The market has spoken: Consumers define the relevant video market

Washington loves drama, and recent debates over video industry consolidation have delivered plenty – billions of dollars at stake, congressional theatrics, and political posturing. But beneath the spectacle lies a consequential antitrust question relevant to any proposed deal:

What is the relevant market?

In rejecting the Federal Trade Commission’s social media monopoly claims against Meta, a federal court explained that a product market turns on whether consumers see products as substitutes, and the “touchstone” of market definition is how consumers respond to price increases. The court also emphasized that the best measure of market share is total time spent.

So are subscription video on demand (SVOD) providers such as Netflix, HBO Max, and Paramount+ – which charge fees and offer premium scripted content and live sports – their own market? Are cable and broadcast a distinct market? Or is the relevant market a broad universe that includes SVODs, free ad-supported streaming platforms such as YouTube, cable, broadcast, and social media?

The answer is found by looking at who antitrust is intended to protect: consumers.

According to Nielsen’s “The Gauge,” consumers now watch more streaming on television sets than cable and broadcast combined. Streaming now accounts for 47 percent of viewing time while cable and broadcast together account for 42.7 percent. And the single largest share of viewing goes not to an SVOD provider, but to YouTube at 12.5 percent. Netflix trails at 8.8 percent and Disney+ is at 4.9 percent. YouTube also leads in mobile device viewing.

When the most watched platform is free, ad-supported, and creator driven – and when cable and broadcast still hold over 40 percent of television viewing – it’s unrealistic to view the relevant market in limited silos. Consumers are choosing among all video options competing for their time. That is substitution.

Media analyst group MoffettNathanson called YouTube “the new king of all media,” and competitors are responding. SVOD platforms are recruiting YouTube content creators. Amazon is paying YouTube’s biggest star, Jimmy Donaldson (aka MrBeast), $100 million to create “Beast Games” for Prime Video. Netflix and Warner Bros. Discovery have also hired prominent YouTubers, including Mark Rober as well as Jake and Logan Paul.

Content models are also converging. Podcasts – long a YouTube staple – now appear on Netflix, Paramount+, Disney+, and Peacock.

SVOD providers are sourcing YouTube talent and content because they recognize YouTube as a substitute competing for viewer attention. Indeed, one of the findings of the Meta court case was that Facebook and Instagram had been remodeled to resemble TikTok, making TikTok an “even closer substitute.”

Streaming pricing tells the same story. Initially SVOD platforms only offered ad free subscription options but now have adopted subscription options with lower fees that include ads. YouTube offers its regular free ad-supported version and also has a paid subscription service without ads. These strategies are aimed at consumer reaction to price differences.

But SVODs and YouTube aren’t the full story. Although declining, cable and broadcast still account for 42.7 percent of television viewing time, showing they are still very much in the competitive mix. They offer a wide array of live sports, news and entertainment programming. Their content is increasingly repurposed across streaming and social platforms, blurring boundaries even further.

And competition is widening. Social media has been known for short form video but platforms such as X, TikTok, and Facebook now host long form live stream and on-demand video content, ranging from politics and concerts to creator content. The boundaries between social, streaming, and television are dissolving. Gen Z now spends more time on social media and uses social media for entertainment more than any other platform.

Despite the facts, some still see narrow markets. Columbia professor Tim Wu argues that considering SVODs and other platforms in the same market is:

 …driven by a false equivalence: that because watching “The Wire” and watching a TikTok video both involve a moving image, they are rivals for your attention. This is a little like insisting that Maxim’s and Pizza Hut are competitors because they both serve food in exchange for money. The law can’t be that stupid.

Professor Wu misses the point. Consumers are speaking clearly. They use YouTube more than any individual SVOD platform. They watch streaming more than cable and broadcast. They move fluidly among paid and free options. They reward platforms that capture their attention and abandon those that do not. The law can’t be so stupid that it ignores actual consumer behavior.

The relevant market for video programming is not made up of silos of services. It is a broad, dynamic ecosystem of platforms – paid and free – competing for the same scarce resource: viewer time.

Whatever the proposed deal, consumers are defining the market. Sound analysis begins there.