Netflix rode out a difficult 2022 to emerge significantly ahead of its rivals. To compete, the other players have already tried aggressive price hikes and savage content culls. Consolidation would appear to be next up in the playbook.
“For much of the past four years, the entertainment industry spent money like drunken sailors to fight the first salvos of the streaming wars. Now, we are finally starting to feel the hangover and the weight of the unpaid bar bill.”
Michael Nathanson, analyst
Disney, Warner Bros Discovery, Comcast and Paramount lost a collective $5 billion in the 2023 battle for our streaming subscriptions. Put that against the backdrop of a weakened advertising market, declining TV revenues and higher production costs and it might not come a surprise to learn, in the FT, that they are (individually) looking at ways to reduce costs and somehow get into profit, with some drastic options under consideration.
“TV advertising is falling far short, cord-cutting is continuing to accelerate, sports costs are going up and the movie business is not performing. Everything is going wrong that can go wrong. The only thing [the companies] know how to do to survive is try to merge and cut costs.”
Rich Greenfield, analyst, LightShed Partners
For example, the sale of Paramount to Skydance or a merger with Warners, who, in turn, have been linked with a takeover by Comcast, are said to have moved beyond the rumour phase.
“The right answer should be, let’s stop trying to be in the streaming business. The answer is, let’s get smaller and focused and stop trying to be a huge company. Let’s dramatically shrink.”
Rich Greenfield, re. merging Paramount and Warners
Disney lost more than $1.6 billion from its streaming businesses, gained 8 million Disney+ subscribers and cut 7,000 job amid shareholder revolt. Chairman Bob Iger also spent the year considering the fit of some of its business units within a newly-shaped group.