From Growth to Profits: The Streaming War Reality

The streaming industry exemplifies the economic principle of overinvestment fueled by a desire for growth over profitability. This has led to an era of cost-cutting and consolidation as the market undergoes significant changes. The stark contrast in profitability between streaming and traditional pay TV is highlighted, with network television distribution boasting an EBITDA margin of 37-40% in 2020, compared to the median industry margin of 13-15%. This profitability stemmed from the high amortization against operating income, suggesting that streaming services may be operating with inflated cost structures, ultimately risking their profit margins as the market adapts.