Battle tactics in Streaming Wars 2022 have shifted from outright land capture mode towards building sustainable and defensible positions.
Netflix saw its subscriber lists shrink in the first half of the year after a bump caused by COVID — sending the industry leader scrambling to find new areas for growth. The company quickly rolled out an ad-supported category, in a reflection of its years-long resistance to the idea, and aims to try to monetize rampant password-sharing in 2023. Media conglomerates such as Disney, NBCUniversal, Paramount Global, and Warner Bros. Discovery had to justify streaming investments, as Wall Street refocused on bottom lines rather than subscriber numbers.
In 2023, for major streaming services, “there is an intense focus on profitability and free cash flow generation” amid uncertainty about which way the economic winds will blow, notes John Harrison, Americas media and entertainment lead at EY. “We are moving to the really big decision point for media companies where they need to reaffirm their commitment to going direct to the consumer,” he adds. [streaming] — to make it as strong and attractive as possible — or they should say, “In the long run, this isn’t going to be as big as we expected it to be.”
Here are five key questions heading into the new year for the sector.
How will Bob Iger recalibrate Disney’s streaming strategy?
Iger returned to the position of CEO of Disney, replacing the ousted Bob Chapek. Egger has already indicated that he intends to step back from Disney+’s “aggressive marketing and serious content spending” in favor of profitability. How exactly that will be implemented in 2023 is an open question. Michael Nathanson, principal analyst at MoffettNathanson, opined in a research note this month that the Disney+ service would be better served by focusing on “premium branded IP” rather than general entertainment or sports. “We believe new CEO Bob Iger should address the long-term viability” of Disney+’s previous growth goals “and reduce investment in general entertainment content,” Nathanson wrote. On a similar note, there’s the question of future Hulu ownership (Comcast may sell Hulu’s 33% ownership interest to Disney as early as January 2024, conversely, Disney could ask Comcast to sell it at that point). Chapek has expressed interest in striking a deal with Comcast to bring Hulu fully into the fold of the Mouse House sooner rather than later. Iger may have different ideas about Hulu’s strategic value to Disney going forward.
Will Netflix’s Layer of Ads and Password Sharing Move the Needle?
Netflix sees an opportunity to generate millions in new revenue by powering ad-supported streaming, while it will also start bothering password-sharing breachers to pay ill-gotten account holders in early 2023. How well the company will implement these plans remains to be seen. to look at her. Third-party data indicates that the ad layer is off to a relatively slow start. The revenue Netflix can generate from customers who share the account, however, will be determined by how aggressively the company intends to pay it — and the signs point to a gentler honors system approach, at least initially.
What will the HBO Max-Discovery + Platform look like?
Warner Bros. hopes. Discovery’s combined HBO Max-Discovery+ platform, which is set to debut in the US next spring, proves that the whole can be greater than the sum of its parts — and helps justify Discovery’s massive acquisition of WarnerMedia. But it’s still not clear how WBD will manage the transition: The company hasn’t announced pricing or packaging details, let alone a group name (“Max” is among the contenders). At a high level, EY’s Harrison says it makes sense for streaming providers to move toward consolidation and bundling. “For all companies with multiple streaming applications … there has to be a decision as to whether the most compelling proposition is to push everything into one application and reduce friction as much as possible,” he says.
HOW MUCH FAST WILL YOU FAST?
In 2022, ad-supported free-to-air TV (FAST) continues to accelerate. Paramount’s Pluto TV, Fox’s Tubi, Amazon’s Freevee, and the Roku Channel saw gains that in some cases outpaced the growth of subscription-based services. Now others are looking to jump into the fast lane, including Warner Bros. Discovery: WBD announced plans to license certain content that was on HBO Max — including “Westworld,” “The Nevers,” “Raised by Wolves,” and “FBoy Island” — to FAST’s third-party partners. Warner Bros. Discovery president David Zaslav said the media company will “aggressively attack” the low end of the streaming market with its own FAST show launching sometime in 2023.
How will NFL Sunday’s YouTube ticket deal change the game?
Google is betting that football fans will stream the NFL’s Sunday Ticket on YouTube — which will be available for the first time starting in the 2023 season to anyone in the US without purchasing a pay-TV package (as was the case with longtime distributor DirecTV). Google would need to sign up at least 2.25 million Sunday Ticket members to break even on the deal, Baird Research senior analyst Colin Sebastian estimates. But it could turn into a loss for YouTube as the video giant looks to shell out more TV advertising dollars and pack more YouTube TV customers. Under the seven-year agreement, Google will reportedly pay the NFL at least $2 billion annually for the Sunday Ticket.
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