fbpx

Did Streaming Kill the Entertainment Industry?

Photo from Nicolas J Leclercq via Unsplash

Did Streaming Kill the Entertainment Industry?

By Movieguide® Contributor

With more TV shows and movies at consumers’ fingertips than ever, streaming was certainly a win for the average person, but as multiple major studios face existential crises, a new question is raised: was it the best option for the industry?

In 2019, the major streaming options were Netflix, Hulu and rising star Showtime. That would change when Disney announced its plans to launch a platform for all things Disney, bringing content like Marvel, Star Wars and Pixar exclusively onto one platform: Disney+.

“You could just taste it,” Disney executive Kevin Mayer told TheWrap about the launch of Disney+. “This is going to transform our company, transform the industry, and our shareholders are going to massively benefit from it. We were sure of it. And we were right, by the way. It did happen that way — until it didn’t.”

Not wanting to miss out on the massive opportunity, other major studios followed suit, and soon, consumers had over half a dozen options when it came to streaming. With the onset of the pandemic, it seemed the boom of streaming could not have come at a better time as watch time ballooned to unseen heights worldwide.

Then, everything came crashing down. As restrictions from the pandemic started to ease, a decade of strong growth for Netflix came to an end as the streamer posted a loss in subscribers in Q1 2022, causing the streaming bubble to burst.

Up to that point, Wall Street had been happy to swallow losses as long as subscribers continued to grow. Then, overnight, investors started clamoring for profits. The timing could not have been worse for the platforms built by major studios which had gotten up and running on the subscriber growth mindset but had yet to amass a large, loyal fanbase that would allow it to suddenly turn a profit.

While Netflix immediately took action, announcing a password-sharing crackdown, price hikes and the introduction of an ad tier, other streamers were slower to follow suit — though they would eventually copy the model — for fear of driving subscribers away.

Fast forward to today, Netflix is the only streamer to consistently turn a profit, while the other platforms are fighting for the lives of their companies. This is because the boom of the streaming market inadvertently killed both the box office and cable, which had been the primary income sources for Hollywood studios for decades.

This has left many studios, like Paramount, in dire straits as their future rests on streaming, which is currently losing these companies billions of dollars every year. Even though many of these major studios still hold the largest chunk of viewership when streaming and legacy media usage are combined, per a new metric from Nielsen, their audience is slipping, while companies built from the ground up on new media, such as Netflix and YouTube, only continue to grow.

However, this did not have to be the case. Rather than jump on the streaming bandwagon, studios instead could have decided to license their content and skip the logistics of how to turn a profit from subscribers. This path has turned out quite well for Sony, the only major studio to go this route.

“They don’t throw away money at a streaming service,” Ross Benes, a senior analyst at eMarketer told TheWrap. “Instead, they profit off other legacy companies trying to compete with the new kids.”

While it was inevitable for some studios, like Disney, to enter into the streaming space, others, like Paramount or NBCUniversal, could have followed the Sony route into licensing. In hindsight, that would have been the better option, but in 2019, building a streaming platform was too lucrative to pass up. While many studios are now suffering because of their ambition, not all hope is lost. Though the strategies of the past no longer seem to work, new approaches and new leadership could prove to be enough.

“We’ve reached a point of no return for studio heads to understand this, as they are hopelessly clueless,” Michael Pachter, an analyst at Wedbush Securities, told TheWrap. “But a new generation of studio leadership can salvage this.”

Movieguide® previously reported on the streaming industry:

YouTube continues to dominate streaming, a title it’s held for over a year and a half, causing other players in the industry to view it as both a friend and a foe.

Nielsen’s May 2024 TV usage report revealed that YouTube accounted for 9.7% of all TV usage that month, handily beating out Netflix’s second place 7.6% of TV usage, which was more than double that of any other platform. This marked nearly a year and a half of holding the crown just above Netflix’s head.

While YouTube isn’t typically thought of as a streaming service, its dominance in the TV space puts it at odds with traditional media, causing streaming platforms to consider it when creating their long-term strategies.

Disney, for example, has turned to YouTube’s massive audience to promote its content, particularly children’s content, posting clips from upcoming shows to generate hype. While it has yet to do so, it has also considered posting full episodes of shows from Hulu and Disney+ onto YouTube to entice viewers to subscribe to its platforms.


Watch THE NINTH DAY
Quality: - Content: +1
Watch THE ASTRONAUT FARMER
Quality: - Content: +1