As much as I like seeing the entertainment industry be fragmented, where a variety of ideas can flourish and firms compete to provide entertainment to consumers at affordable prices, I had a feeling that the big media companies needed to merge together to achieve the scale needed to generate profits in the era of streaming. CNBC puts it nicely as "more of a partnership of necessity" and I agree with CNBC because the streaming landscape is currently being dominated by tech giants with stronger balance sheets and subsidiaries that help subsidize their streaming business.

Looking at the chart below, you can see that there are many streaming services out there. Under the cable entertainment system, customers would get a bundle and gain access to channels run by many different entertainment companies. With streaming, consumers have many streaming services to choose from. Sure, doing DTC means more revenue per customer for the entertainment companies. At the same time, it becomes more difficult for these companies to attract more customers because it means they have to do all the marketing and they don't have cable companies to help them with that.

Sure, your average streaming customer has 2 or more streaming subscriptions. But right now, subscription fatigue is plaguing the industry. Consumers would rather stick to the top few streaming platforms and not bother to explore the other streaming options. That's one reason why $NFLX continues to succeed in the streaming space while competitors struggle.

If all of the streaming platforms went 100% ad-supported and allowed anyone to watch the shows on their platform at any time, then the streaming providers wouldn't have to compete for subscribers and subscription fatigue wouldn't be the big issue that it currently is. Why aren't the streaming providers doing this? They're not doing this because:

As long as the entertainment landscape relies on subscribers for revenues, combining forces and thus combining subscribers is the only way for the industry to achieve the economies of scale needed to achieve profitability in streaming. I don't see much anti-trust scrutiny in these entertainment deals because the unions would support these M&A transactions. The unions would rather see the entertainment industry consolidate and become profitable than remain fragmented and struggling to stay afloat.

Me personally, I think the entertainment industry is still not ready for the streaming era as a whole and that's what concerns me. At some point, the entertainment industry will become a massive oligopoly and innovation within the industry will halt because of it.