Last semester, I wrote about the state of streaming as we knew it. I spoke about emerging out of Covid and people’s attention changing to other things in life. As time has progressed since then, the rocky state of streaming seems more evident, with companies now simply strategizing in the name of impressing shareholders and actually making money from these services.
Recently, Netflix, the main “independent” streaming service, dipped its toes into a controversial move: banning password sharing. This article has more specific information, but basically, the streaming giant is looking to make more money by limiting the amount of people on each account. This was met with public outrage, causing the company to step-back on its original intentions, saying it would only be testing in international markets.
Unlike Netflix, most of the other streaming services are owned by a larger entertainment/media corporation. For example: Disney owns Disney Plus, Hulu, and ESPN Plus; Comcast owns Peacock; Paramount owns Paramount Plus and PlutoTV; and WarnerBros Discovery owns HBO Max and Discovery Plus. Streaming of course became a focus for these companies during the pandemic due to the circumstances, but as stay-at-home life has come to an end, these business units are struggling to stay afloat. Many are raising prices and adding advertisements, but these common go-to’s are not providing the needed benefit.
To combat this struggle in demand/market, many of these media corporations are looking at merging, with WarnerBros Discovery finding themselves moments away from announcing a merger between its streaming services, with one likely consuming the other. However, Deadline has recently reported that the company has abandoned its plans to do so, shifting strategy given each services’ respective upcoming slate. WarnerBros Discovery is of course not new to a merger, given its own just last fall, which led to a rocky few months as all the puzzle pieces painfully went together.
Disney is also reportedly looking at changing up its own streaming services, as Bob Iger returned as CEO recently due to his predecessor/successor’s failure with Disney Plus. The company recently reorganized its devisions, singling out ESPN as its own entity with many speculating that this could lead to its eventual sale. This area has notoriously been a trouble for Disney, given the cost of sports streaming and unfavorable level of ESPN Plus subscribers. The company also has a 66% controlling ownership in Hulu, with its rival Comcast owning the other 33%. Disney needs to either buyout Comcast’s share or sell its portion out by the end of this year. With the company already struggling with debt from their Fox purchase in 2019, Bob Iger is looking to sell the whole streaming service to Comcast. Deadline reports that he is open to this possibility as the deadline looms.
I think the main issue that many media companies are currently dealing with is being too large for what they can handle. Generally, their industry strived during the last few years, but their continued heavy growth may have been too optimistic. As economic uncertainty shakes consumers, many are cutting the cost of streaming or theme parks as their money can be better utilized, especially when they simply do not watch anymore. These companies are looking to become leaner and more streamlined as they strategize to fully recover from the effects of the pandemic. These next few months will be very interesting in the streaming world as parent companies try to finally make these services profitable-or at least break even.
References
- https://www.cnet.com/culture/entertainment/netflixs-password-sharing-crackdown-has-begun-everything-to-know/
- https://deadline.com/2023/02/warner-bros-discovery-abandons-plan-to-merge-hbo-max-discovery-plus-streaming-1235253134/
- https://deadline.com/2023/02/disney-bob-iger-open-to-selling-hulu-1235254445/
Hey Gabe, great post! It makes sense that streaming services are facing some trouble as the world emerges from the 2020 pandemic. However, I didn’t know how serious this problem actually is for these corporations. I also didn’t know that Comcast owns 33% of Hulu. Most importantly, if Netflix starts cracking down on password sharing I’m going to riot.
Gabe, this blog was a very interesting insight into the business of streaming services. In the modern day, the number of streaming services is almost overwhelming, so I wonder how everything will play out in the industry. In my opinion, the current number of streaming services is unsustainable, so I am definitely expecting a major shakeup in the industry sooner or later.
Nice blog post Gabe! I was super confused whenever Netflix made the decision to ban password sharing. I feel like this would detract a lot of their audience since it’s such a popular feature. So, it’s interesting to read how their main goal is to make more revenue. Overall, I am interested to see how these streaming industries will progress in the future. I wonder if they will be less or worse off considering how they are being too large to handle.