TV’s Golden Era Proved Costly to Streamers

Consumers are winning from the streaming revolution but across most of Hollywood, the businesses churning out TV and movies are losing. 

Services such as Netflix, Disney+, Paramount+ and Max have become the default entertainment options for homes across America rather than cable, saving many consumers money. 

For the titans of Hollywood, that shift has been costly. Traditional media and entertainment companies have reported losses of more than $20 billion combined since early 2020 on their direct-to-consumer streaming businesses.

Netflix, which brings in profits, is an exception, but the rest of the industry is wondering: While consumers love streaming, is it actually a good business?

Investors now care about profitability rather than growth, a change that makes finding new revenue streams and retaining customers critical. Studios that for years were able to splurge on content to feed viewers’ insatiable appetite for new shows and films now must pull back to make the math work. The ad market is weakening, many companies have laid off staff to save money and Hollywood writers are on strike.

Market values for Paramount Global, Comcast, Walt Disney and Netflix are down more than $280 billion combined since the end of 2020. Warner Bros. Discovery is worth about half of its total value since its 2022 trading debut as a combined company. The declines have come after many of the stocks rose during the early part of the pandemic, when consumers were stuck at home and hungry for entertainment.

While Netflix suffered a share slump after losing customers for two quarters last year, its recent password-sharing crackdown has driven its stock higher. Its share price is up about 22% since the company’s new rule went into effect in late May. 

Adding to streamers’ woes: The U.S. market has grown crowded. Consumers have a lot of choices when it comes to video subscriptions and are getting pickier about what they pay for, regularly turning subscriptions on and off. Collectively that has had a chilling effect on new subscriber growth. 

That slowdown in growth has prompted a new chapter of austerity in which many studios are reining in content spending and weeding out underperforming shows and films in their streaming libraries. Warner Bros. Discovery and some of its rivals have purged catalogs as a cost-cutting measure. 

This new, leaner entertainment environment was taking shape before the Hollywood writers’ strike. Now, the writers’ strike is interrupting productions and causing studios to pull back on ordering new series. 

Some companies are closer to maintaining their levels of show orders than others.

More than half of the scripted titles currently in the works from Sony Group and Netflix are overseas productions, which could help them continue to produce new content during the strike by U.S. writers.

Write to Nate Rattner at [email protected] and Sarah Krouse at [email protected]