As the dispute over Warner Bros.' ownership intensifies, authoritative expert Dan Rayburn has urged investors to move away from an excessive focus on the narrative of the 'streaming wars' and instead concentrate on verifiable financial data and business facts.
Amid the escalating ownership dispute involving Warner Bros Discovery, a leading Hollywood giant, $Warner Bros Discovery(WBD.US)$ Dan Rayburn, an authoritative expert in streaming and media, delved into this topic during a recent podcast interview. The discussion also encompassed potential deals involving $Netflix (NFLX.US)$and Paramount (PSKY.US). Additionally, he analyzed several core issues currently facing the industry, including the impact of sports streaming, key investment metrics, and the divergent strategic rationales of tech giants. He strongly recommended that investors shift their focus away from the overhyped narrative of the 'streaming wars' and instead concentrate on verifiable financial data and business realities.
Below is the transcript of the December 23 interview between podcast host Rena Sherbill and Dan Rayburn:
Rena Sherbill: Dan Rayburn is undoubtedly one of the most knowledgeable experts covering the expansive fields of streaming and media today. Dan has been a frequent guest on our show, a long-time contributor to SeekingAlpha, operator of his personal blog 'streamingmediablog,' and a regular presence on various mainstream media platforms. Dan, welcome back to the show.
To start, could you share what you're currently most focused on within the industry? Netflix has certainly been at the center of attention recently—whether it's collaboration rumors with Warner Bros, negotiations with Paramount, or its moves in the sports events sector. What are your primary areas of interest right now?
Dan Rayburn: There are indeed many topics worth exploring. Netflix remains a focal point in the industry, and thank you again for having me. Just focusing on developments in sports streaming alone, we could produce a podcast episode every day, not to mention other aspects of streaming business models such as bundled packages and pricing strategies.
Sports events have always been a major focus, especially in the last two quarters. For instance, the National Football League (NFL) reached a partnership with Apple (AAPL.US), and Formula 1 (F1) finalized its streaming rights agreements. Such new developments continue to emerge.
Notably, the NFL is leveraging the global reach of streaming platforms to expand its influence—a stark contrast to the traditional reliance on broadcast television channels. This shift is particularly significant during peak viewership periods like the upcoming Christmas season.
Among the five NFL games scheduled from December 25 to 27, all but those in local team markets will not air on national TV channels. Netflix will exclusively stream two of these games on Christmas Day.$Amazon(AMZN.US)$One game will be exclusively broadcast by Peacock platform on Saturday, the 27th, while the remaining game will be aired by the NFL Network.
For investors, the focus should remain on financial data and actual business performance. However, speculation is rife in the current market. I even noticed claims on LinkedIn that the deal has already been finalized, with some asserting that 'Netflix has acquired Warner Bros'—a statement that is completely implausible, accompanied by promotional graphics entirely lacking substantiation. Therefore, investors must learn to discern the authenticity of information and differentiate between facts and opinions.
Rena Sherbill: Let’s discuss the rumors surrounding a potential deal involving Warner Bros Discovery, with Paramount or Netflix as possible partners.
Following the initial reports of collaboration intentions between Netflix and Warner Bros Discovery, Paramount's hostile takeover bid further complicated the situation, as you mentioned, leading to rampant speculation in the market.
With nearly three decades of experience in the industry, though not a speculator, what scenarios do you foresee as an expert? And under different circumstances, what aspects should investors focus on?
Dan Rayburn: In my view, investors should only concern themselves with deals that have been finalized, rather than hypothetical scenarios like 'possible,' 'should,' or 'might' happen—given the multitude of variables at play. Currently, there are two main deal proposals under discussion, with details still being adjusted and likely to change further depending on the bids.
Based on publicly available information, Paramount’s funding sources have been clarified, while Netflix has disclosed its financial arrangements in regulatory filings.
The key question investors need to consider is: What impact will the transaction have on consumers? Interestingly, several large labor unions have publicly stated that if Netflix acquires certain assets of Warner Bros, it would reduce market competition and deprive consumers of choices.
However, one might argue that a significant pain point for consumers is the overwhelming number of fragmented streaming platforms. Hence, I don’t believe this deal would lead to the so-called issue of 'reduced market options.' The real uncertainty lies in Netflix’s integration strategy: Will it incorporate Warner Bros’ content into its own platform, or maintain HBOMax as a standalone operation?
Moreover, many investors overlook the core assets involved in the deal. If the transaction between Netflix and Warner Bros Discovery goes through, Netflix will gain rights to TNT's content library, sports broadcasting rights, and exclusive streaming rights for the 2028 Olympics. Additionally, Netflix will take over Warner Bros’ internal technology platform and systems that provide HBO linear channels to third-party TV service providers (multichannel video programming distributors, MVPDs).
The key question, however, is whether Netflix intends to engage in such business. There is no definitive answer yet. Speculation suggests that Netflix might conduct large-scale layoffs after the acquisition, but in reality, this is not feasible — Netflix itself is not a film and television production company, whereas Warner Bros has a mature content production and distribution team, on which Netflix would still rely. In fact, Netflix has clearly stated that it will continue Warner Bros' theatrical release strategy.
Some believe this statement lacks specificity and speculate that Netflix may shorten the theatrical window period. This possibility does exist, but there is no definitive answer at present. In summary, investors should focus on the completed deal. It is important to clarify here: I do not hold any shares of the companies discussed, nor am I a financial analyst providing investment advice.
My analysis is based on exchanges with various parties within the industry — including distribution partners, film and television companies, cinemas, broadcasters, sports leagues, etc., as well as market data, striving to make an objective and rational judgment. This is also the analytical approach I recommend for investors.
However, it must be noted that in the current political environment in the United States, the influence of political factors on large-scale M&A transactions far exceeds that of five to ten years ago. The trajectory of this transaction will inevitably be tied to political maneuvering, which is an unavoidable reality. I will not speculate on the success or failure of the deal, but it is certain that from the perspective of content assets, Warner Bros holds extremely high value.
Rena Sherbill: Did Paramount's hostile takeover bid exceed your expectations? Has the development of this transaction influenced your views on the industry or related fields?
Dan Rayburn: Not really. Such large-scale M&A deals have always been accompanied by internal information leaks — for example, chat records between the CEOs of the two companies being exposed, insiders who shouldn’t speak revealing information, and all sorts of baseless rumors flying around.
Looking back over the past decade in the media and entertainment industry, especially in film, streaming, and sports, it is difficult to find a transaction of such magnitude and profound impact. Amazon's acquisition of MGM was more focused on film production, while AT&T’s purchase of DirecTV ended in failure, and AT&T is fundamentally a telecommunications operator, making its nature completely different from this transaction. Therefore, in terms of both scale and potential industry impact, this deal can be considered a milestone event.
Rena Sherbill: What do you think is the probability of Netflix acquiring Warner Bros? For instance, 70%? Or do you think it is meaningless to make any predictions now, and we should just wait patiently?
Dan Rayburn: No one can precisely predict the outcome. Imagine if Paramount suddenly raised its offer to $35 per share; the entire situation could reverse overnight. Of course, this is just market speculation, not a given fact. I won't make assumptions out of thin air — all analyses are based on objective data. But for now, it is too early to draw conclusions.
Another key unknown is regulatory approval. Industry practitioners and investors alike can endlessly debate the pros and cons of the deal, but ultimately, whether the transaction goes through depends on the attitude of regulators. Both the EU and the U.S. Department of Justice will intervene in the review, and Netflix estimates the deal will take 12 to 18 months to complete.
More notably, Warner Bros Discovery's spin-off plan will not be completed until the third quarter of 2026, followed by a lengthy regulatory process. Even if everything goes smoothly, the final closing of the deal may take two years or even longer. During this period, the industry landscape may undergo significant changes, rendering any current speculation meaningless.
Rena Sherbill: Could you explain why the EU is also involved in the approval process?
Dan Rayburn: The EU’s jurisdiction over the approval stems from the revenue share of the parties involved in the European market. If the relevant revenue reaches a certain threshold, EU approval becomes mandatory.
For audiences unfamiliar with industry regulations, it is important to clarify that the EU typically does not directly halt transactions. While there have been exceptions, such as the intervention in the$iRobot(IRBTQ.US)$acquisition case, in most instances, the EU approves deals while imposing a set of regulatory conditions.
This model is not uncommon; for instance,$Comcast (CMCSA.US)$the acquisition of NBC followed a similar pattern – while the deal was approved by the U.S. Department of Justice, the company had to comply with specific operational requirements. The EU adopts a similar approach toward such mergers and acquisitions, making it a key element among many uncertainties.
Rena Sherbill: Indeed, the entire situation is fraught with uncertainty. In your view, should we analyze streaming companies individually or discuss the matter by categories of sports events?
Dan Rayburn: That’s a challenging question because many issues are inherently interconnected. The choice is yours, but in terms of audience comprehension, categorizing by sports events might be easier to understand.
Rena Sherbill: Let’s dive into the NFL, especially since today is December 23rd, and the Christmas games are just around the corner.
Dan Rayburn: Sure, let’s talk about the NFL. Any NFL fan can likely feel the current fragmentation in its streaming landscape—different types of content scattered across various platforms with inconsistent video quality, making it difficult to get a clear picture.
But what deserves the most attention right now is the upcoming Christmas game lineup. Today’s recording is on December 23rd, and yesterday, ESPN broadcast a game that introduced new data-enhanced technology, delivering an impressive viewing experience.
Note: None of the five NFL games scheduled from December 25th to 27th will air on national television. Netflix will handle two Christmas games, Amazon will stream one (a triple-header), Peacock will exclusively present the game on Saturday, December 27th, and the remaining game will be broadcast by the NFL Network.
In other words, four out of the five games will be exclusively streamed on digital platforms. Of course, all NFL games still retain over-the-air (OTA) signals, and Peacock’s exclusive game will also air via local NBC affiliates. However, this arrangement underscores that the NFL is increasingly relying on streaming platforms for global distribution—a fundamental shift in its distribution model over the past few years.
Historically, broadcasting rights for holiday games (Christmas, Black Friday, Wild Card games) were firmly controlled by traditional broadcasters. The core reason the NFL is now selling these premium assets to streaming platforms is that they are willing to pay significantly higher licensing fees.
As consumers, we might dislike this fragmented model—it has become increasingly inconvenient to watch sports. However, the public may overlook one key fact: the decision-making logic of sports leagues has never been about “consumer convenience” but rather about “maximizing revenue for the league.”
The NFL’s broadcasting model has always been the most fragmented, far more so than the NBA and MLB. As MLB signs new licensing agreements, its broadcasting will also move toward fragmentation.
Rena Sherbill: From a data perspective, is there comparability between viewership metrics for games streamed online versus those broadcast on traditional television? Additionally, do sports broadcasting rights genuinely bring new subscribers and revenue growth to streaming platforms?
Dan Rayburn: You’ve hit on a core pain point in the industry—the actual value of sports content to direct-to-consumer (DTC) streaming platforms remains unclear at this stage.
The root cause lies in the fact that neither sports streaming platforms, sports leagues, nor direct-to-consumer streaming service providers disclose detailed viewership data. Even when such data is occasionally released, it tends to be vague macro-level information. There isn't even a unified standard for defining 'users,' let alone assessing their actual value. Key metrics like user churn rate and retention rate have never been made public—Netflix, for instance, has never disclosed its user churn rate to Wall Street since its inception.
Rena Sherbill: Is this deliberate? Logically, if the data were impressive, companies would likely promote it proactively.
Dan Rayburn: I don’t believe it’s intentional concealment. The core issue is the lack of standardized definitions for metrics within the streaming industry. Traditional broadcasting has clear measurement norms, but the streaming sector has yet to establish a unified standard.
When it comes to live events alone, there are multiple metrics such as concurrent streams, average minute audience (AMA), and monthly active users (MAU), with varying statistical approaches across different companies. For example, Netflix recently introduced a new metric called 'monthly active viewers,' but its definition remains unclear. Additionally, concepts like concurrent plays, concurrent devices, and unique plays continue to emerge, with companies employing diverse methodologies for their calculations.
To make matters worse, many companies still rely on Nielsen’s data, despite its statistics being widely criticized. Sports leagues have publicly questioned the reliability of Nielsen’s data but continue to use it nonetheless. Compounding the issue, Nielsen has recently altered its methodology, introducing a so-called 'big data + sample survey' model, rendering old and new data incomparable. In such a scenario, how can one compare viewership performance across different years?
Take Netflix’s 'monthly active viewers' as an example. The metric defines users as those who watch at least one minute of content per month—that’s all. Subsequently, Netflix estimates the total reach based on household size, using this figure as a core metric to replace the traditional monthly active users (MAU).
Similarly, during Amazon’s 'product launch event' a month ago, the company announced that Amazon Prime Video had reached 315 million global monthly active viewers, without clarifying the definition of 'viewers.' Does it mean watching for two seconds, ten seconds, or merely opening the page? If users only see the Prime Video entry on Amazon’s homepage without clicking to watch, will they still be counted? These questions remain unanswered, even by Nielsen.
This is the dilemma investors face: it’s extremely challenging to accurately determine how much effective viewing time specific content receives on various platforms. A few platforms do release segmented data—for instance, NBC Sports separately discloses viewership figures for NFL broadcasts on Peacock, while Fox does not. Even so, we can only access average minute audience (AMA) figures and remain unaware of users’ actual viewing durations.
In short, we can obtain some fragmented data, but it is far from sufficient to comprehensively evaluate the commercial value of sports content, let alone answer the core question: 'Can sports rights attract new users and improve user retention?'
Rena Sherbill: Although you are not a financial analyst, could you share which core metrics investors should focus on when evaluating streaming companies like Netflix and Amazon? How do these metrics relate to the industry indicators you typically monitor?
Dan Rayburn: Of course. First, it is important to clarify that I am not a financial analyst providing stock recommendations, nor do I issue investment reports or belong to the research team of either the buy-side or sell-side institutions. However, my daily work involves analyzing various types of financial data—I review SEC filings of dozens of publicly traded companies every day, spanning sectors such as sports, media, entertainment, and cloud infrastructure.
Many people overlook the value of SEC filings because critical information often does not appear in corporate press releases. For example, 'the number of subscribers canceling traditional cable TV services,'$Verizon(VZ.US)$companies will never voluntarily disclose this data in press releases, but it is meticulously recorded in SEC filings.
Any investor focusing on the direct-to-consumer (DTC) streaming industry understands that over the past 18 to 24 months, the core trend in the industry has shifted from 'scale first' to 'profitability first.'
The 'expand at all costs' strategy adopted by major platforms during the pandemic is no longer viable. At one point,$Disney (DIS.US)$the direct-to-consumer business was incurring daily losses of up to $100 million, with quarterly losses even reaching $1.1 billion.
It is against this backdrop that Wall Street sent a clear message to the industry: abandon the 'growth at all costs' mindset and focus on achieving profitability—the industry’s cash burn rate was simply too high.
Subsequently, Warner Bros Discovery, Paramount, and Disney's direct-to-consumer businesses successively turned profitable, while the Peacock platform, though not yet fully profitable, is nearing the break-even point. It is worth noting that different companies have varying definitions of 'profitability,' and investors need to carefully scrutinize their accounting methodologies.
In my view, one of the key metrics investors should focus on is average revenue per user (ARPU)—but unfortunately, many companies have stopped disclosing this data.
Consider this: as an investor, would you rather see user growth on a platform with declining ARPU, or a slight reduction in users but an increase in ARPU? The answer is clearly the latter, as higher ARPU indicates stronger profitability.
Interestingly, companies such as Netflix, Disney, and Roku (ROKU.US) no longer disclose ARPU data. Their rationale is that their business models have evolved—current revenue streams now include subscription fees, advertising income, and bundled partnerships with other platforms (which yield lower revenues under the wholesale model), making the traditional ARPU metric insufficient to accurately reflect the current state of their businesses.
This justification does hold some merit, but it also makes it difficult for investors to track the true operational status of these companies from a financial perspective. For example, what impact would discounted promotional packages launched during Black Friday (with 12-month subscription fees as low as $3-5 per month) have on ARPU? Can companies really profit from such promotions? The answer is most likely no.
Precisely for this reason, the Peacock platform did not launch any Black Friday promotional activities this year—a very wise decision. While some consumers complained about the lack of discounts, for a platform like Peacock, which is still operating at a loss, this was a rational choice.
Beyond ARPU, investors should also focus on content bundling strategies, partnership models, pricing adjustments, and content investment costs. A few companies, like Netflix, disclose their total annual budgets for content production and rights acquisition—for instance, Netflix’s content investment this year is approximately $18 billion. Investors need to continuously monitor trends in this data.
In contrast, Disney reports its total content investment without differentiating between streaming services and traditional broadcasting businesses, consolidating the figures into one number, significantly diminishing its reference value.
Additionally, the proportion of advertising revenue will be a core focus moving forward. Currently, very few companies disclose the breakdown of subscription revenue versus advertising revenue within their direct-to-consumer businesses. However, over time, Wall Street will pressure companies to reveal this information—after all, in the coming years, advertising will become a key driver of revenue growth for streaming platforms, especially for Netflix, whose ad-targeting system continues to improve, offering significant potential for its self-operated advertising business.
In summary, investors should concentrate on these core financial metrics rather than getting caught up in heated discussions on social media—such as “a certain show on a certain platform is more popular.” Popularity does not equate to user retention for a platform. Just look at shows canceled after one season: popularity ≠ profitability. This is a point I repeatedly emphasize to investors.
Rena Sherbill: Why can’t popularity and profitability be equated? Is it because we lack sufficient granular data to establish a correlation between the two?
Dan Rayburn: Precisely. Netflix has explicitly stated that some highly popular shows do not deliver favorable returns on investment—despite their high popularity, the level of user engagement they generate, when weighed against production costs, falls short of expectations.
Here, “user engagement” is a broad concept, potentially encompassing new user acquisitions, user retention rates, ad impressions, cost-per-thousand impressions (CPM), and more. Different platforms use varying standards of measurement, but the core focus remains on viewership performance.
Many within the industry are unaware that the actual streaming viewership data for various large-scale events is far lower than expected. For instance, during the 2022 World Cup, the peak streaming viewership on Fox's platform reached only 1.28 million. It should be noted that the World Cup’s performance on traditional television was phenomenal, yet the numbers for streaming platforms were disappointingly low.
Looking at Apple's partnership with F1, according to ESPN data, the peak television viewership in the United States for F1 races reached 1.5 million average minute audience figures. This year, races broadcast on ABC, ESPN, and ESPN2 had an average viewership of merely 1.3 million.
These figures are sufficient to challenge the public’s preconceived notions—when people hear combinations like 'Apple + F1' or 'NBA + streaming,' they instinctively assume impressive viewership numbers, but reality suggests otherwise.
More intriguingly, none of the platforms broadcasting games during this year’s Thanksgiving holiday were willing to disclose their streaming viewership data—the collective silence itself speaks volumes.
Rena Sherbill: A few months ago, analyst Jack Bowmann mentioned on a program that while Amazon Prime is widely considered a cash cow for Amazon, it is, in fact, operating at a loss. Its core value lies in enhancing brand influence. Is the move by streaming platforms to invest in sports events driven by similar logic—focused more on brand promotion rather than direct revenue growth?
Dan Rayburn: In many cases, this is indeed true. However, only insiders within the companies know the exact answer. That said, we should ask ourselves: does it really matter?
For Apple, even if Apple TV loses $1 billion or $2 billion annually, it would have almost no impact on its overall balance sheet—Apple can easily absorb such losses. This is because Apple’s core business is not content production; its streaming service is merely one piece of its broader ecosystem strategy.
Therefore, analyzing Apple's streaming business requires a completely different perspective from that used for Netflix. Netflix’s core focus is content creation, not streaming technology—many mistakenly regard Netflix as a streaming company, but in reality, streaming is merely the technical means through which Netflix distributes its content.
In contrast, Apple and Amazon Prime Video’s core businesses are tech hardware and e-commerce retail plus advertising, respectively. Content production is not their primary focus.
Industry analysts and Wall Street are eager to understand the actual operational costs of Amazon Prime Video. How much revenue does Amazon generate from Prime Video’s advertising business? How many users retain their Prime memberships specifically for access to Prime Video content? And do these members consequently purchase more products on Amazon’s platform?
Amazon possesses a vast amount of user data, even surpassing the scale of Google (GOOGL.US). Therefore, it understands the true value of Prime Video better than anyone else.
However, Wall Street often falls into the trap of one-sided interpretation. For instance, there were reports claiming that 'Apple TV loses $3 billion annually,' but this statement overlooks a critical question: What return did Apple gain while losing $3 billion? Did it boost hardware sales? Did it enhance overall revenue from service businesses?
To analyze such companies, one must focus on their overall ecosystem strategy. Netflix’s business is relatively singular; although it has recently ventured into offline cinemas, it remains fundamentally different from ecosystem-driven enterprises like Disney and Amazon.
Many media outlets and analysts tend to simplistically compare Apple TV with Netflix, leading to the conclusion that 'Apple is no match for Netflix in the streaming industry'—a completely erroneous perspective. Apple has repeatedly emphasized that its goal is not to become the next Netflix.
Similarly, Netflix Co-CEO Greg Peters publicly stated a month ago that bidding for the entire season’s broadcasting rights of the NFL does not align with Netflix’s business logic because Netflix 'cannot calculate the return on investment after spending massive amounts on copyright fees.' Whether in terms of acquiring new users or retaining existing ones, it cannot assess the value.
Investors should pay attention to this statement—it indicates that Netflix does not even know how to measure the success or failure of obtaining the NFL’s full-season broadcasting rights. This also answers the core of your earlier question: Some companies simply lack clear short-term or long-term success metrics.
Giants like Apple, Amazon, and Google are implementing long-term strategies in the streaming sector. Even if they incur continuous losses for several years, they have sufficient capital and patience to persist.
Rena Sherbill: How do you interpret the underlying logic behind Apple’s investment in Apple TV?
Dan Rayburn: Apple’s strategic intent is actually very clear—to tell high-quality stories. Apple has repeatedly emphasized that 'storytelling' is at the core of its brand and corporate culture. Whether it’s hardware products, software services, content creation, or music business, everything essentially revolves around conveying the brand’s story.
What sets Apple apart is its focus on curating content with differentiated value rather than pursuing the breadth and depth of its content library. This approach starkly contrasts with traditional industry practices.
Long-time streaming users may recall that during Netflix's early expansion phase, the company heavily promoted the size of its content library on its website, boasting numbers such as '50,000 or 80,000 titles.' When Amazon entered the streaming market, it also rapidly expanded its content library by acquiring a large number of licenses, matching Netflix in scale.
During that period, the primary criterion for users selecting a streaming platform was 'who has more content.' However, Netflix soon realized that competing solely on content volume no longer provided an advantage, prompting a shift to an original content strategy.
Netflix explicitly communicated to its users: the platform’s content volume might decrease in the future, but it would focus on producing high-quality original series like 'House of Cards.' The success of this strategy fundamentally altered consumer behavior.
Today, how many people choose a streaming service based on whether the platform offers '10,000, 50,000, or 100,000 hours of content'? Very few. Only in certain niche markets—such as anime platforms like Crunchyroll—does the size of the content library remain a key competitive factor.
From an investment perspective, trends in content libraries are equally noteworthy. Adjustments to these libraries directly impact production costs and licensing expenses.
Rena Sherbill: Does this also imply that content needs to align with brand identity?
Dan Rayburn: Indeed. Take Apple’s partnership with Major League Soccer (MLS) as an example. Apple explicitly stated that MLS’s core audience consists of women and younger demographics, precisely the target group Apple aims to reach. Additionally, Apple secured exclusive global rights to MLS matches without regional broadcasting restrictions—allowing users to watch all games on a single platform.
In today’s highly fragmented content landscape, such collaborations are rare exceptions. Nevertheless, after two years of cooperation, both parties revised the terms of their agreement: the contract duration was shortened by three years, Apple relinquished renewal rights after the 2027 season, and the payment model was renegotiated. While specific details of the revised terms were not disclosed, the underlying reason for the adjustments is evidently the partnership failing to meet expectations.
Another notable change is that the MLS Season Pass will cease operations. Starting next year, users will no longer need an additional subscription; all MLS matches will be available for free via Apple TV.
This case clearly illustrates that even giants like Apple are not guaranteed immediate success. When partnerships fall short of expectations, companies promptly adjust strategies, including contract durations, payment models, and content packaging approaches.
Rena Sherbill: Do you have anything else to add regarding Netflix, Amazon, and Apple?
Dan Rayburn: I would like to talk about the NBA's new rights agreement. This year, Amazon Prime Video and Peacock secured extensive broadcasting rights for numerous NBA games, and their broadcast quality has been exceptional—clear video resolution, rich interactive features, and an overall viewing experience surpassing expectations.
Notably, this marks the NBA’s return to the NBC platform for the first time since 2002. The season opener broadcast on Peacock attracted an average minute audience of 5.6 million, with peak viewership exceeding 7.1 million—a remarkable achievement.
The NBA has publicly stated that in the new rights agreement, they aim to 'increase distribution channels through streaming platforms without overwhelming users with too many choices.' In other words, the NBA seeks a balance between expanding its reach via streaming services while avoiding the excessive fragmentation seen with the NFL.
From the current performance, the NBA has indeed achieved this goal. By contrast, the NFL’s broadcasting can be described as 'extreme fragmentation,' and Major League Baseball (MLB) will also move toward a fragmented approach after signing its new rights deal.
Here, I must apologize to fans of the New York Yankees: next year, if you want to watch all of the Yankees’ games, you will need subscriptions to eight different broadcast and streaming platforms—an almost inconceivable situation.
Rena Sherbill: Someone I know wanted to watch the World Series this year but didn’t know which platform to use.
Dan Rayburn: Technically, it is possible to watch, but the problem lies in users not knowing where to find the content. The reasons behind this are complex: on one hand, new streaming platforms keep emerging, such as Fox’s new service, making it difficult for users to understand the content rights and pricing of different platforms; on the other hand, ESPN’s product portfolio is dizzying—ESPN app, ESPN Unlimited, ESPN Plus, and authenticated cable TV offerings—all layered with blurred boundaries.
To make matters worse, another streaming platform—TNT Sports app—will launch next year. All sports content currently available on HBO Max in the U.S. will migrate to this new platform, while regions outside the U.S. will remain unaffected.
Frankly, I sympathize with the average consumer. Having worked in this industry for nearly 30 years and closely following the content strategies of various platforms daily, I consider myself well-informed about industry trends. Yet, even I sometimes feel confused: 'Which platform is tonight’s game on?'
For ordinary users, the streaming experience is particularly frustrating: complex platform operations, login difficulties, and unclear picture quality (for instance, Netflix’s Christmas broadcast of the NFL event did not support HDR, whereas Amazon Prime Video’s broadcast did).
Such significant differences in picture quality for the same event across different platforms were unimaginable in the era of traditional broadcasting—previously, regardless of which city you were in or which cable TV provider you used, the picture quality for the same event was consistent. But in the streaming era, this has become the norm.
Every day, I receive numerous text messages from friends asking, 'On which platform can I watch a certain game?' The fragmentation of streaming services indeed causes extreme frustration for users.
Rena Sherbill: The streaming industry is undoubtedly entering a new phase of development. What are your thoughts on Google and YouTube? It seems that YouTube is making significant strides in the streaming sector.
Dan Rayburn: Regarding YouTube, there are several points I would like to share. First, YouTube TV published a blog post last week announcing that it will launch 10 new bundled packages next year. While this news appears exciting, it lacks critical information—the release timing, specific content, and pricing have not been disclosed.
Some media outlets reported that 'users will finally be able to subscribe only to the channels they want to watch'—this is a serious misinterpretation. I have verified with YouTube that users cannot freely choose four channels to subscribe to, which is what the industry refers to as the 'à la carte' model. The upcoming packages are not truly customizable channel selections but rather preset bundles.
Of course, some of these may include 'lean bundles'—fewer channels but more targeted, such as specific sports packages. However, until the specifics of the package content, pricing, and regional restrictions are announced, there is no reason to get overly excited. I am puzzled as to why some media outlets are excessively hyping this news.
Furthermore, YouTube's content strategy differs fundamentally from other platforms. There is currently a rather meaningless debate within the industry: Does YouTube TV qualify as 'television'?
In my view, this question is entirely irrelevant—the definition of television should be determined by users. Whether referring to hardware devices or service formats, if users consider it television, then it is television.
Many people believe that YouTube TV is becoming increasingly like 'traditional television' because it secured the exclusive broadcasting rights to the Academy Awards. However, this perspective overlooks the full scope of the deal: in addition to the Academy Awards, YouTube also acquired the broadcasting rights to at least 10 related events, including the Governors Awards and the Oscar nominations announcement, none of which had previously aired on television. This agreement will remain valid until 2029.
More importantly, the deal also includes a collaboration on the Google Arts & Culture initiative. Leveraging its robust technological resources, Google will assist the Academy of Motion Picture Arts and Sciences in digitizing its vast collection—comprising over 52 million items. Google will create a digital platform for these invaluable cultural assets, providing a one-stop access point.
This is an advantage that traditional broadcast television companies cannot achieve. For a global cultural event like the Oscars, partnering with YouTube is an excellent choice—because film, television, and music culture transcend national borders and genres, resonating with audiences worldwide in a way that sports events, which often have significant regional limitations, cannot match.
Finally, it must be emphasized that the viewership data Nielsen released for YouTube is highly unreliable. This is because it conflates short-form content lasting 10-15 seconds with Netflix's 90-minute long-form videos and traditional television’s four-hour live sports broadcasts. Such comparisons are meaningless and akin to 'comparing apples to bowling balls.'
Rena Sherbill: Indeed, as the industry continues to evolve, people always try to label these new developments—Is this television? Is it an upgrade to broadcast TV?
However, through today’s discussion, I’ve come to realize that different companies are entering the streaming industry with their unique brand identities. Whether in content selection, operational strategies, or service models, each exhibits distinct characteristics. As you mentioned in the Oscar collaboration case, the dimensions involved go far beyond mere event broadcasting—it’s truly fascinating. As long as we break free from conventional thinking, we can uncover the innovative aspects of the streaming industry.
Lastly, do you have anything else you’d like to say to investors and consumers? You may also add any topics we might have missed.
Dan Rayburn: First, I want to emphasize to investors: there is no so-called 'war' in the streaming industry. War implies armed conflict and destruction, whereas the competition among these companies is healthy and positive.
Healthy competition fosters diverse bundling packages, pricing strategies, and marketing plans. However, many media headlines proclaim 'Netflix has won the streaming war'—a claim with no basis. What is the criterion for judgment? Is it because Netflix will generate over $9 billion in free cash flow this year?
Everything boils down to the data itself. Everyone is entitled to their opinion, but the issue today is that few people are willing to distinguish between opinions and facts. The media loves sensational headlines, and the term 'war' implies there can only be one winner.
However, in the field of content distribution, there can be multiple winners. The core of these companies’ competition revolves around users’ time and attention—after all, everyone has a limited amount of time each day to consume content. Their competitive dimensions span various content formats such as music, podcasts, news, and films, with varying durations and quality levels (for instance, 4K resolution is not necessary for mobile video viewing).
Returning to your earlier question about the 'definition of television'—there is no standard answer. People always debate endlessly, but from an investor's perspective, it's not about right or wrong, and there is certainly no 'winner-takes-all' scenario. The media’s penchant for hyping up 'war' narratives stems from their love for creating stories about 'losers,' but this is far from the actual market reality. A look at corporate balance sheets makes this clear.
Secondly, focus on data and scrutinize sources carefully. Misinformation in the streaming industry is rampant, and even authoritative outlets like The Wall Street Journal and The New York Times can publish erroneous reports. For example, there was a claim that 'Hulu has 100 million users,' but in reality, Disney, as a publicly traded company, discloses Hulu's user data every quarter—currently only 54 million. Why do media outlets use unverified estimates?
More surprisingly, many people commenting online don’t even understand key information in SEC filings. For instance, Disney mentioned in its SEC filing that 'due to a wholesale agreement with Charter Communications, average revenue per user (ARPU) declined this year'—meaning Disney earns less per user under this agreement compared to retail pricing. However, such details never appear in Disney’s press releases.
Therefore, to truly understand the streaming industry, one must grasp the underlying logic driving the sector, and that starts with reading the data. Data does not lie; data tells the most truthful story—facts matter the most.
These days, many writers like to use vague terms such as 'may' or 'perhaps'—which carry no real meaning. This is why I frequently post content on LinkedIn emphasizing 'present facts, list data.' I cite data sources and attach links to SEC filings, welcoming anyone to debate—but when it comes to core issues like profitability, data cannot be refuted.
Of course, it is important to note that different companies measure profitability differently. For example, EBITDA calculations vary based on accounting principles. Investors also need to understand discrepancies in statistical methodologies, such as the differences between Generally Accepted Accounting Principles (GAAP) and non-GAAP metrics, as well as the varying implications of EBITDA and earnings per share (EPS).
In summary, for any investor, enhancing one’s ability to interpret data is crucial.
Rena Sherbill: Yes, data must be interpreted within the context of the industry. Last week’s podcast discussed news about the reclassification of the cannabis industry, emphasizing the need to analyze data in light of industry-specific characteristics—a logic entirely distinct from interpreting data in the media sector. As you said, content is king, but context is equally vital.
Dan Rayburn: Context is key. As a veteran, I particularly detest the term 'war.' This isn’t war—it’s healthy market competition.
Twenty years ago, the streaming industry was developing at an astonishing pace—almost every quarter, companies introduced higher-quality video resolution, with firms chasing each other to drive continuous progress. It was an era filled with innovation and excitement, and such healthy competition still exists today.
Editor/Joryn