requires 50,000 viewers to break even. Hulu's home page will sometimes promote a new original, but it's pretty heavy "full series available, watch this syndicated program." If Warner Brothers didn't put all their money into originals and instead promoted all the backlog of shows they had, maybe they wouldn't have fallen apart. If Viacom would put more effort into promoting their completed catalogs instead of making so many originals, and maybe put some more older stuff like the theatrical shorts and cartoons they own (paramount was a turn of the 20th century movie house media company, and I know they're still good), maybe it would be more profitable.
Here's another problem with the original's business model, the cost is too much. Let's go back to early television, particularly animation since I'm pretty well versed in that. There were basically 2 types of cartoons that aired on TV back in the day, old theatrical short cartoons and original cartoons with VERY limited animation (think about Hanna-Barbara and how the walking cycles would loop and how only the lips would move). Bugs Bunny would have varied walk cycles, would do different moves, talk with his hands, and was expressive, then 30 minutes later Fred Flintstone would stand still while saying things, and recycle animation very obviously, and was generally stilted. Why, because the budget on those old theatrical shorts was much higher than that of the TV cartoons, but they still managed to make them entertaining through clever writing and good voice acting, and not to downplay those elements since 8 Crazy Nights has great animation but the writing and voice acting are not great in many people's eyes, but the quality there isn't necessarily directly proportional to the budget. Now this is only with my own personal experience, but a lot of the originals on these streaming platforms are of equal production value to that of conventional TV shows, or in the case of a lot of Disney Plus originals, higher than conventional TV shows. While The Mandeloreon, The Book of Bobba Fett, and Obi-Wan were a little more "story driven" than "effects driven," the effects were similar to that of the movies. The Peacock Original Bell Air seems to have a higher quality than the original Fresh Prince (Fresh Prince was a multi-camera sit-com that largely takes place in the Banks house, Bell Air is a single camera drama that seems to have many set-pieces from the single episode I've seen, so most likely more expensive). If these were done more cheaply, maybe it wouldn't be so unsustainable, but that's not the case.
Now my next point I don't know how important it is to the bottom line, but it could be a somewhat big thing, and that is syndication of the original programs. I've been saying "spend $1,000,000 to get the syndication rights to 100 episodes, which is good for the streaming service getting it since it doesn't take as many views to break even on it," but this also contributes to the original creator breaking even on the original investment. While Hulu may just need 100,000 views to make back the $1,000,000 investment on acquiring Regular Show, Cartoon Network made $1,000,000 off the whole of regular show with that purchase. I don't think syndication on hulu was part of Cartoon Network's business plan for Regular Show, but it none the less is. Since TBS was airing reruns of The Big Bang Theory while new episodes were airing on CBS, syndication was definitely part of it's plan. So now what about all these streaming originals? Where will they get syndicated to? As of right now, nowhere because that would defeat the purpose of having them. With streaming services, we have the same problem of why Disney Channel won't be airing Billy and Mandy, because Cartoon Network is a direct competitor to Disney Channel. We're also not able to have cross-network promotion like how Nickelodeon's Ren and Stimpy would sometimes air on MTV with them both being Viacom channels, because it's all a single streaming service (Disney Plus's Andor was on hulu for a little while, but with hulu essentially being a Disney owned streaming service at this point that's kind of like Ren and Stimpy on MTV, it wouldn't be on Peacock for example). I know a lot of paramount plus originals are airing on main cable channels, but that seems like it's more out of desperation to make money on them instead of "they ran their course on the streaming service, syndicate to the cable channels." It just doesn't seem like there's much of a life after first stream for a lot of these originals.
So this is my rambling on the business models of streaming services and why I think so many are struggling. I don't work for any of these big companies so I don't know any of this for sure, it's all speculation and I probably got a lot of the numbers wrong, but based on what's happened with some of these and news stories about "it's unsustainable, here's why all your favorite shows are being canceled by Netflix," and then seeing how free streaming like PlutoTV and Tubi are able to stay afloat despite licensing everything and not having any ties to a production studio (like Sony's crackle, they just stream various things owned by sony pictures), all I can really point to is the originals. Then I don't know about you, but I primarily watch the backlog content, so while I may enjoy some of the originals I'm going to stick around for the many hours of backlog content (I type this as I watch As Told By Ginger on Paramount Plus). Well this has been Pokematic, signing off, and bu-bye.
