The Streaming Wars Are Over
CNN Business was informed by Michael Nathanson, a MoffettNathanson media analyst. "The streaming wars have ended since subscriber growth has stopped," Nathanson said. "You're fighting a battle in a land which has no resources in it."
Disney announced Thursday that Disney+ had added 14.4 million subscribers in the third quarter. This was higher than what was anticipated. Another big announcement was that Disney+ will increase the cost of its advertising free service by $3 per monthly, after having lost more than $1 billion from streaming.
Despite Disney+'s growth in the third quarter, the company announced it was revising its long-term forecasts for the platform. Disney is only one of many streaming providers who have revised their strategic plans lately.
David Zaslav, Warner Bros. CEO. Discovery has pulled back a number of big budget projects for HBO Max, while also affirming that he's not out to win the streaming "spending war." Zaslav's strategy is the opposite of the approach taken by his predecessor Jason Kilar, whose focus was to put the most content possible on HBO Max, no matter the consequences.
After losing subscribers for two consecutive quarters, Netflix's growth has slowed. Game servers Its stock has plummeted by around 60% so far this year. And, in a bid to course correct the company is changing itself from a streaming revolutionary to a modern-day legacy media company. It will offer a lower-cost alternative that is ad-supported as it previously stated it would not do. It will also crack down on password sharing, something it claimed helped it grow.
"When the streaming wars officially began in late 2019, early 2020, the major services have laid out their five-year plans," Matthew Ball, CEO of Epyllion an investment and advisory firm, and former Amazon Studios executive, told CNN Business. "We're close to achieving them so the executives need to ask themselves if their targets are achievable or even desirable. This has led to many strategy modifications - as it is expected to."
So streaming is changing However, If the wars over streaming is coming to an end what's next?
The Rumble of the Bundles
Disney+ gained subscribers but also raised prices.
Nathanson believes that the next phrase of the streaming revolution will be one of consolidation and bundling.
He also said that services can be combined to create new services or Disney is trying to do the same thing and bundle three or four services. Bundles are effective, as we saw with pay-TV. You can have broadband, phone and video all in one place. That worked for a time.
It's not surprise that Disney raised the prices of several of its tiers, but didn't alter its premium Disney bundle which includes Disney+, Hulu, and ESPN+. It remains $19.99.
This seems to be Disney's strategy of encouraging consumers to sign up to its entire slate of services rather than only one.
HBO Max and Discovery+ will join in the coming year
Warner Bros. Discovery is also on the path to consolidation. Last week, the company announced that the long-awaited merger of its services, HBO Max, and Discovery+, would be made available in the United States by summer.
So if the initial phase of the streaming revolution was known as the "Streaming Wars" the next phase could be called the "Rumble of the Bundles."
Ball believes that big media companies will continue to do the same thing they have always done: "operate across multiple media categories."
He said that Hollywood has been focusing mainly on streaming video. But they are now shifting their focus to other areas. "More gaming, sometimes blockchain/NFT, experiential exhibits, etc."
The streaming wars have ended. Streaming will live for the foreseeable future.
Netflix is getting better, and so is the rest of streaming.
With streaming transforming into something new, consumers are expecting a shock to the system.
Streaming has taught millions of viewers around the world to expect a wide array of ad-free content at a low price. Nathanson stated that this expectation was not sustainable.
"Wall Street was paying people for subscribers, and since it paid people to be subscribers, companies didn't care about the economics," he said. "They were willing and able to do anything to get subscribers."
Netflix isn't in serious trouble. It's evolving into a media company
In other words, the"grow at any cost" strategy will never work and we're now at a point at which businesses and Wall Street are looking at balance sheets and paying attention to revenue and profitability as much as they can.
The reality is that streaming wars are over and consumers are paying for the loss. However, there is no other option for them to go.
Streaming is here for the long-term. It's the mainstay of Hollywood and how millions watch TV shows and films. While the strategies and dynamics of the businesses behind them are changing, it's not going to change.
Ball stated that video is the most popular leisure activity around the globe. "Streaming may change but consumers will change. They are addicted to video."