Streaming was supposed to be the savior of TV—the rebellious new kid with no commercials, endless content, and an open bar of binge-worthy dopamine hits. But, as Doug Shapiro’s sharp, no-BS research reveals, the revolution is out of cash and looking for a loan. Streaming doesn’t just monetize less—it barely monetizes at all. For every streaming dollar generated, old-school pay TV is making it rain with three dollars in subscriber fees and seven dollars in ad revenue. In other words, streaming might have the hype, but pay TV still has the house.
Let that sink in: the industry’s shiny new thing isn’t just a less profitable model; it’s a fundamentally broken one. And the implications aren’t just bad—they’re existential.
The “Monetization Problem” No One Wants to Talk About
Here’s the deal: streaming might have a sleek user interface and clever recommendation algorithms, but it hasn’t figured out how to make money. Pay TV, that lumbering dinosaur we’ve all written off as extinct, still generates mountains of cash. Shapiro’s data spells it out—streaming’s revenue per home is a joke compared to pay TV.
Take Netflix, the poster child of streaming. Sure, it boasts billions in revenue, but those billions pale in comparison to the tidal wave of money still rolling into traditional TV. Why? Because people pay for pay TV. They pay subscriber fees, they pay for bundles they barely use, and advertisers pay premiums to reach their captive audiences. Streaming doesn’t have that kind of lock-in—most subscribers are one click away from canceling.
And don’t get me started on ad-supported streaming. Streaming ads don’t command the same CPMs (cost per thousand impressions) as linear TV, and even the platforms themselves are treating ads like a necessary evil instead of a moneymaker. When your business model boils down to “we’ll figure it out later,” it’s not a business model—it’s a wish.
Traditional TV: Dead But Still Dancing
For all the doom-and-gloom headlines about linear TV, Shapiro’s data paints a more nuanced picture. Two-thirds of U.S. video revenue still comes from good old-fashioned television. That’s right: the thing you only use to watch the Super Bowl and complain about cable bills is still king.
Linear TV’s dominance boils down to two simple truths: advertisers love it, and audiences stick with it. Despite the rise of streaming, traditional TV delivers consistent, predictable reach—something streaming hasn’t figured out. It’s the dependable Honda Civic to streaming’s unreliable Tesla.
But here’s where it gets wild: even with all that staying power, TV isn’t growing either. The pie isn’t getting bigger—it’s just being sliced differently. Shapiro’s data shows that every dollar streaming gains comes at the expense of something else. It’s not growth; it’s cannibalization.
Why Big Media Is Freaking Out
Shapiro’s research drops another bomb: video profits for big media companies are cratering. Revenue is up a measly 6% since 2018, but margins? Down 38%. That’s a hemorrhage, not a hiccup.
What’s driving the decline? For one, the cost of creating premium content has skyrocketed. Scripted dramas that used to cost $3-4 million per episode are now running $10 million or more. Meanwhile, streaming platforms like Netflix are pouring billions into original programming to compete, but they’re still chasing their tails trying to recoup those costs.
This isn’t just a bad quarter—it’s an industry in free fall. Media execs are learning the hard way that you can’t slap together a $200 million budget for a mediocre sci-fi show and expect subscribers to fund it indefinitely.
GenAI: The Hollywood Killer?
Enter GenAI, the new disruptor everyone’s whispering about. Shapiro points out that generative AI has the potential to blow Hollywood’s business model to pieces. Imagine creating an animated film that’s 80% as good as Pixar’s, but at 10% of the cost. That’s not just a game-changer—it’s a wrecking ball.
Animation, Shapiro argues, is the canary in the coal mine. It’s the first place where AI will replace bloated production teams with lean, fast, and cheap workflows. And it won’t stop there. As AI tech evolves, it could upend everything from pre-production to post-production. Why pay for location shoots and extras when you can render them in AI? Why hire a VFX team when a machine can do it in real-time?
But here’s the real kicker: the biggest threat isn’t that studios will replace people with AI—it’s that outsiders will use AI to replace studios. Picture a 19-year-old with an NVIDIA GPU and a dream creating content that rivals Netflix. It’s not just plausible—it’s inevitable.
YouTube: The Trojan Horse
While Hollywood wrings its hands over AI, YouTube is quietly eating its lunch. Shapiro’s data shows that YouTube is already the #1 streaming service on TVs. Yes, TVs. Not your phone, not your laptop—your living room TV.
And it’s not just cat videos anymore. Creator-driven content, led by juggernauts like MrBeast, is siphoning off viewers from kids’ programming and unscripted TV. Even YouTube itself is leaning into the TV model, rolling out features like “seasons” and “episodes” to make its content more binge-worthy.
The implications are staggering. YouTube isn’t just competing with Hollywood—it’s redefining what TV even is. And unlike Netflix, it’s profitable.
Why This All Matters
So why does any of this matter? Because the media industry is in the middle of an existential crisis, and most of its players are pretending everything’s fine.
Shapiro’s research lays bare the cracks in the foundation. Streaming, once seen as the future, is turning into a race to the bottom. Traditional TV is hanging on by sheer inertia. And disruptive forces like YouTube and GenAI are reshaping the landscape faster than anyone can adapt.
The stakes couldn’t be higher. Media isn’t just another industry—it’s the cultural fabric of our lives. The stories we tell, the voices we amplify, and the ways we connect are all tied to this ecosystem. If the industry collapses under its own weight, we lose more than jobs and profits—we lose the narratives that shape our world.
But hey, maybe a 19-year-old with a laptop will save us. Stranger things have happened.
Stay bold, stay curious, and know more than you did yesterday.
