Christian Grece’s Post

Content may be king, but content no one watches is akin to hiring a bad jester. Apple along with other streaming services not named Netflix has discovered that splurging on content for the sake of content won't generate subscriptions. After spending more than $20 billion on original TV shows and movies that not a lot of people watch, Apple is refining its strategy in Hollywood. Money can't buy viewers. While Netflix's profits are soaring, the rest of the streaming industry continues struggling to break even and reduce subscriber churn. Apple has been a big spender when it comes to content, but as they say, quality matters more than quantity. While Netflix still outspends everyone, Apple hasn't been exactly been shy when it comes to opening the digital wallet. The Apple conundrum...for its part, Apple has shelled out over half a billion dollars for films directed by Martin Scorsese, Ridley Scott, and Matthew Vaughn, while investing more than a quarter of a billion dollars in the World War II miniseries Masters of the Air, one of many new series launched this year. Unfortunately, they were all viewing disappointments. On the original programming side, the company has spent billions of dollars a year for content that has received strong reviews and awards nominations. But those acquisitions have resulted in attracting just 0.2% of TV viewing in the U.S. and poor subscription growth. No longer the apple of Hollywood's eye. Apple is rightfully changing tactics, paying less upfront for shows and being quicker on pulling the plug that aren't clicking with audiences. It's an approach along with scaling back on budgets that the streaming industry is now embracing after years of content spending sprees. The industry faces bigger issues. Streaming companies, unfortunately, have become little more than the legacy cable-TV services they sought to replace. From bundling to jacking up subscription rates, streaming is doing very little to actually drive engagement with subscribers. Value is important to subscribers, and currently streaming companies have turned to tactics that we've seen before with cable-TV. Sure, they're spending a bigger portion of their budgets on live events such as sports and concerts, but that doesn't address the real issues. Case in point, YouTube is in fact the top streaming company (not Netflix) in the U.S., and it's done so with short-form and user-generated video. That has worked to drive engagement and even dialogue between users and YouTube, something that audiences obviously like. For streaming services, the theme is to keep down the costs and scrutinize existing budgets. While that may right the ship in the near term, that may not be enough for the long term https://lnkd.in/gMqAq45P #appletv #netflix #streaming #hollywood #television #movies #digitalcontent #subscription

🏚️Streaming’s Financial Strain: Legacy media giants like Disney, Paramount, and Warner Bros. Discovery are facing significant losses in streaming, questioning the sustainability of the current model. 📺Subscriber Threshold: Executives believe that to be profitable, a streaming service needs at least 200 million subscribers. Only Netflix, Amazon, and Disney+ (combined with Hulu) have crossed this mark. 💲Content Costs & Risks: Streaming giants like Netflix and Amazon are investing billions in original content, with shows costing up to $50 million per episode, underscoring the high stakes and risks involved. 🏈Live Sports as a Lifeline: The soaring costs of live sports rights are a critical battleground. Streaming services are betting big on sports to attract subscribers and reduce churn. 🦦Advertising’s Role: With ad-supported tiers gaining traction, streaming platforms are leveraging targeted advertising as a crucial revenue stream. 💰Market Consolidation: The future may see only a few dominant streaming services (e.g., Netflix, Amazon, Disney/Hulu), while smaller players may shrink, merge, or exit the market. 🔄Bundling as a Strategy: Smaller streaming services are exploring bundling as a way to increase value and attract subscribers, though the economics remain complex. 🪪Sony’s Unique Approach: Unlike competitors, Sony has adopted a profitable “arms dealer” strategy by licensing content rather than competing directly in general streaming. https://lnkd.in/dkwtGpqf

✅🖥️ New York Times (6/22): “Streaming has long been hailed as a promising business, because companies like Netflix can add additional subscribers at little extra cost. The more paying subs a service has, the more the company’s costs can be spread out over a large base, lowering the cost per sub. But those want lots of options, and the costs of making enough programming can be enormous. As a result, a streaming service’s profitability depends in large part on how many paying subs are needed before those TV shows and movies become cost-effective. There was a time when industry execs hoped that number might be as low as 100MM. But now the consensus among many of the executives interviewed is that the number is at least 200, and possibly more. “If you’re going to be a full entertainment service with live sports and tent-pole blockbusters today, 200MM is a number that can give you the scale with the hope for growth over time,” Amazon (execs have) said. Bob Chapek, Disney’s CEO until 2022, also agreed that 200 was the number that meant “you’re big enough to compete.” Netflix has reached that, and then some, with about 270MM paying subs. Moreover, those pay an industry-leading average of more than $11 per month. Netflix is highly profitable, with operating margins of 28 percent. In the first quarter of 2024, Netflix reported revenue of $9.4B, and $2.3B in net income. No one else comes close. Disney and Amazon are the only other streaming services with more than 200MM subscribers.” ⬇️ #streamingtv #ctvadvertising #avod #svod #ott #fast #upfronts

Not long ago, streaming TV promised an ad-free experience, with giants like Netflix, Amazon Prime Video, and Disney+ leading the charge. Fast forward to today, and commercials are making a strong comeback across these platforms. While this shift may seem like a step back to some, it presents an enormous opportunity for advertisers. Why It's Exciting: Targeted Ads: Streaming services offer a data-rich environment, allowing for highly personalized and relevant advertising experiences. Increased Reach: With 170 million ad-supported subscriptions and counting, advertisers can now tap into a vast and engaged audience. Innovative Formats: New advertising formats are less intrusive, with shorter ad times compared to traditional TV, enhancing viewer experience while maintaining ad effectiveness. As the landscape evolves, advertisers can leverage these trends to craft compelling campaigns that resonate with viewers like never before. The future of streaming TV is bright for advertisers ready to innovate! 🌟📺 #StreamingTV #Advertising #MarketingInnovation #DigitalMarketing #MediaTrends Keynes Digital https://lnkd.in/egbt8gmT

Great article + summary of the streaming environment.

From Reuters: The latest quarterly results have shown signs of a turnaround at the storied media company, suggesting that Iger may be getting the House of Mickey Mouse in order by focusing on its streaming business. Disney on Thursday reported its second straight quarterly profit for the streaming business, riding on cost-cutting measures and a 4.4 million jump in subscribers after it started cracking down on password-sharing by users. Its $253 million operating profit for the streaming business in the fourth quarter nearly offset the $307 million that its traditional television business shed in operating income. The hope is that The Walt Disney Company's streaming business will start to do more "heavy lifting" as it improves and linear television declines, said Ben Barringer, technology analyst at Quilter Cheviot. "It has the tech and the product in Disney+, it now just needs to utilize it in the right way to drive profit growth and challenge the other streaming giants," he added. The company began cracking down on password-sharing in June, following in the footsteps of streaming giant Netflix, betting it would lead to a jump in subscriber numbers and higher revenue. "The right way to think about Disney is to add together the shrinking linear #TV business and the rapidly growing direct-to-consumer business, because Disney is hedged," Needham & Company senior research analyst Laura Martin said. The company continues to produce original programs such as "Only Murders in the Building" for Hulu and "Agatha All Along" for Disney+, but it also relies on new film releases to spur viewership of related content. For instance, the release of "Deadpool & Wolverine" and Pixar Animation Studios' "Inside Out 2" prompted users to watch older movies in the franchise this year, company executives said. "Theatrical #film is the engine behind its powerful flywheel and continued success at the box office will help translate to continued #streaming engagement," said Wade Payson-Denney, #media analyst at Parrot Analytics.

In a letter to its shareholders a few weeks ago, Netflix made it clear that subscriber numbers are not the only metric that illustrate its growth. Its focus to develop this advertising revenue stream is another demonstration of the exciting opportunities that it can offer. Netflix's introduction of the advertising tier in 2022, made it ahead of the curve in regards to advertising on streaming platforms and its business moves continue to bring insight into the future of the advertising in this sphere. Mike Proulx, VP and research director at Forrester, spoke to The Current, 'There are only so many net-new subscribers [streamers] can chase, especially in a world now where there is so much competition and consumer choice....I think there is going to be a disengagement between revenue and subscriber numbers due to the growth of their ad-supported business.' Read more about the strategic developments in the Netflix advertising here: https://hubs.li/Q02xWcm60 #DigitalMarketing #Netflix #news

🎬 𝗡𝗲𝘁𝗳𝗹𝗶𝘅'𝘀 𝗣𝗿𝗶𝗰𝗲 𝗛𝗶𝗸𝗲𝘀: 𝗧𝗵𝗲 𝗦𝘁𝗿𝗲𝗮𝗺𝗶𝗻𝗴 𝗚𝗶𝗮𝗻𝘁'𝘀 𝗪𝗶𝗻𝗻𝗶𝗻𝗴 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆 Netflix has once again raised its prices, and it's not just about funding new content. Here's why this move signals Netflix's dominance in the streaming industry: 1. Unrivaled Cultural Impact Netflix has become indispensable to mainstream culture, producing hit originals like Stranger Things and Squid Game that rival HBO's appointment TV. 2. Diverse Content Offerings From high-end TV shows to sports events and reality programs, Netflix now offers a "cable bundle" for the streaming era. 3. Competitive Pricing Despite price increases, Netflix still offers significant value compared to traditional cable subscriptions, with users watching an average of 2 hours daily. 4. Strategic Ad-Supported Tier The company is nudging users towards its ad-supported plan, which is more profitable for Netflix. 5. Ambitious Growth Plans Netflix is exploring live sports, video games, and creator-driven content to capture an even larger entertainment market share. The bottom line? Netflix can raise prices because it has won the streaming wars. As co-CEO Greg Peters puts it, they're tapping into just 6% of their revenue potential in current markets. #Netflix #StreamingWars #EntertainmentIndustry #BusinessStrategy

People dump on big media for being too slow to make the transition to streaming. But cable networks routinely delivered 40% profit margins while Netflix hovers between 10-20%. Innovator's dilemma is tough in general, but even harder when the business you're supposed to become will (in success) have half the margin of your legacy business. In hindsight, one could argue that the ultimate mistake was trying to compete on Netflix's terms vs just evolving the cable bundle to look more like a streamer. Big media could have allowed Netflix+Amazon+Apple to be the streamers and focused on 1) keeping quality content in the cable bundle (not just sports) and 2) updating the UX for the streaming era. Many execs argued for this strategy and were ultimately shouted down for not being 'innovative'. But if there was no Disney+, Max, Peacock, Paramount+, etc and all that content continued to go first window to cable, we'd probably have 20-30M more cable subs than we do now, and consumers would have largely transitioned to modern streaming UX via Comcast and Spectrum or vMVPDs like Fubo and YouTubeTV. Big media would have been spared all the costs of the streaming wars, kept 80%+ of cable subs from churning, and have more leverage when negotiating these crucial sports packages today. Coulda, woulda, shoulda. Also worth noting, this pov could be wrong and cable was impossible to save. Or maybe Disney+, Max, etc will be better off having gone through this decade of tumult once their streamers reach scale & profitability. Still, it's nearly impossible to imagine the streamers will ever be as profitable as peak cable.

How Streaming Services Have Hijacked TV and Are Now Repeating the Cycle with Commercials: In the golden age of streaming, many of us flocked to services like Netflix, Hulu, and Amazon Prime to escape the constant interruptions of traditional TV commercials. The allure was clear: uninterrupted binge-watching sessions and a treasure trove of on-demand content. But it seems the honeymoon phase is coming to an end. Fast forward to today, and we’re witnessing a déjà vu moment. Streaming giants are increasingly incorporating commercials into their platforms, either through ad-supported tiers or by sprinkling ads in between episodes. This evolution raises some thought-provoking questions about the future of our viewing experience. From Innovation to Imitation: Initially, streaming services revolutionized how we consumed media, offering a refreshing alternative to cable’s rigid schedules and ad-saturated programming. However, as these platforms seek to expand their revenue streams and balance the costs of producing high-quality content, they’re adopting strategies reminiscent of traditional TV networks. Revenue Models and Market Realities: It’s not surprising that streaming services are turning to ads. The competition for subscribers is fiercer than ever, and original content creation is expensive. By introducing ad-supported plans, these companies can offer lower subscription prices to attract more users while generating additional income from advertisers. This dual approach helps them stay competitive but also brings us back to a familiar, ad-filled territory. What’s Next for Viewers: As consumers, we’re at a crossroads. Do we accept this commercial resurgence as a necessary trade-off for affordable access to premium content? Or do we seek out alternative platforms that promise an ad-free experience? The streaming landscape is dynamic, and our preferences will shape its future direction. Ultimately, the evolution of streaming services reflects broader trends in media consumption and business strategy. While the return of commercials might feel like a step backward, it’s a reminder of the ever-changing nature of the entertainment industry. What are your thoughts on this shift? Are you willing to watch ads if it means paying less for your subscription? #Streaming #MediaTrends #Advertising #DigitalTransformation #ConsumerInsights #EntertainmentIndustry https://lnkd.in/eM8m6gAn