December 5, 2023

Robin Baker | AFP | Getty Images

I’m calling the streaming wars over. 2019-2023. rest in peace.

The race to add streaming subscribers is over among the biggest media and entertainment companies, knowing that consumers will only pay for a limited number of subscribers. Of course, the participants were still running. They just don’t want to win anymore.

disney Announced that its flagship streaming service Disney+ lost 4 million subscribers in the first three months of the year, bringing the company’s total streaming subscribers down from 161.8 million to 157.8 million. Disney+ Hotstar, Disney’s streaming service in India, lost 4.6 million customers. In the U.S. and Canada, Disney+ lost 600,000 subscribers.

It’s clear that the biggest media and entertainment companies are in a world that no longer has significant streaming subscriber growth — they’re content to stop trying to chase it. Netflix In the first quarter, 1.75 million new users were added, and the total number of global users reached 232.5 million. warner bros found It increased by 1.6 million to 97.6 million.

The current big media narrative is all about making streaming profitable. Warner Bros. Discovery announced last week that its U.S. direct-to-consumer business posted a $50 million profit in the quarter and will remain profitable this year. Netflix’s streaming business turned a profit during the pandemic. Disney announced Wednesday that its streaming loss narrowed to $659 million from $887 million.

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Netflix has reined in the growth of its content spending, with Warner Bros. Discovery Channel and Disney both announcing thousands of layoffs and billions in cuts to content spending in recent months. Chief Financial Officer Christina McCarthy said on Wednesday’s earnings call that Disney will “produce less content” going forward, though Chief Executive Bob Iger said he doesn’t see that impacting global subscriber growth.

Smaller players still have some growth. NBCUniversal peacock gets It had 2 million subscribers last quarter, making it 22 million subscribers. Paramount Global Added 4.1 million users this quarterMake it 60 million subscribers.

But the key question is not to focus on the growth numbers, but on investor reaction to the growth numbers. Paramount Global fell 28% in a day last week after it announced it would cut its dividend to 5 cents a share from 25 cents a share to conserve cash.

Disney+ Hotstar subscribers brought in a paltry 59 cents a month last quarter, down from 74 cents in the previous quarter. It appears that Disney can live with losing these low-income customers. Disney gave up streaming rights to Indian Premier League cricket matches last year. Paramount Global acquired the rights for $2.6 billion.

Disney also announced it would increase the price of its ad-free Disney+ service later this year. After announcing another price increase last year, Disney’s average revenue per user for U.S. and Canadian subscribers rose 20% in its most recent quarter. Big price increases are not usually a strategy used by executives if the priority is to add subscribers.

What’s next?

Raising prices and cutting costs is not a good growth strategy. Streaming is a growth strategy. Maybe it’ll make a comeback with cheaper ad tiers and Netflix’s upcoming crackdown on password sharing.

However, growth is highly unlikely to return to levels seen during the pandemic and early days of mass streaming.

That could mean the media and entertainment industry will soon need a new source of growth.

The most obvious candidates are games. Netflix has started a fledgling video game service.Comcast Consider buying EA last yearas first reported by Puck. Microsoft’The company’s deal to buy Activision is now in jeopardy after British regulators blocked the deal. If the takeover fails, Activision Likely to be an immediate target for traditional media companies as they look for more exciting stories to tell investors.

While Disney shuttered its Metaverse division as part of recent cost-cutting efforts, combining its intellectual property with games seemed like an obvious match. One can easily imagine the growth potential of Disney buying something like Epic Games, which owns Fortnite, and building its version of an interactive world through the game.

More consolidation will eventually occur among traditional media companies. But a major gaming acquisition could start a race in the industry.

Maybe Game Wars is the next chapter.