Streaming is at an inflection point currently. At first, the only thing that mattered was plentiful subscribers. Then, Wall Street wanted more. Namely, big shiny numbers and black balance sheets. Now, everyone wants both, but can’t seem to figure out how to get it. Blake & Wang P.A.’s entertainment lawyer in Los Angeles USA, Brandon Blake, looks more closely.
Wall Street vs. Reality
While streamers have been keen to show Wall Street their profitability efforts, this year’s steep discounts show one thing all too well: luring in new subscribers is still a focus, even in more mature markets.
While a profitability focus would better align the newcomer streaming industry with cable TV’s glory days, it’s clear they’re not yet ready to put aside reach and mass appeal. And it’s been plaguing the industry since the start of the so-called “streaming wars”.
We’ve seen call after earnings call lately where executives only want to talk about profit. Each, no doubt, hoping to match (or even dethrone) Netflix’s 20%-30%, double-digit growth. No more talk of subscribers, even from Netflix, just the raw numbers.
Naturally, Wall Street wants them to chase that profit over all. However, Wall Street and reality don’t always talk the same language.
The Black Friday Discount Spree
If you’ve been looking for a great streaming deal for Black Friday, however, you would have walked away with an entirely different message. If you were shopping for a deal, there were plenty around. Disney+ and Hulu slashed to just $4.99 a year. Normally, it’s $12.99. We saw the same across HBO Max ($10.99 to just $2.99), and even Apple TV, which had 6 months on offer at half price.
Notably, Apple has not been a Black Friday participant. Until now, at least. We’ve seen plenty of other attempts this year to grow its reach further among domestic and international subscribers, too. While Paramount+ and Peacock came to the Thanksgiving table with just modest discount offers, despite Peacock's bundling partnership with Walmart, it’s hard not to notice the trend, and it’s not about high profits. Only Netflix stayed silent with no discount on offer. After all, they do dominate the streaming lists, for now, at least.
While their chatter to Wall Street may be all about profit, their messaging to customers is quite, quite different. It’s very clear that reach and scale still matter to streamers, even if Wall Street wants to focus only on the bottom line.
It highlights an ongoing problem for streaming. Specifically, when does the sweet, sweet profit actually happen? Most of these deals were, of course, for the ad-supported tiers, highlighting how streamers are hoping that building a cable-like advertising model can help generate more revenue and monetization, but really, we’re still not seeing streaming evolve into a profitable model. Certainly not fast enough, anyway.
Still, that can’t be done without reach and people, either, so it’s a nasty catch-22 either way. Perhaps this year’s Black Friday deals are showing the real problem. It takes both to build long-term profit.