Postcards: Electricity Vampires and The Future of Streaming

In the basement of my parents' home is a clock that has been blinking 12:00 am for the last 21 years. Do I unplug it or see how long until someone notices that this is still a thing?                                                                                                                                                                                                                                                                                                                                                                                                                 Forwarded this email? [Subscribe here]() for more [Postcards: Electricity Vampires and The Future of Streaming]( In the basement of my parents' home is a clock that has been blinking 12:00 am for the last 21 years. Do I unplug it or see how long until someone notices that this is still a thing? [Garrett {NAME}]( Nov 22   [READ IN APP](   Dear Fellow Expat: In the basement of my parent’s home is a giant wooden monstrosity that holds a newer big-screen television and older electronics. How old, you ask? Long before there was streaming - before YouTube and Netflix - there were DVDs. Before that… VHS. And before that… oh my… the Betamax. Betamax, or Beta, was Sony’s analog videocassette magnetic tape recording format. It arrived in the U.S. in 1975 and was the primary competitor to the VHS (Video Home System) format developed by JVC. Some still love Beta and jabber about the higher resolution and better picture quality. But Beta couldn’t survive the hardware Cold War against VHS systems. VHS tapes had longer recording times, more successful marketing campaigns, and more manufacturers made those machines. It also made one of the [weirdest mechanical sounds]( you’ll ever hear when loading and unloading the videotape. But don’t worry, because there’s a Betamax in this basement. You will find all three machines in my parents’ basement entertainment center. And all of them have been plugged into the wall for the last 21 years. While I’m sure it would be great to watch Beta's sweet, sweet resolution in classic films that my dad owns, like Harry and the Hendersons and Back to the Future, I don’t think it’s even plugged into the new television. Just the wall… where it sucks electricity from the outlets and the clock blinks 12:00 AM… and has done so since I was in college. My parents aren’t alone in their realization that they’ve been paying for this electricity since the Bush Jr. Administration. According to NRDC, about 23 percent of all electricity consumption in the U.S. is driven by vampires - those idle devices that remain plugged into the wall and other outlets. But that figure is going to explode in the years ahead. In-home devices will account for about half of the demand for cloud storage in the future. That smart toaster and smart refrigerator will only increase electricity costs. That will be a lot of electricity when we remain concerned about the long-term stability of the grid. What will be done to stabilize that demand? Given their track record, I assume they’ll move to ban devices for the Gaia. If so, I must get back downstairs to watch Harry and the Hendersons before they drive around the neighborhood and start confiscating the electric vampires. The Future of Streaming The world of DVDs, VHS, and Beta has been relegated to eBay selling. Although, if you want a copy of The Color of Money on Beta, I know a guy. For all the consumer trends and expectations about the future of entertainment, it’s clear that no one has effectively found a way to cement their hold as the preferred streaming channel. While Netflix continues to dominate the headlines, it did trail Amazon Prime in market share during the first six months of 2023, according to Statista. There’s no shortage of names in this space, and we’ll likely see additional consolidation. Netflix, however, has shown an ability to attract viewers to its ad-supported network. The company boasted 15 million active users with its advertising tier. Actor Ed Norton - best known for Fight Club - is also the co-founder of EDO. His media analytics company specializes in TV advertising and tracking. He expects that Netflix will double its market capitalization thanks to advertising support. "I bet Netflix, as it becomes a fully ad-supported network business, will double its market cap,” he told Yahoo! Finance this month. “I bet Netflix's market cap will go higher than anybody thinks it's going to go when people realize how effective an advertising platform that company’s going to become.” Norton says that companies can’t rely on subscriptions anymore, so they must turn to ad-supported networks like Hulu. That said, it feels like all that will happen is we end up right back where we started. That said, Netflix is trading at a breakneck valuation of 47x earnings and a price-to-sales of 7x. It’s hard to get overly enthusiastic about the stock, with consumer spending under pressure and concerns about a recession on the horizon. Here’s a breakdown of the numbers across the streaming space. Identifying any value here is tough, and there’s no real economic moat. - Netflix (NFLX) - 47x Earnings, 7x Sales - Walt Disney Company (DIS) - 74x Earnings, 2x Sales - Paramount Global (PARA) - Unprofitable, Losing Money on Streaming - Alphabet Inc Class A (GOOGL) - YouTube dominates audio streaming, with 26x earnings, 5.8x sales - Warner Bros. Discovery (WBD) - Unprofitable, Trading at Half Book Value - Amazon-com (AMZN) - 76x earnings, 2.7x sales - iQIYI (IQ) - Chinese streaming, 18x earnings, 0.55x sales. - Comcast (CMCSA) - 11.8x earnings, 1.4x sales, ranked among the most hated companies]( in America by consumers. - Apple (AAPL) - 31x earnings, 7.7x sales I don’t have a dog in this race, but streaming will remain the dominant force. If I did bet, I’d say that Google, as does Amazon, intrigues me. I can’t get behind Netflix at its current valuation. Happy Thanksgiving. I’m looking forward to the rest of the trading year. Stay positive, Garrett {NAME} You're currently a free subscriber to [Postcards from the Florida Republic](. For the full experience, [upgrade your subscription.]( [Upgrade to paid](   [Like]( [Comment]( [Restack](   © 2023 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()