May 18, 2021
The cord-cutting marketplace is sitting on a knife's edge right now. The issue isn't that people don't want cord-cutting options, but that the market is starting to hit the point of critical mass. Having a lot of one product is good for consumers, in one sense. But the cord-cutting market may be running up against what's known in economics as excess capacity.
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Streamer's Spotlight: Will Excess Capacity Start Killing Streaming Service Start-ups?
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Investopedia defines excess capacity as "a condition that occurs when demand for a product is less than the amount of product that a business could potentially supply to the market." The definition is built on the idea of a single business, but it can be applied across entire industries, as well. A great example of this is what occurred to the auto industry during the height of the global pandemic. Nobody was driving cars, and nobody was buying them. There was an oversupply and not enough buyers.
We are likely at the beginning of an oversupply problem within the cord-cutting market. Consumers will only use a limited number of services; and when too many services are alike, there's far more capacity (or excess, if you will) than what consumers can legitimately use or even want.
How Will Excess Capacity Impact Cord-Cutting?
Excess capacity in the cord-cutting market will likely have two big impacts.
First, it's going to cause a halt in price increases. For consumers, that's of course a huge plus. Cord-cutting prices have been steadily increasing each year, with massive spikes in 2020 for services like YouTube TV. Needless to say, consumers don't like price hikes even when competition is increasing, so depressed prices are a boon for those of us paying for services.
The second major impact will be services consolidation. This would occur in two ways: Larger services buying out smaller ones, and some services completely shutting down. As far as the live TV streaming market is concerned, we've already seen the latter happen. PlayStation Vue closed down in 2019, as did AT&T WatchTV. And while AT&T TV is still available, its service has gone through enough changes that it may end up being shut down or sold off completely.
When Will the Cord-Cutting Market Hit Excess Capacity?
Realistically, it's probably already there for the live TV streaming market. The shut-down of several services is an indication of this. That market is already starting to clear, even if prices haven't come down. But many vVMPD providers are starting to lose customers (even the biggest ones in the market), which would indicate an oversupply problem.
The on-demand streaming market is a bit harder to pin down. Unlike the vVMPD market, on-demand providers don't all provide the same thing. They're rapidly developing unique content, or siloing their content instead of licensing it. This causes a dilution problem as smaller services can't get as many customers, but those services also cost far less to operate, so they can operate with fewer customers than vVMPDs.
All told, the next few years in the cord-cutting market should be interesting to watch.
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This Week's Streaming Guide
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1. 'Superman & Lois' Returns from Hiatus
The re-re-re-make of Superman & Lois on The CW returns from hiatus TODAY (May 18). Watch live at 9 PM EST. - Watch The CW Live Without Cable
2. Psychological Thriller 'Too Close' Available this Thursday
Emil Watson stars in this AMC+ original as Watson, a forensic psychiatrist, must crack the brain of a criminal suspect. - Watch on AMC+
3. New Marvel Series 'M.O.D.O.K' Hits Hulu this Friday
A supervillain runs his evil organization into the ground. - Watch on Hulu
4. History Channel's 'The Cars that Built the World' Streams this Sunday
If you're a car person, this is one dramatic documentary you won't want to miss. Watch live on History Channel this Sunday, May 23, at 9 PM EST. - Watch on Netflix
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News and Industry Developments
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1. Hulu + Live TV Loses 200,000 Customers
The service shed a huge number of customers in Q1 2021. - Cord Cutters News
2. Disney, HBO, and ViacomCBS Had Stronger Subscriber Growth than Netflix
The old guard appears to be getting a handle on the Netflix growth model. - Financial Times
3. Sling TV Lost 100,000 Subscribers in Q1
The service continues to struggle due to a rapidly declining channel catalog, rising prices, and competition. - Fierce Video
4. YouTube TV Hits 10 Million Download Milestone on the Google Play Store
As its competitors struggle, YouTube TV gains traction. - 9to5Google
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