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

To remind you, 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.

In Monday's essay, I concluded that “media companies face an existential need to refine and evolve their value propositions around narrow affinities. But to do that, consumer behavior and economics requires the companies to split off the consumption of ‘general entertainment’ from linear and subscription models, and sacrifice scale.” 

Meaning, audiences can get Hollywood movies and TV series across a wide variety of paid and ad-supported services, and they are increasingly turning to Free ad-supported TV services (FASTs) for the same value proposition that subscription services offer. 

Lately, Disney CEO Robert Iger and WWE CEO Nick Khan have been making the case that the best value proposition for consumers is relevancy: libraries built to complement core franchises and brands like Marvel or Star Wars on Disney+, or WWE and English Premier League content on NBCUniversal’s Peacock. Parrot Analytics calls this “affinity”, or overlap that exists between the audiences of different series.

In other words, if one agrees with these predictions, the streaming services most likely to succeed in the future will understand their subscribers and hyper-serve those audiences with relevant content and advertising. In that model, a streaming executive’s role is less about building out big libraries, and more about identifying third-party content to license or produce that pairs with core franchises and brands (and Khan (unashamedly) suggested the secret sauce is starting with content 52 weeks per year like WWE, which produces live events and seven hours of original weekly programming). 

But “bigger is better” was the sales pitch that Warner Bros. Discovery executives delivered yesterday with the renaming and relaunching of an app combining HBO Max and Discovery+ libraries. They have called it “Max”. Warner Bros. Discovery CEO David Zaslav told event attendees, "Max is the one to watch because we have the largest TV library in the world.” They are betting that “Dr. Pimple Popper” and “Fixer Upper” will be relevant to audiences who watch recent HBO hits “Last of Us” and  “Succession”. 

So Warner Bros. Discovery is openly embracing “bigger is better” at a time when both consumers and advertisers seem to be telling media companies “relevancy is better”. That move raises a fair question: does relevancy translate into a successful business model in 2023? 

There is also a deeper, underlying question that needs to be answered first: what is “relevancy” as a business model in 2023?

Key Takeaway

It makes sense why relevancy-driven streaming models are appealing to the likes of Disney and NBCUniversal. But it also makes sense why companies like Warner Bros. Discovery are hesitant to make that pivot.

Total words: 1,700

Total time reading: 7 minutes