Streaming services battling to compete with Netflix are spending a lot of money, very badly, a new book says

• "Binge Times" breaks down media companies' struggle to keep up during the streaming boom.
• The book exposes how execs with little expertise cut corners to get ahead and got their due.

"Binge Times" is an engaging new book by journalists Dade Hayes and Dawn Chmielewski revealing the behind-the-scenes corporate machinations that drove the video streaming wars. Despite its virtues, the book's subtitle, "Inside Hollywood's Furious Billion-Dollar Battle to Take Down Netflix," manages to simultaneously understate and overstate the dramatic impact these ongoing battles are having on many of the biggest technology and media companies.

On the understatement side, a mere billion dollars represents not much more than half of the amount of money that Jeffery Katzenberg and Meg Whitman incinerated in their streaming startup Quibi, the least significant player in the unfolding drama. Netflix itself generated over $10 billion in negative cash flow during the decade that followed its decision in 2012 to produce its own original content.

On the overstatement side, even the multi-trillion dollar tech giants, Apple and Amazon, seeking to compete with the much smaller Netflix don't seriously think they have any prospect of "taking down" the market leader. And the legacy media companies that have launched their own copycat services are focused on the much more modest objective of staying relevant.

The narrative of "Binge Times" is constructed around the seven-month period from November 2019 to May 2020 during which Apple, Disney, NBCUniversal, WarnerMedia and Quibi launched their streaming products (Paramount+ would not launch until 2021). In addition to tracking the key business, creative and personnel decisions involved in the preparations, the launch and the aftermath for each, Hayes and Chmielewski, detail the efforts and responses of the two market incumbents with a decade-plus headstart in Subscription Video on Demand (SVOD): Netflix and Amazon.

The authors undertook scores of interviews and scoured the public record of statements and speeches by the key

decision-makers to paint a picture of the diverse strategic mindsets of the various market participants.

That said, the book has a tendency to give a little too much credence to its best sources.

"Sarandos knew," "Binge Times" asserts in explaining the popularity of Netflix's break out series House of Cards, "from reviewing years of DVD rental data and streaming reports, that this combination of talent would draw a big audience." The authors provide no mention nor explanation of why those same data sources did not allow Sarandos to predict the embarrassing failure of the even more expensive series, "Marco Polo," that followed fast on the heels of "Cards." Instead, in their telling, "each new series garnered progressively more prestige and subscribers."

What is most illuminating about the account provided in "Binge Times" is the extent to which the leaders of these companies were making it up as they went along.

The tech companies had no expertise in developing successful creative entertainment product — and Amazon initially thought they could take the guess work out of it by crowdsourcing. The media conglomerates had no expertise in managing customer relationships or consumer experiences as they had always left this to their distribution partners.

The inevitable result was a lot of money spent very badly.

Where "Binge Times" is weakest is on the economics of these enterprises — not only of the streaming services that are the book's focus, but the overall businesses of which they are a part. For instance, the authors assert that until the pandemic, the parks division had been "long the most lucrative part of Disney's sprawling entertainment empire." In fact, in fiscal 2019, just before the pandemic, the Media Networks division generated more operating income than the combined Parks, Experiences and Products division.

Such flaws are more than made up, however, by the guilty pleasure of watching the arrogant executives, with plenty of opinions and confidence but little domain expertise, get their due.

The AT&T leadership comes out particularly poorly. Watching its initial decision to buy Time Warner apparently based in part on the belief that telecom executives would represent an upgrade to management across the enterprise is as stunning as its sudden decision to release its entire 2021 slate of films on to HBOMax at no extra charge to users. The latter fateful choice resulted in being forced to pay 170 different profit participants as if every single one of the films had in fact been released to theatres and been a huge hit.

With lots of strategic moves being made but little sign of the red ink abating, the amount of original creative content being produced collectively by the various adversaries in the streaming wars is at an all time high. It seems like this can't last forever, but for every move towards industry consolidation and rationalization, another player announces its intention to get into the original content game — most recently Roku.

It feels like this movie can't end well, at least for shareholders, but in the meantime, viewers should just binge away.

Jonathan A. Knee is Professor of Professional Practice at Columbia Business School and a Senior Advisor at Evercore. His most recent book is "The Platform Delusion: Who Wins" and "Who Loses in the Age of Tech Titans."