Why is streaming less profitable than cable TV? Lots of parallels between the print business and the streaming digital articles in news. The author calculates how streaming generates only 1/6 as much revenue per streaming home as pay TV generates.
Of course we all hope that digital will generate the same gross margin as print, so we can finance independent journalism. Don’t get your hopes too high, though. You probably will need much more volume to reach an acceptable total margin.
On average, streaming homes are only subscribing to ~2 services. To me this sounds like there is no unlimited market of subscriptions in one category like news either. Just like very few people subscribed to five newspapers in the past.
Building market share, and time to market for that matter, will be key before the entire new digital subscription market sets itself in relative market shares, like the print business has done decades ago.
And the following in the article point opens up a lot of big tech platform questions for the news industry.
Perhaps most damaging is the changing competitive dynamic. Not only is Netflix willing to operate at much lower margins, but other deep pocketed “new” entrants are willing to operate at no margin at all.