The rise of the streaming middleman
The rise of digital operating systems and smart TVs is putting a toll road between streaming companies and their audiences. Not only are they fighting for dominance, but they’re also battling streaming platforms for subscription and advertising revenue. With many of these companies operating their own streaming services, inherent conflicts of interest could invite antitrust probes.
The other streaming war
Streaming gatekeepers are fighting a heated war.
- Companies such as Roku, Amazon, Samsung, Apple, and Google battle for shares of advertising and subscription revenue that streaming platforms collect.
- Many are also moving into the connected-TV market to give the operating system preference, as there are yet to be clear winners in the space.
- Meanwhile, they’re also facing competition from traditional TV-makers like LG, Vizio, and Comcast.
These companies, which typically take 30% of ad revenue and 15% of subscriber revenue, make much more from their streaming business than their hardware business. For example, Roku made $1 billion in revenue in the first half of 2021 from its platform business (at a 66% profit margin) but only $220 million from hardware (at a 3.6% profit margin).
Software fights a hard battle
With how much money is at stake, streaming platforms are taking these operating-system companies to task to keep more revenue… and the middle-men are fighting back, leading to delayed debuts or platforms going temporarily dark.
- Roku hasn’t been able to strike a new deal with YouTube TV over control of data and search results.
- WarnerMedia battled Amazon and Roku over carrying HBO Max, which delayed its appearance on both systems.
- ViacomCBS is barring one connected-TV manufacturer from taking any ad inventory on Paramount+, leading to a stall in discussions.
Making things even more complicated is that many of these systems — Roku, Apple, Amazon, and Google — have streaming platforms of their own, creating a complicated conflict of interest.