The evolution of television is one of the great business stories of our time. From the big three networks to dozens of cable channels to hundreds of cable channels to thousands of streamable shows to…what next?
Relentless price hikes combined with brilliant innovation in streaming led to a decade of cord-cutting. The number of households paying for cable will go from over 100 million to only 50 million in just another few years, longtime industry analyst Michael Nathanson forecast in a report today. That’s just a continuation of the current 4% to 5% annual rate of decline. And Nathanson thinks 20 million or so of the departees effectively will still pay for cable via an online service like YouTube TV or Hulu Live TV.
Meanwhile, streaming services like Netflix and Disney+ passed 1 billion subscriptions in total last year for the first time. At some point, the cord-cutting decline will sink the whole old-fashioned cable industry completely. But not yet.
The latest evidence of the perhaps surprising strength of the cable ecosystem comes to us courtesy of the National Football League. The league’s $46 billion worth of deals with Disney, Fox, CBS, and NBC are almost up. Surely airing football games on cable TV must be worth less now that tens of millions of viewers have fled? Nope. The NFL’s renewed pacts total more than $100 billion, Nathanson reports, though there are a few new twists.
Each network gets rights to stream their games online, something only CBS could do under the old deals. And there’s a new player on the field for this round: Amazon grabbed full rights to games on Thursday night. Though the e-commerce company had some streaming rights in recent years, traditional networks had controlled the broadcast rights and produced the games for air. Oh, and the deals also include the right to partner on legal betting, too. That might end up mattering a whole lot more to the economics of the deals than anyone foresees today.
But why is football worth so much to cable? It’s one of the oldest customer segmentation strategies around: If your best customers are willing to pay more, find ways to charge them more. See Apple’s development of the iPhone X or Tesla’s Model S Plaid. Among the most loyal customers left for paid TV are fans of live sports, particularly football. Expect cable rates to go up to cover the cost of the new football deals.
On the other hand, as those hardcore fans pay more, less devoted sports fans will keep on defecting. Doesn’t sound like a winning strategy for much longer.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com
***
What exactly is Clubhouse? The next big thing, or the latest flash in the pan? On this week’s Brainstorm podcast episode, hosts Michal Lev-Ram and Brian O’Keefe ask Fortune’s Danielle Abril to show them around the app and explain the hype. Jon Sakoda, founding partner of venture-capital firm Decibel Partners, explains how Clubhouse is the perfect app for pandemic life. And Eliran Sapir, founder and CEO of Apptopia, discusses how social media startups manage to stick around, despite the competition, and how Clubhouse appears to be measuring up. Listen to the podcast here.
NEWSWORTHY
Unsafe at any speed. Home exercise equipment can be dangerous. Peloton issued a warning on Thursday asking customers to take care using its treadmills after an incident in which a child died. “While we are aware of only a small handful of incidents involving the Tread+ where children have been hurt, each one is devastating to all of us at Peloton, and our hearts go out to the families involved,” CEO John Foley said.
Pressure drop a drop on you. Tech stocks, particularly some of 2020's highest flying tech stocks, continue to get hammered in the market amid concerns that rising bond yields will curb their value. On Thursday, Square and Snap lost 9%, Tesla, Pinterest and Roku dropped 7%, Zoom and Snowflake fell 6%, and PayPal, Twitter, and Peloton lost 5%. Most other sectors fared better and the S&P 500 Index lost only about 1%. Still, tech investors shouldn't feel too bad. At least they didn't buy a non-fungible token linked to sound clips of a film director passing gas. “If people are selling digital art and GIFs, why not sell farts?” Alex Ramírez-Mallis tells the New York Post. And if the door is open to fart jokes, let's not miss the chance to mention that the founders of poop-testing startup uBiome have been charged with securities fraud and money laundering. It's a smelly mess on this Friday morning for sure.
Everything I wanted. Plenty of tech CEO verbiage to mull over this morning. Apple boss Tim Cook was pushing his back-to-office mantra in an interview with People. "I can't wait," he says. Facebook CEO Mark Zuckerberg popped up on Clubhouse to argue that the company will be in "a good position" despite Apple's looming privacy enhancements on the iPhone. According to new leaks, the two companies are also bulking up for the coming battle over augmented reality glasses. Facebook has a prototype wristband to act as an AR controller. And Apple is working on eyeball tracking for its gear.
The past is never past. Old tweets did in the newly-named leader of Teen Vogue. Alexi McCammond, hired away from Axios by Conde Nast two weeks ago, will not take over as editor of the publication. She faced criticism over posts from a decade ago containing homophobic and racist content.
Searching for new digs. Things are getting a little tight at the Googleplex despite all the people working from home. Google says it will spend another $7 billion and create 10,000 more jobs this year, including $1 billion on a new campus in Silicon Valley, more cloud data centers, and new offices in Oregon, Minnesota, and Texas. “Coming together in person to collaborate and build community is core to Google’s culture, CEO Sundar Pichai says in a blog post announcing the investments. In other big real estate plays, 'lectric pickup maker Rivian unveiled a map of its planned charging station network. The goal is to open more than 600 stations by the end of 2023.
FOOD FOR THOUGHT
Automation is often pitched as a cost-saving tactic. That was certainly the idea behind using more drones in the Air Force. Simpler hardware, fewer pilots, lower costs. But the Air Force has ended up spending a lot more on drones, as The Economist explains:
A recent study by the RAND Corporation, another think-tank, notes that drones, by feeding back full-motion video, largely replaced the human targeters who in previous wars had been needed on the ground to guide air strikes. Yet precisely because drones generate so much intelligence, they require more humans to analyse it all—at least until artificial intelligence is good enough to do the job.
Doing away with the humans is hard. At present, keeping a single Predator or Reaper drone above a given target around the clock requires four drones, and thus 49 people in mission control and 59 more, most of them for maintenance, in the local “launch and recovery” area where the drone is operating.
FOR YOUR WEEKEND READING PLEASURE
A few great long reads I came across this week:
The NFT Craze Offers Easy Money—And Hard Copyright Questions (Decrypt)
NFTs are giving rise to new forms of copyright infringement, but could also provide artists with a means to earn more money on the Internet.
Mind the gap (The Verge)
After a bruising lawsuit with Microsoft, Katie Moussouris is fighting for fair pay.
Inside Israel’s lucrative—and secretive—cybersurveillance industry (Rest of World)
The country’s hacking software is recognized the world over. Not everyone thinks it’s a good thing.
For Maya Lin, a Victory Lap Gives Way to Mourning (New York Times)
The Neilson Library at Smith College, which Lin redesigned, is interwoven with her own life story. But any triumph is muted by the sudden death of her husband, Daniel Wolf.
IN CASE YOU MISSED IT
Coinbase takes to Reddit By Lucinda Shen
Online sign-ups made the U.S. vaccine rollout less fair. Here’s how to fix them By David Z. Morris
Crypto marketplace OpenSea raises $23 million to be the ‘Amazon of NFTs' By Robert Hackett
March Madness 2021: How to watch and stream NCAA Tournament games online for free—even without cable By Chris Morris
Like it or not, vaccine passports are coming soon to an airport near you By Grady McGregor
How to build the talent pipeline for people of color By Jeffrey J. Brown and Harry L. Williams
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
Junior workers on Wall Street get paid buckets of money in return for working insane hours to build the spreadsheets and PowerPoints that can justify all the latest SPAC mergers and such. But 13 first-year analysts at Goldman Sachs developed a very different 11-slide PowerPoint that's spreading all over on social media. After self-surveying, they've cooked up charts showing that they worked an average of 98 hours per week in 2021, that their mental health has sharply deteriorated, and that 77% feel they have been victims of abuse in the workplace.
As Bloomberg columnist Matt Levine noted, at least the unhappy first years have perfectly adopted the Goldman template for presentations, right down to the firm's blue color scheme, san serif font, and logo box in the top left corner of every page. "If you put together a horrifying presentation that really looks like an official Goldman Sachs deck, and then share it on social media, it will go viral and your bosses will have to take it seriously," he concludes.
