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Streaming wars are over: What’s next for media

admin by admin
May 11, 2023
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Streaming wars are over: What’s next for media
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Robin Beck | Afp | Getty Images

I’m calling it The streaming wars are over. 2019-2023. RIP.

The race among the largest media and entertainment companies to add streaming subscribers has ended because consumers know they will only pay for a limited number of subscribers. Indeed, the participants are still running. They are no longer trying to win.

disney The company’s flagship streaming service, Disney+, lost 4 million subscribers in the first three months of the year, announcing the company’s streaming subscriber count fell from 161.8 million to 157.8 million. Did. Disney has lost 4.6 million customers to his Indian streaming service, Disney+ Hotstar. In the US and Canada, Disney+ subscribers fell by 600,000.

It has become clear that the largest media and entertainment companies are operating in a world that no longer sees massive growth in streaming subscribers. Netflix Added 1.75 million subscribers It reached 232.5 million worldwide in the first quarter. warner bros discovery add 1.6 million 97.6 million people landed.

The current big media narrative is about monetizing streaming. Warner Bros. Discovery announced last week that its U.S. direct-to-consumer business posted a profit of $50 million in its fourth quarter and will remain profitable this year. Netflix’s streaming business turned profitable during the pandemic. Disney announced Wednesday that its streaming losses narrowed from $887 million to $659 million.

read more: Iger praises rival Universal’s ‘Super Mario Bros. Movie’

Netflix has curbed content spending growth, with Warner Bros. Discovery and Disney both announcing thousands of job cuts and billions of dollars in content spending cuts in recent months. Chief Financial Officer Christine McCarthy said on Wednesday’s earnings call that Disney will “produce less content” going forward, but Chief Executive Bob Iger said that it will He said he did not believe it would have an impact on subscriber growth.

There is still some growth among smaller players. of NBCUniversal Peacock Acquisition We had 2 million subscribers in the last quarter and now we have 22 million subscribers. Paramount Global Added 4.1 million subscribers this quarterputting it at 60 million subscribers.

But the key question isn’t looking at growth rates, it’s investors’ reaction to growth rates.Paramount Global 28% drop in one day last week After the company announced it would cut its dividend from 25 cents per share to 5 cents per share to save cash.

Disney+ Hotstar subscribers earned just 59 cents, up from 74 cents last quarter. Disney seems fine with losing these low paying customers. Disney gave up streaming rights to Indian Premier League cricket last year. These rights were acquired by Viacom18 for $2.6 billion. A minority shareholder of Viacom18 is Paramount Global.

Disney also announced price increase The ad-free Disney+ service will launch later this year. Disney’s average revenue per user for US and Canadian subscribers increased 20% in the most recent quarter after yet another price increase announced last year. If growing subscribers is a priority, large price increases are typically not a strategy used by executives.

what’s next?

Raising prices and cutting costs is not a good growth strategy. Streaming was a growth strategy. Perhaps with a cheaper ad tier and Netflix’s impending crackdown on password sharing, it’ll come back a bit.

However, growth is highly unlikely to return to the levels seen in the early days of the pandemic and mass streaming.

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Netflix (NFLX) earnings 2Q 2023

This probably means that the media and entertainment industry will need a new growth story soon.

The most obvious candidate is gaming. Netflix has launched a fledgling video game service.comcast Considering buying EA last yearfirst reported by Pack. microsofts activision contract It is now at risk after UK regulators blocked the deal. If the acquisition fails, Activision It could be a target for legacy media companies looking for more exciting stories to tell their investors.

in the meantime Disney shuts down Metaverse division Blending intellectual property and gaming as part of recent cost cuts seems like an obvious match. You can easily imagine the growth potential of doing.

More consolidation will eventually occur among legacy media companies. But the acquisition of one major gaming company could have ripple effects in the industry.

Perhaps Game Wars is the next chapter.

Disclosure: NBCUniversal is the parent company of Peacock and CNBC.

Tags: Activision Blizzard IncBulletin: BusinessBusiness newsMediaMicrosoftNetflix IncParamount Globalstreamingtechnologywalt disney companyWarner Bros. Discoverywarswhats
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