Matthew Ball: preference

Transcript context

…Now, if I think of the Cowen household, we subscribe to Disney, to Hulu, to Apple, HBO, other things. I can’t even name them all. I feel that can’t last forever. Maybe we subscribe to them all because it’s a pain to cancel them. Other households are willing to go through the pain of canceling to save some money, maybe more than we are. What does the equilibrium look like there? How many streaming services are there going to be? Is there a stable market equilibrium? Or is it like the airlines, where they always just keep on going bankrupt? Or how do you view the economics of that sector? Well, the economics are an interesting question. If you go from 2005 to 2015, let’s say the heyday of television financially, it was in the top decile of EBITDA margins nationally. The median was around 12 percent to 15 percent. TV’s EBITDA margin was 40 percent, 45 percent. What was beside it in that stack rank? Renewables, oil and gas, heavy fixed-cost businesses that had really, really high marginal costs, and therefore, EBITDA looks pretty good. That was never sustainable. There’s no good argument for why television was going to have margins 3X the median. We’re seeing that right now. It had them because there was almost a communitarian approach. Everyone fought together. You and I would compete in the time slot, Tyler, but you could never fail out, and we’d have different cascades of renewals with different providers at different times for different channels. It was a perfect system. When you’re talking about what the future looks like, it’s likely that those margins stay much, much lower. Most people are thinking 20 percent right now. But I want to stress that it’s easy to underestimate the TAM in video. There are 300 million Americans who watch video every day. The average American watches five and a half hours of television, streaming or otherwise, but excluding TikTok and YouTube. That is so, so much. We think about this — I subscribe to five services, but you really should be thinking my family watches 250 hours of TV a month. Your earlier career as a firefighter — how has it shaped how you analyze media, gaming, and the metaverse? There’s a unity to it all, right?…

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