Streaming is the new cable

Streaming is replacing cable by becoming cable — without the profits.

Why it matters: The cable industry churned out profits like clockwork, until it didn’t, but streaming hasn’t yet shown financial viability.

The big picture: Media giants are under more pressure than ever to turn their streaming businesses profitable as the cable bundle — which was funding the streaming investment — rapidly declines.

• Advertising dollars, one of the primary revenue drivers for cable, that have left TV are not necessarily moving towards streaming, due to increased competition from social media.
• Marketers are expected to spend just over $60 billion across tradition TV and streaming this year, compared to $64 billion five years ago, according to longtime ad buying analyst Brian Wieser.
• “I think that there’s there’s a lot to be said for the power of the bundle,” David Cohen, CEO of the Interactive Advertising Bureau, tells Axios. “Consumers are not going to subscribe to seven or eight things, they simply can’t afford that.”

State of play: The deals that used to be the bedrock of legacy TV keep moving to the streamers.

• Amazon, which is closing in on a major NBA deal, is setting itself up to be the streaming world’s version of ESPN. Even Netflix has an NFL deal.
• At the same time, legacy media companies that have launched streaming services are bundling their services together in moves that mimic the cable TV bundles (whose revenues drove their business).
• Comcast is giving its customers a discounted bundle that includes Peacock, Netflix and Apple TV+. This summer, Disney and Warner Bros. Discovery will offer Disney+, Hulu and Max in one offering.

The bottom line: The old-school cable bundle “will be under threat more now than ever before,” Cohen says. Axios