How the streaming wars are shaping culture

Today, almost every household subscribes to a streaming service; the typical US household has five. The battle for our attention is changing television.

By Will Dunn

Photo by Marcus Bastel /Millennium Images

Among the inventions made possible by George Owen Squier are the US Air Force – Squier was an army officer, and the Wright brothers’ first military passenger – and the internet, which he expedited by inventing the “multiplexing” that allows multiple signals to travel along a wire at the same time. In 1922, Squier proposed a use for this technology: rather than broadcasting radio to be picked up by anyone, people could subscribe to have their favourite music sent into their homes over a wire. The service, Wired Radio, offered more reliable and better-quality sound than radio itself, but the cost meant it was mainly popular with shops, where it was used as musical wallpaper. In the decades that followed, it became synonymous with anodyne commerciality, especially under the new name Squier gave it: muzak.

Today, almost every household in the US (87 per cent) and more than two thirds of British homes subscribe to at least one streaming service; the typical American household has five. Streaming has replaced the old video rental business and is eroding the much larger and more significant TV networks: more than half of American consumers have dropped their cable or satellite services in favour of streaming, and around half of remaining cable customers say they plan to do so. The streaming boom has produced a new era of quality TV and huge investment in production, but it is also switching people around the world from watching a profusion of locally produced TV to a much smaller slate of programmes that are mostly made in one country. Have the streaming wars brought us better TV, or more muzak?

It is easy to forget how bad TV had become in the last days before the streaming revolution, when reality shows dominated schedules and networks fought to wring the most attention from the cheapest possible format. In 2000, Channel 5 broadcast Naked Jungle, a game show in which a dismayed audience competed, unsuccessfully, to avoid seeing Keith Chegwin’s penis. In 2004, Fox broadcast The Swan in America, an incomprehensible spectacle of cruelty: eight women were made to undergo a three-month regime of weight loss and cosmetic surgery without once being allowed to look in a mirror. As their reflections were revealed – and criticised by sharp-tongued judges – the cameras captured the psychological torment.

The rational response would have been to stop watching TV altogether, and in a sense many did, fleeing the schedules for DVD box sets of The Wire, Breaking Bad and Scandinavian crime dramas. Many of these were ordered through Netflix in the US and Lovefilm in the UK, which allowed these companies to collect data on the TV people actually wanted to watch, rather than the TV to which they would pay jaded, guilty attention.

Armed with this information, and aware of approaching competition (Amazon bought Lovefilm in 2011), Netflix began to spend on programming what would make its subscription seem as necessary as a cable TV package, starting with House of Cards in 2013. Streaming services began to invest more and more on their own productions. Not everyone was happy; audiences at the 2017 Cannes Film Festival booed when the Netflix and Amazon logos appeared in credits, apparently in protest at the idea of films being released first on to TVs rather than in cinemas. But behind the scenes, everyone wanted a meeting with the streaming giants. They held the money: between 2013 and 2023, global spending on production almost doubled, from $128bn to $243bn.

If Netflix was so much cheaper, how was it able to spend so much more money? Partly the answer is that money itself was cheap: with low interest rates and quantitative easing, central banks created a global economy in which borrowing was practically free and investors were happy to gamble, especially on promising technology companies. Netflix was able to raise tens of billions from selling its equity and debt. The same was true for Amazon, but more so, as its e-commerce and cloud businesses grew. The pandemic supercharged these effects, both because central banks responded by making debt even cheaper, and because the companies that served entertainment (and in Amazon’s case, everything else) to people at home were suddenly even more promising. By 2021, Netflix had more subscribers in the UK than Virgin Media, Sky and BT combined. Amazon has bought rights to Premier League (and from next year, Champions League) football. They are now what analysts call “hygiene subscriptions”, explains Dominic Sunnebo, the global consumer insight director at Kantar – “subscriptions that are so important, they’re not considered to be cut when people are looking to reduce their spend.”

In the UK and the US there is a profusion of paid-for streaming services, including Mubi, which people subscribe to in order to tell other people they watch artful films, and big-budget offerings such as Apple TV Plus, Paramount Plus and Sky’s Now TV. The market is dominated, however, by three platforms – Netflix (subscribed to by 60 per cent of UK households), Amazon’s Prime Video (46 per cent) and Disney Plus (23 per cent). More than five million British households subscribe to all three. Together, these three companies spent around $66bn on producing new films and TV in 2022.

As with other areas of the digital economy, the streaming wars have cemented America’s cultural dominance. Nine of the ten most popular websites in the UK are American, and American software accounts for more than 95 per cent of the software used to access them. Thanks to Netflix, Amazon and Disney, we watch more American TV than ever before. Of the 50 most popular titles streamed in the UK over the past three years, only seven were set in the UK; the top two are The Crown and Bridgerton, American dramatisations of British history.

In the late 1980s the BBC director-general, Alasdair Milne, was among a number of British cultural figures who warned that the Conservative government’s deregulation of the TV market would lead to “wall-to-wall Dallas”. It didn’t happen at the time, but David Hesmondhalgh, a professor of media, music and culture at Leeds University, says “we are seeing the shift now” from a culture in which people mostly watch TV made in their own country to one in which we mostly watch American TV.

“Television companies have always had a huge amount of power to determine our cultural lives,” says Hesmondhalgh, and streaming services – as both producers and distributors of content – have power not only over what gets made but how visible it is. The peak-time slot in the schedule has been replaced by the top spot in the platform’s recommendations: “They can have a huge influence over which content you’re most likely to watch, just by flashing those images up in front of you when you launch Netflix or Prime.”

The cultural changes produced by the streaming revolution have been experienced mostly by the young; British over-65s watch seven times as much broadcast TV as Gen Z, according to Ofcom, which says there is now a “stark divide in the viewing habits of younger and older people”.

Is this a problem? Have we lost something important to our culture by ceasing to gather as families in front of Noel’s House Party? No: “It’s miserable having to watch the crap that your dad was making you watch, with the control in his hand,” says Hesmondhalgh, who thinks a lot of the nostalgia around the bygone decades is misplaced. At the same time, however, he believes there is a big and widely overlooked difference between domestic public-service broadcasters, which are regulated to provide not just entertainment but news and analysis, “for the common good”, and “extremely well-resourced American companies” that are unencumbered by such obligations.

In the cases of Apple and Amazon, the TV business is not even an end in itself, but a means to bring more customers to the central enterprise of selling phones or parcel delivery.

Not everything is rosy in the world of streaming, however. “Going into the pandemic, it felt like growth was limitless,” says Kantar’s Sunnebo. “And clearly it was not.” Lockdown was thankfully a temporary phenomenon and inflation has eaten into household budgets. Last year, Sunnebo says, “almost a million households dropped out of the market altogether”.

Sunnebo thinks the big trend now is for consumers to do what they did before Netflix, in the box-set era: “People are not signing up to Apple TV Plus as a long-term subscription, they’re signing up to watch Ted Lasso. Once they’ve finished watching Ted Lasso, they cancel. Consumers are not treating them as subscriptions. They’re buying series.”

In response, the industry has done what the networks did before DVD box sets, and begun rationing out its biggest properties one episode a week, to keep customers on board for as long as possible: Succession and The Last of Us are released on streaming platforms just as they would have been on a TV network.

More fundamental shifts are taking place within streaming companies, however. Last week, Netflix announced a reorganisation of its film division that involves the departure of executives who shaped the company’s productions. Most notable among these is Lisa Nishimura, vice-president of independent film and documentary features, who launched the documentary-making division that was Netflix’s way in to major awards and credibility as a film studio. Nishimura worked as executive producer on Oscar-winning features, such as American Factory and My Octopus Teacher, while also building the company’s reputation as an essential subscription with series including Making a Murderer and Tiger King.

Nishimura’s departure may mean, as one unnamed executive told the Hollywood Reporter, that the “thoughtful, taste-driven era” is over and that Netflix will concentrate on the productions that get the most viewing hours: big, escapist drama series such as Stranger Things, Bridgerton, The Witcher (which viewers have collectively spent more than 400,000 years watching) and films in which men called Ryan (Reynolds, Gosling) cause or endure explosions.

There’s a chance the industry’s belt-tightening could force it to produce better, more locally relevant TV. Amazon’s The Rings of Power, set in the fantasy world of JRR Tolkien’s The Lord of the Rings, was the most expensive TV series ever made, with a total budget (including rights and marketing) of more than $1bn. But in the UK, Sunnebo says “far more” viewers were driven to sign up to Prime Video by the much cheaper Clarkson’s Farm. There’s also a chance that viewers who signed up during a decade of Oscar-winning documentaries and Martin Scorsese films find themselves watching ten years of Paul Blart: Mall Cop 2.

This makes the stakes even higher in the Conservative government’s war on the BBC and Channel 4. “There is a resilience in the British system,” says Hesmondhalgh. “But we have to continue protecting that industry, because it’s brought the country very good things, not just economically but culturally and socially.”