Consumers are winning from the streaming revolution. But in most parts of Hollywood, the companies that make TV shows and movies are losing ground. This is revealed by a report by the Wall Street Journal.
For those in a hurry:
Services like Netflix, Disney+, and Max have replaced cable TV as the standard entertainment option in US homes, which is also true, to some extent, in Brazil.
In the United States, the distribution looks like this:
Transition to streaming
For the titans of Hollywood, this shift in consumer habits has been costly.
Traditional media and entertainment companies have reported losses of more than $20 billion (roughly R$97 billion, at current exchange rates) combined since the start of 2020 in their direct-to-consumer streaming businesses.
Profitable Netflix is an exception. The rest of the industry is asking: While consumers love streaming, is it really a good deal?
Investors are now concerned with profitability rather than growth. This shift makes finding new revenue streams and customer retention essential.
Studios, which for years have lavished content to satisfy the insatiable appetite of viewers, now have to step back to make the math work.
industry falls
The advertising market is weakening, many companies have laid off employees to save money, and Hollywood screenwriters are on strike.
The market values of Paramount Global, Comcast, Walt Disney and Netflix have all fallen by more than $280 billion combined since the end of 2020.
Warner Bros. Discovery is worth about half of its total value since its commercial debut in 2022 as a combined company.
See below the weekly evolution of the market values of the companies mentioned:
The declines followed the rise in many stocks in the early part of the pandemic, when consumers were stuck at home and hungry for entertainment.
While Netflix has seen a decline in shares after losing customers for two quarters in 2022, its recent crackdown on password sharing has boosted its shares.
Its stock price has risen about 22% since the company’s new rule took effect in late May.
Streaming excesses and cancellations
Adding to the streaming platform issues: The US market is crowded.
Consumers have many options when it comes to streaming subscriptions. and they’re getting pickier about what they pay, regularly activating and deactivating subscriptions.
Collectively, this has had a chilling effect on new subscriber growth.
This growth slowdown has led to a new chapter of austerity. In it, many studios control spending on content by canceling underperforming productions in their catalogs.
writers’ strike
This new, leaner entertainment environment was taking shape before the Hollywood writers’ strike.
Now, the writers’ strike is halting production and forcing studios to stop ordering new series.
Check below the difference in the number of scripted orders for new productions for streaming (dark blue) and TV channels (light blue) between May 2019 and May 2023:
The pullback is happening across the industry. Orders for streaming platforms and traditional TV channels were around a third of their levels from the same month in 2022.
However, more than half of the scripted titles currently in the works by Sony Group and Netflix are foreign productions. This can help them keep producing new content as the strike continues.
With information from The Wall Street Journal (in English)
The post The Golden Age of TV Was Expensive for Streaming Platforms first appeared on Olhar Digital.
Source: Olhar Digital
Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.
