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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.

Author's Note: Thursday’s essay will reveal The Medium’s key trends for Q4 2023. Look for my latest Medium Shift column for The Information to be published mid-week.

The end of the writers’ strike marks a new era in Hollywood. Deadline reported the television industry is anticipating “accelerated contraction, more competition, reeled-in budgets, fewer overall deals and possibly more cancellations}”. In other words, “Peak TV Is Over” and we are likely to see total productions fall substantially from the peak of nearly 600 shows in production.

In the film industry, there are studio projects with mid- and lower-tier budgets facing “tough choices” due to the conflicting commitments of talent. Movie productions slated for 2024 focus on finishing productions and hitting their pre-announced release dates, and that means talent will be scarce.

So, “contraction” applies beyond the TV industry: Fewer titles in theaters, fewer shows on linear TV, and fewer movies and TV shows on streaming services. There will also be a contraction in the linear business. The obvious culprit are trends that are driving the total number of linear households below 50 million. But also, Disney’s recent deal with Charter eliminated eight cable networks from Spectrum TV packages, and is now considered precedent for all other cable network conglomerates. . So, in one sense, contraction simply means marketplaces operating at a smaller scale than they did before.

“Contraction” will also inevitably play out in streaming: reduced content supply will result in weaker direct-to-consumer value propositions. Bloomberg recently reported that Disney projected it will fall tens of millions subscribers short of its September 2024 target of 215 million to 245 million subscribers.  That projection reflects both Disney’s execution, to date, and the impact of the strikes. 

This is the basic story we have for how contraction will play out on the supply side. On the demand side, Nielsen’s most recent The Gauge shows YouTube taking an increasing percentage of TV viewing time away from competitive subscription streaming services: It now has 9X the usage of each of Paramount+ (1.1%), Peacock (1.2%) and Max (1.3%).  This is a strong signal that YouTube is driving the contraction in demand for these services, but the exercise of searching for other signals highlights the challenges with trying to understand this market contraction will play out.

Key Takeaway

There is a broad market trend of contraction of both the supply and consumer demand for legacy media content. Media coverage is telling the supply side story. There is an argument to be made that YouTube is driving the demand side contraction.

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Total time reading: 4 minutes