Many people spend nights jumping from one streamer to the next — Netflix, HBO Max, Amazon Prime Video, Disney+, etc. — barely remembering which show streams where. But with Netflix losing some of its glow with subscribers and Wall Street, who are the leaders in streaming now? And with reports of massive layoffs and multi-million and billion dollar losses at Warner Bros. Discovery and Disney, is anyone making money?
In February, Warner Bros. Discovery announced it lost $217 million in streaming operating costs last quarter. That’s a decent loss compared to other media companies, such as Disney+ and Peacock who are losing upwards of $1 billion per quarter, says Brandon Katz, industry strategist for Parrot Analytics.
The only company that’s consistently making money is Netflix. “They are free cash flow positive, and even though it's not as big right now as they want it to be, they project [making] about $3 billion this year.”
Katz says it's tough to compare streaming versus cable, because cable companies have bloated packages that help networks charge huge subscriber fees. Meanwhile, the ecosystem is fragile for streamers because subscribers can cancel at their leisure.
“You got tons of content, which costs billions upon billions of dollars. You've got pretty low prices, for the most part, at least compared individually to the old cable package. And you got streamers that can churn out. They can unsubscribe and cancel at any time.”
The tides could soon change for Netflix, however. The company’s recently announced crackdown on password sharing could impact an estimated 100 million users who are using the service without subscribing. Katz predicts that could prompt some short-term user behavior changes, including some cancellations.
Katz says the company encouraged password sharing in the past because it helped create brand loyalty and expand its influence. But now Wall Street is narrowing its focus on streamers solely based on revenue.
“If they convert just 10% of that 100 million freeloading password shares, you're looking at roughly 10 million new customers. They clearly see the upside as worth it.”
Now, Katz predicts the number of streaming platforms will drop by at least half over the next few years.
“Basic economics dictates that there is never going to be enough market share — enough profit — available to support eight, nine major players. We're probably going to see consolidation through voluntary opt-out, like Sony saying they don't even want to launch a major streaming service and involuntary opt-out like Quibi failing.”