Streaming video platforms are streaming a lot of cash into their content.
Subscribers may not be enough to keep that rolling in its current form, leaving big names to consider new strategies.
It became clear to streaming services some time ago that cord-cutting and the ensuing subscription wave had leveled off by the end of 2021, just in time for runaway inflation that found consumers looking for the cancel button — and having a hard time finding it.
Just before regulators began scrutinizing the sector and making sure it’s just as easy to unsubscribe, streaming providers began introducing cheaper ad-supported tiers to hold onto those who amassed subscriptions during lockdowns and began to pick and choose.
But even that’s not enough to keep what is effectively a new slew of Hollywood studios making money, which is forcing subscription services to raise prices — and they have — to now look at other opportunities for getting their content in front of more paying eyeballs.
The Wall Street Journal (WSJ) reported Monday (April 10) that many streaming services “are under pressure from Wall Street to stanch the losses and cash burn from their streaming platforms. And even the profitable ones, such as market leader Netflix, no longer have a blank check from investors to splash out on content spending in pursuit of more subscribers.”
WSJ also noted that at a Morgan Stanley conference in March, Disney CEO Robert Iger said his company and others are being squeezed to “better rationalize our costs” while also noting that Warner Bros. Discovery CEO David Zaslav said on the company’s February earnings call that 60% of the content on its HBO Max service was going unwatched, explaining “we need to monetize that in order to drive shareholder value.”
How will they do this? One solution can be found in recovering theatrical releases. The Easter weekend just ended saw Universal’s “The Super Mario Bros. Movie” smash all theatrical records for an animated film, recouping its reported $100 million production price tag about five times over in domestic and global box office in its debut weekend alone.
Easter box office numbers sent stock prices for AMC Entertainment and Cinemark Holdings higher Monday — 30% higher in AMC’s case — with MarketWatch reporting that “Also helping boost sentiment were a strong weekend debut by Amazon Studio’s ‘Air’ and the announcement by Walt Disney Co.’s Lucasfilm on Friday of three new live-action ‘Star Wars’ films, although release dates weren’t revealed.”
The fact that Amazon Studios is making good on late 2022 reports that it would spend $1 billion producing films for theatrical release shows that the streaming video platforms saw this coming and many, if not most, are planning to lean more heavily into theatrical debuts.
That can get dodgy, however, as Marvel Entertainment learned in 2021 when “Black Widow” franchise star Scarlett Johansson sued corporate parent Disney for streaming the “Black Widow” film on Disney+ with its theatrical release simultaneously.
Johansson said that cut her out of the lucrative box office take. The parties settled, but that suit may be a harbinger of contracts to come as streaming leans into theatrical.
As Monday’s WSJ story foretold: “Streaming subscribers should thus prepare for a new reality — one in which new content isn’t simply fire-hosed onto platforms for artificially low prices. Movies in particular will see a big shift as established media players push more releases into a recovering theatrical industry while some have also started to question the economics of making big-budget movies exclusively for streaming.”
Streaming subscribers should also get ready for more price hikes as forthcoming options to share streaming accounts are purported to be accompanied by higher subscription costs. Then there are new adventures in bundling — such as the one Warner Bros. Discovery will unveil Wednesday (April 12) — reportedly combining HBO Max and Discovery+ to create subscriber value.
Zaslav tipped it to analysts in the fourth quarter of 2022 that he wants Warner Bros. to make more movies people leave home to see, while also foreshadowing a price increase for the new HBO Max/Discovery+ streaming service.
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