Streaming Strategies: Competition, Consolidation, & Impact

Growing competition, content consolidation, and shrinking audience wallets are causing streaming strategies to change dramatically as companies like Paramount Global (Paramount+, Showtime, Noggin, BET+ etc.), Warner Bros. Discovery (HBOMax, Discovery+), Disney (Disney+, Hulu, ESPN+), and Netflix each pursue big changes to woo viewers back to the subscription table. Paramount Global believes their winning distribution strategy to be a wide theatrical release followed by a short window to streaming for film, while for television the ROI is primarily seen as generated from legacy content on their major network, CBS. Paramount+ reported 43mm subscribers at the end of Q2 2022.

Warner Bros. Discovery still shall combine services into one platform, but CEO David Zaslav has been diving into “synergies,” or cuts. The first was CNN+, followed by removing certain films made for HBOMax from the platform, before canceling the release of the $90mm feature, Batgirl. The theory behind these measures is according to Zaslav, to acknowledge an economic model that does not support underperforming or “expensive” D-T-C content. Unlike former CEO Jason Kilar who released Warner Bros. films day & date on HBOMax in 2021, Zaslav affirms Warner Bros. will embrace theatrical and linear businesses moving onward. Warner Bros. Discovery reported 92.1mm subscribers at the end of Q2 2022.

Disney and Netflix each in an effort to appeal to audience’s shrinking wallets, are on track to launch their ad-supported versions (AVOD) this fall and winter, respectively. Disney sold a record $9 billion dollars in advertising at Upfronts in 2022 with ads intended for its AVOD platform Disney+, which includes programming from network ABC, the Disney Channels, ESPN, ESPN+, Freeform, FX, Hulu and National Geographic. Sports programs also helped ad sales while rates for ads increased due to the massive presence of consumers who are streaming in the content market. The new Disney+ AVOD will cost the same as the current, ad-free version, which will increase by $3/ month to $10.99, a 38% price increase (but still cheaper than Netflix!) Hulu will also increase its cost by $1 for ad-supported and $2 for ad-free versions.

Disney has at last surpassed Netflix in number of subscribers, with 221.1mm over Netflix’s 220.7mm. In Q2 2022, Netflix lost another roughly million subscribers while Disney added 14.4mm to Disney+. In an effort to change that paradigm, Netflix will also be adding an ad-supported version, partnering with Microsoft, who will handle sales and tech for the conversion around the early part of 2023. Ideally, the rollout will hit North America first, where subscriber shrinkage has been the greatest, before launching in other territories.

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