The Medium identifies a few key trends each fiscal quarter that reveal the most important tensions and seismic shifts in the rapidly and dramatically changing media marketplace. The key trends help you answer a simple question: "What's next for media, and where's it all going? How are the pieces lining up for business models to evolve, succeed, or fail?"
Read the three key trends The Medium will be focused on in Q3 2023. This essay focuses on "There is a less-discussed lens on how the demand for 'premium content' is being redefined by creators, tech companies and 10 million emerging advertisers."
On Monday I asked what the purpose of the media conglomerate model is in the streaming era, and I answered it with former Intel CEO Andy Grove’s “strategic inflection point”. There is the assumption in the marketplace that Disney and other legacy media conglomerates are at Grove's binary, pivot-or-die strategic inflection point because of streaming. And that is because leaders like Disney CEO Robert Iger have defined it as a new distribution channel.
However, the TV business is still a better model than streaming and with lower and more predictable churn rates. So, it is hard to argue that the TV business will be a worse business model than the streaming business model for these conglomerates anytime soon. We are not witnessing a “strategic inflection point”, and there is no urgency for anyone to pivot to a different business model.
Then what exactly are we witnessing?
One subscriber responded to Monday’s essay that we are witnessing a holding pattern until early April 2024. That is when the tax statute that prevents WBD CEO David Zaslav from offloading Warner Bros. Discovery assets will be lifted. The reader argued: “That will be the starter pistol for this next wave of consolidation and contraction”, and others will follow after the unwinding of the WBD merger’s complicated tax structure (a Reverse Morris Trust).
Even if that is the case, the question remains: Will media conglomerates still exist on the other side of that market shift? Because in this dynamic market shift from wholesale to retail, it is not clear what competitive advantages the conglomerate offers its individual business segments. Nor is it clear whether those business segments will be able to compete outside of the conglomerate
If the legacy cable media conglomerate cannot figure out how to allocate resources to delight consumers across its own ecosystem, and therefore create shareholder value, why should any of their individual subsidiaries/pieces of the business exist within or without the conglomerate?
That is the ultimate question looming for April 2024.
Total words: 1,800
Total time reading: 7 minutes
Last September, I explored a question posed by a subscriber about which media business model delivers “delight”, or the best creation of value “for users mainly but also shareholders as that flows from users in my book.” We had come up with five answers: