Jury's Out on Whether Streaming Is Good Business: Nathanson

“The jury’s still out” on whether streaming is a good business model compared with linear TV, MoffettNathanson's Michael Nathanson told the virtual StreamTV Show. The analyst cited steep investments that streaming market leader Netflix has had to make in content to maintain its subscriber base, and now competing media companies going direct to consumer “have to spend to catch up.” The “negative cycle” in content spending depresses return on invested capital, he said (see here for the 1 p.m. panel Tuesday). Streaming is a good business model “if you can scale it,” but “that requires a ton of spending in advance and the hope that you’re not too late to the game,” he said, and “the hope that you can raise pricing” and learn to “live with churn.” Netflix didn't comment Wednesday. It’s hard to raise pricing in the streaming market, said Nathanson, noting Netflix has implemented price increases over time. “Price increases are a real challenge.”