Streaming Video Is Devouring itself

I used to cover the cable TV industry for a living. I was particularly active during the "cord cutting revolution," when people were busy ditching expensive cable TV bundles and replacing it with streaming video services.

Cable execs were in abject denial that this was happening until it reared up and bit their heads off. Many insisted this was a fad. I would get hate mail from cable industry folks deeply angry that I'd pointed out their failure to adapt to modern consumer desires was running the ship aground.

At first, the shift to streaming was a notable improvement for consumers. Users offloaded their fat bloated bundles of unwatched cable TV channels in exchange for a rotating crop of cheaper streaming video platforms they could sign up for, binge watch, then cancel at will. Great stuff!

But as subscriber growth slowed, and traditional cable and streaming companies merged, the industry has steadily begun to resemble the shitty old cable companies they once disrupted. Prices soared, content quality sagged, and features consistently got more limited and restrictive. It's textbook enshittification.

Netflix now harasses you if you share your password with your kid. Amazon Prime now charges you increasingly more money if you want to avoid ads. A steady stream of mergers have turned Warner Brothers and HBO into just another reality television slop machine excited to charge you more money for worse product.

Hollywood already wasn't doing great. It was kicked around by Covid, pummeled by a grand migration of production overseas, and broadly disrupted by the rise of the short form TikTok dopamine engagement economy. Actors and high level technical talent are now resorting to driving Ubers. It's not pretty out there.

And it's about to get significantly worse with the Ellison family purchase of Warner Brothers. Right wing billionaire Larry Ellison decided to gift his nepobaby son with not just one (Paramount/CBS) but two major Hollywood studios (Warner Brothers) as right wing oligarchs look to dominate what's left of U.S. media.

The Ellison acquisition of CBS is already going terribly, with a major swath of layoffs dropping a few weeks ago. And it's expected that the $110 billion Paramount acquisition of Warner Brothers (backed by a lot of Saudi cash) will be exponentially worse for the workforce:

“The deal is tied up with so much debt that it virtually guarantees layoffs the likes of which Hollywood hasn’t seen before. That’s going to mean far less output from the suite of properties under Paramount and Warner’s control. And it will mean that the production apocalypse which has been brewing since the pandemic, the end of Peak TV, and the contraction of runaway green lights for streaming networks will grow still more apocalyptic.”

Warner Brothers is, so we're aware, a company that's already been acquired three additional times in the last two decades, with each transaction being a disaster for consumers, labor, and overall product quality. Folks like myself, who've covered this company for decades, feel trapped in a weird purgatorial loop:

It is crazy how many times this asset has been traded around. I do think it is fair that sort of merging with this company has been historically the kiss of death. Obviously, the Ellison family is out to prove that it isn’t true.

Every indication so far is that the Ellisons are more ruthless and less competent than past Warner Brothers suitors (which is really saying something given AT&T put on a master class in screwing up their acquisition of the company).

There is, as I've explored these two posts, an elaborate scaffolding of corporate pseudo-journalism that exists to help companies pretend this is all entirely sensible, and to memory hole any unpleasant historical context (like the fact the AT&T transaction alone resulted in 50,000 people losing their jobs).

The Ellison kid is, as per shitty mergers tradition, going around making empty promises about how yet another pointless merger will be just the ticket to usher forth a new golden age for Hollywood:

“I firmly believe that uniting Paramount and Warner Bros. Discovery presents a unique opportunity to build a true champion for the creative community, one that can and will bring more stories to life, support filmmakers and talent with real scale, and compete effectively on the global stage as an independent media leader,” Ellison wrote. “That is the true legacy of Hollywood, and my promise to you is to build a stronger Hollywood, by keeping both of these legacy studios operating separately, thereby preserving and potentially increasing jobs.”

There is absolutely zero meaningful evidence that any of this is true. To pay off the massive debt from the Paramount and Warner mergers, the company will have to engage in a merciless level of layoffs, price hikes, and corner cutting, further deteriorating an already sagging Hollywood legacy.

The U.S. extraction class is all out of original ideas. So they rely on the temporary stock boosts and tax breaks created through pointless "growth for growth's sake" consolidation. This consolidation never functions in the public interest. It's almost always uniformly harmful. The press is broadly complicit in pretending otherwise.

Debating that this isn't going to happen is like trying to get in a fist fight with a running river. It's physics. None of the folks involved in these myopic transactions are financially incentivized to learn anything useful from experience.

Ultimately what will happen (since I've seen this cycle play out repeatedly over decades) is customers will get tired of sagging quality, price hikes, and nickel-and-diming restrictions, and flock to either free alternatives (like YouTube or TikTok or Twitch) or back to piracy.

At which point, all the executives involved for the steady audience erosion will blame everything and anything but themselves (generational entitlement! Avocado toast! VPNs! China!), then move on to another company or sector, gargantuan compensation in tow, to repeat the process all over again.

The only disruption to this trajectory is functional corporate oversight, competent regulators, and a meaningful appreciation for antitrust reform, which the United States is, to be very clear, too corrupt to consider with any seriousness.