Matt Y, the Cable Guy

I had two options when I read a recent tweet from Matthew Yglesias: I could have ignored it, on account of it being sort of hollow and meaningless, if not outright wrong; or I could respond to it. Writing all about a single context-free tweet does seem really stupid on my part. It is not like Yglesias is going to read this, so it would only be a way of telling you, dear viewer, to read this one dumb tweet. On the other hand, it does give me an opportunity to explain why I think it is so very dumb. And it is one of those things that has been bouncing around my head.

You know I cannot resist. Here is the tweet:

The anti-monopoly people should talk about the benefits to consumers of streaming video being fragmented across Netflix, HBO, Hulu, Amazon, Disney, Paramount, Peacock, etc instead of just buying a single bundle from the cable company.

There is no follow-up to this, so I think Yglesias’ implied conclusion is that cable television was not so bad, even though it is a monopoly in many regions, because you could just pay one bundle rate and get all the popular channels and, by association, all the popular shows. For comparison, if you want to keep up with the first ten items on — to pick just one collection — Esquire’s list of 2022’s standout shows, you have to subscribe to six different streaming services on top of a cable TV package that includes HBO.

Paying for multiple subscriptions and dealing with half a dozen apps on your TV really does seem like a drawback compared to the single-bill world of cable TV. But it is not like this is the fault of overzealous anti-monopoly advocates. On the contrary, this actually seems like a product of vertical integration.

For comparison, let us take a look at the world of streaming music services. Spotify is the most popular, with about a third of the market, but Apple, Amazon, and Tencent all have similar shares, followed by YouTube. These top five services split eighty percent of the total market for streaming music, according to this January 2022 report from Midia Research.

Most people probably use just one of these because most of the bigger players have approximately similar catalogues. Where they differ is in execution. If you want more social features and exclusive podcasts, you probably want to subscribe to Spotify; if you have a Prime subscription, you might be okay with Amazon Music. But you really only need to use a single one of these to have access to a semi-universal catalogue of tens of millions of songs.

One reason for this situation — perhaps not the only reason but certainly a major factor — is the separation of the production and distribution channels of music. Streaming services do not own record labels. Each of them certainly has exclusive releases, but the vast majority is a shared pool of songs licensed by labels. This near-universal pool — and the consistent cost to subscribers — means services are forced to compete on other terms.

The competition between streaming video services is inextricably linked with the material they produce. In the last two years, Netflix has nearly doubled its ratio of Originals to licensed material, a strategy it has leaned on as competing services consolidate shows. Disney has an entire streaming service built exclusively on intellectual property it owns, much of it the result of acquisitions. Each streaming service has responded by building its own library of original media.

And you know what? That means there are many shows. So many shows. Maybe too many shows. But it also means there has been a boom of interesting, quirky, weird shows, some of which would not have been given cable airtime. There is also plenty of crap — but that is nothing new. The streaming boom has expanded the total number of films and TV shows being made every year.

You can find evidence for this in your local TV guide, where cable TV still manages to fill its schedule every day. Yeah — cable TV still exists, though its subscriber base is declining precipitously. But there are still plenty of shows being made for television. It is just that far more premium quality shows are made now than ever before thanks to the higher budgets that can be afforded for now by the streaming service market.

What Yglesias seems to be complaining about is increased variety and competition resulting from shows no longer being tied to a handful of channels airing, realistically, during a short primetime window every day. But this choice is partly the result of vertical integration, where the same company develops, produces, markets, distributes, and shows its own programming instead of licensing material made by others. If there were stronger regulatory structures in place, perhaps Disney would not have been able to acquire Marvel and Pixar and Star Wars; maybe Comcast would not have been allowed to buy NBCUniversal. Maybe there would be restrictions on how vertically integrated these markets could be — a company may have to choose between creating shows and exhibiting them, for example. I am not saying that would be better — even a dummy like me can see so many issues with that — but perhaps it would make the streaming video business a little more like streaming music.

As it is, streaming video providers’ incentives are aligned with getting more people to pay a monthly access fee. It does not necessarily matter how many people watch each item — in the simplest terms, it is actually more beneficial for streaming services to have as many subscribers as possible and as few viewers as any show can sustain, since each viewer costs money. Streaming music has completely different incentives. The goal of record labels is to license their library everywhere and get as many people as possible listening to their roster of artists so they can get a bigger slice of services’ monthly revenue.

There is a whole different side of this story that I have no business exploring, which is how cable TV used to be a more regulated system in the U.S. before rules were loosened in the 1980s and 1990s. But that is not in my wheelhouse.

The thing I am trying to underscore is that, contrary to Yglesias’ implication, “anti-monopoly people” are probably not overjoyed that a handful of conglomerates now control the entire pipeline of American visual media, and the expansion of choice has largely been driven by entries from yet more big businesses like Apple and Amazon. The “fragmented” landscape Yglesias is so perturbed by is more choice and competition than ever. Unfortunately, it is powered by vertically integrated giants, each of which has enough money and intellectual property to demand its own slice of your monthly income.

By the way, have you heard that piracy of TV shows is on the rise again?