Is This the End for Streaming Services?
In 2007, Netflix revolutionized the way the world consumes media. Starting originally as a DVD rental company, the company popularized watching thousands of movies and shows on demand. With the streaming boom seems to have passed, this leaves everyone with one question: how will streaming services adapt to the recent industry wide decline in profit?
In the first fiscal quarter of 2022, Netflix saw a loss of 200,000 subscribers. If the streaming giant is in decline, the sustainability of streaming services is brought into question.
“Streaming is not a profitable business,” Lizzie O’Leary said on Slate. “It is a hard business for almost every single company. If you look at Disney, they’ve got $1.1 billion in operating income loss. If you look at Warner Bros. Discovery, they’ve got I believe $3 billion in operating income loss. They’re spending heavily on streaming, but streaming is not a profitable business for them. It’s not going to be profitable for another two, three years.”
Netflix needed a fast solution to its losses and ultimately landed on three: the cancellation of many shows, increased prices, and locking down on password sharing. While it is a bit too early to see if these changes–and massive Netflix Original hit shows like “Wednesday”–will help the company in the long run, Netflix ended up generating $31.6 dollars in profit in the last six months.
While Netflix is still profiting despite a rocky start in the previous year, other streaming services can not say the same. Peacock, Paramount+, Hulu, HBO Max, and even Disney+, are just some of the streaming services that are losing billions of dollars in profit.
“The big picture is that there’s a ton of red ink, and there would be much, much more if we 1) went back further because some of these services have been bleeding money for multiple years and 2) could see the P&Ls [profits and losses] of Apple and Amazon, which are burning big piles of money on streaming but are so big that it doesn’t matter to them or their investors (for now),” Peter Kafka and Rani Molla said in their Vox article on the ending of streaming boom.
Despite the uncertain sustainability of streaming services, corporations are still trying to find ways to ring as much profit from them as possible. From increasing their prices to mergers and acquisitions, many companies are making deals with others to try and combine their individual streaming services.
Programs on Showtime will be available on Paramount + in late 2023; Discovery merged with Warner Bros making Warner Bros. Discovery, Inc; and, furthermore, HBO Max and Discovery+ will be combining later this year to become one streaming service. There is even a possibility of Disney becoming the full share owner of Hulu in the not-too-long future.
“Disney is the majority owner of Hulu, holding a two-thirds stake, while Comcast owns a third.” Georg Szalai said in his Hollywood Reporter article. “Starting in January 2024, Comcast can use a put option to require Disney to take over its stake, while Disney can tell Comcast to sell its stake.”
With recent mergers, the television timeline could come full circle, marking a drastic change in the streaming industry. In not too much time, shows and movies may once again return to two or three streamlined platforms.
