In Q1 2023, PARQOR will be focusing on four trends. This essay focuses on "The definition of scarcity is continuously evolving away from linear. What happens next?” 

Last April I wrote about how Hulu's integration of ESPN+ made it easier to discover and watch the lightning-in-a-bottle TV story of Tiger Woods’ return to The 2022 Masters. But, it did not solve the problem of friction in streaming: specifically, how the User Experiences (UX) and the User Interfaces (UI) of how connected TVs and devices control the last mile to the consumer. 

Friction exists in the form of discoverability: the consumer may not know that The Masters could be viewed on ESPN+ and Hulu; or, an ESPN+ subscriber may not know they can watch the event unless they first log into Hulu. It also exists in the form of choice: a broadcast of The Masters is buried within the Hulu and ESPN+ apps. Meaning, on a connected TV device home screen, the target viewer must decide between apps before choosing Hulu or ESPN+ to watch The Masters. In conversion funnel lingo, there are countless opportunities presented for the target viewer to leave the funnel because they are confused or they opt to watch something else instead of “converting” to a Hulu or ESPN+ viewer.

I highlighted in Monday’s essay that scarcity is evolving away from linear over the next 10 years, and therefore “Disney or any company that does not own a smart TV solution does not have scarcity”. Scarcity is the linear distribution model’s historical moat — the linear model enabled multichannel video programming distributors (MVPDs) to aggregate millions of households locally, regionally and later nationally.

There is an obvious question I did not address: if Disney cannot solve for friction or scarcity then why does it need either or both Hulu and ESPN+?

Key Takeaway

The question facing Disney of whether to invest or to divest to solve for scarcity is ultimately an existential question. Neither option may be the solution Disney's problems.

Total words: 1,800

Total time reading: 7 minutes