Streaming services: speculative bubble or strategic investment?
This brings us to the question of what the current competition is really about – namely control over media distribution. The last hundred years have seen numerous unsuccessful attempts by film production companies to challenge the global dominance of Hollywood (from J. Arthur Rank in the 1940s to Polygram Entertainment in the 1990s). The failure of such ventures was not due to a lack of investment in film-making capacity, but rather a failure to secure a reliable channel through which the films produced would reach global audiences. Ultimately, film and TV producers want audiences to see their work, and they will always be attracted to those organisations that provide them with the opportunity to reach the widest possible audience.
It is in this light that we should think about the current arms race in media production. The traditional media companies that first emerged in Hollywood a hundred years ago are facing by far their biggest threat to date. This is not just because Netflix or Amazon are investing so heavily in film and TV production, but because they have created distribution channels through which they can directly reach international audiences. The eye-watering sums currently being spent on content creation make sense only if seen as long term investments that will help to secure the future of these distribution channels. There are only so many subscription services that consumers will be willing to pay for, and it seems that most of the world’s leading media and tech companies are eager to ensure that they will be in control of at least one of them.