In Q2 2023, PARQOR will be focusing on three trends. This essay covers "Media companies have millions of consumer credit cards on file. What are they building for their customers?"

PARQOR identifies a few key trends each fiscal quarter that reveal the most important tensions and seismic shifts in the media marketplace. Must-read stories or market developments are not always obvious from press reports or research analysis, and often require a deeper dive. PARQOR’s analysis questions established ideas and common wisdom, reassesses the moving pieces, and reveals the potential in the media marketplace in 2023.

One of PARQOR’s key trends for Q2 2023 — “Media companies have millions of consumer credit cards on file. What are they building for their customers?” — has popped up in a few conversations in the past week. I received some pushback in conversations on how I have phrased it, as this is not the first time media companies have had millions of credit cards on file. They have had other retail businesses like merchandising or mobile games.

This particular PARQOR trend relies on the premise that with all this consumer data, “they should be able to figure out additional direct to consumer models.” However, the takeaway from recent earnings calls is that these companies have yet to figure out the streaming business model, first.

Disney’s FY Q2 2023 earnings call yesterday reflected this dynamic. The legacy media company is widely celebrated for having figured out streaming reported fewer subscribers and plans to distribute Hulu with Disney+ content in “a one-app experience.” But, Disney’s earnings led commentators like CNBC’s Alex Sherman to argue “the streaming wars are over” and therefore it is “highly unlikely growth will ever return to the levels seen during the pandemic and the early years of mass streaming.” 

Something has changed. It is no longer worth asking what additional retail services the media companies may build because they have conceded they are still figuring out their streaming business models.  Instead, it is worth asking whether they have misdefined the competitive dynamic as one focused on the math of libraries, when the dynamic is actually focused on the math of content relevance to consumers.

Key Takeaway

What can media companies build to compete with a firehouse of content whose volume is expanding daily? Betting on streaming libraries alone has been a fool’s errand answer. They need to also solve for relevance.

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