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By Joe Arney

The world鈥檚 most successful entertainment companies are under economic siege from tech titans such as Netflix, Apple and Amazon, forcing traditional media players to make hard decisions about merging, selling assets or limiting production.

Ted Striphas has seen this movie before.

Striphas, associate professor and chair of the media studies department at the University of Colorado Boulder鈥檚 College of Media, Communication and Information, studies the history of media and technology. By better understanding how people and cultures reacted to past innovations, he said, we can better navigate present-day disruptions鈥攆rom social media to artificial intelligence.

In the case of how studios are losing ground to the tech industry, it鈥檚 the case of a very old story鈥攐ne Striphas traces back to RCA.

鈥淭he Radio Corporation of America produced radios, but they realized that unless you had something to listen to, no one would buy them,鈥� he said. 鈥淏ut at some point, the legacy media industries moved away from the device to focus entirely on content.鈥�

$5B in streaming losses

It was a lesson the tech industry paid close attention to when it came to devices like Amazon鈥檚 Fire TV lineup or the Apple TV. Both companies launched original content to help their devices stand out in the market. Meanwhile, Netflix鈥檚 blend of original and licensed media offers a different kind of threat to the established players in this space, like Warner Brothers Discovery, Comcast, Paramount and Disney. Building out their own streaming platforms led to a combined loss of $5 billion in 2023, according to a Financial Times report.

The sizable share of the linear TV audience that these companies hold makes them forces to be reckoned with, Striphas said. But as the future of television moves to an on-demand model, it鈥檚 no surprise there鈥檚 been so much chatter about the future of those studios: Early in the year, Warner Brothers Discovery and Paramount were said to be exploring mergers that would allow a combined entity to cut costs. More recently, Paramount has suddenly become a darling, attracting interest from Skydance Media and, in late January, a $30 billion bid from Allen Media Group.

鈥淲hen you look at the legacy media industry, this is what they鈥檝e been doing for the past 40 years. Mergers are very much part of the playbook, so this is kind of an uninspired response,鈥� Striphas said.

But complicating this scenario is that the entertainment industry is being remade in the image of the tech industry, which has brought its 鈥渆nough is never enough鈥� ethos to entertainment. While legacy media studios created content to keep viewers happy and coming back for more, the tech titans want to sell more Echo and Roku devices.

Sumner Redstone, who grew Paramount鈥檚 parent company into a behemoth, 鈥渇amously said 鈥榗ontent is king,鈥欌�� Striphas said. 鈥淚t was absolutely correct when he said it. But it is absolutely the problem now, because what the technology industry understands is the need to return to the old RCA model. If you really want to compete in today鈥檚 marketplace, it鈥檚 not enough simply to produce content. You need to be producing the hardware, as well.

鈥淎 merger is a boring solution, but I think it鈥檚 the only move they have, because the studios missed the boat on understanding the relationship between the device and the content.鈥�

If it鈥檚 any consolation to the studios, they鈥檙e hardly the first industry to find their business model upended by technology, and they certainly won鈥檛 be the last to confront this threat. Whether the next industry target maintains its strength or goes the way of newspapers, taxicabs, record stores and bed-and-breakfasts will depend on leadership and legislators.

鈥淭his is the story of the technologization of everything, and the movement of computing technology into places where people didn鈥檛 expect it to belong,鈥� he said. 鈥淎n individual business can鈥檛 stand against the tech industry鈥檚 hunger. Whole industries are going to have to figure out how to resist this, or how to flex their muscle in a way that the terms of surrender are not simply dictated to you by the technology industry.鈥�

A second storyline for businesses is the regulatory climate, which has been friendly to tech for a generation鈥攂ut that may be changing.

鈥淭he regulatory environment probably has to change, because it鈥檚 just not doing the work that I think is most beneficial to the people who are consuming these products and experiences,鈥� Striphas said.