Things are not going well on Netflix, Prime Video, HBO or Disney+. All the big companies in the world of streaming are in low hours, in what is a historic drop in profits that is calling into question even the business model itself. As described by Vulture, the streaming sector is going through its worst historical moment and, incidentally, it is conditioning the audiovisual industry itself.
From Bloomberg they point out that the profits of the large streaming companies have fallen by 90% since the last decade. If in 2013 the big ones had profits of around 23.4 billion dollars, right now the combined profit is only 2.6 billion dollars. It must be said that Warner Bros. Discovery has multimillion-dollar losses, but even leaving it out, between Netflix, Disney and Paramount they do not reach 10,000 million dollars in profits. They are still profitable businesses, but far from the impact they had a decade ago.
One of the main causes is found in the failure of multimillion-dollar series that fail for not getting the audiences they expected. The most representative case is Amazon with ‘Citadel’. The second most expensive series in history (behind the ‘Rings of Power’) was a flop. A series for which more than 250 million dollars were spent and it did not even reach the top 10. This has left Prime Video in a difficult situation, as other series such as ‘Everybody Loves Daisy Jones’, ‘Inseparable’ or ‘ The Peripheral’, with budgets of more than 100 million dollars, has not achieved sufficient audiences either. The CEO of Amazon has requested a report on why his 7,000 million investment in original series is not having the expected results.
As a consequence of the bad results we see how Netflix, Amazon or HBO are already making changes. The streaming war is experiencing turbulent times and the first to be aware of it are themselves. In this 2023 we have seen that far-reaching changes are already being made to try to change the dynamics. HBO changed its name to become Max. At Disney there are also radical cuts and at Netflix Canada opted to eliminate its cheapest plan, the basic one with ads.
For all these reasons, the companies decide that in order to compensate for these poor results, an increase in rates is necessary. Netflix Canada started a movement that serves as a warning, as it could soon spread to more countries. Netflix’s idea is to keep only the most profitable plans. On the one hand, the ads for €5.49 per month and then making the leap to €12.99 per month. They compare the streaming business to the crypto bubble. Director Steven Soderbergh, Oscar winner for ‘Traffic’, has come to compare the streaming business with cryptocurrencies: “it is absolutely conceivable that the streaming subscription model is the cryptocurrency of the entertainment business.” The director criticizes that Hollywood has had to reinvent itself to adapt to the digital model and then not receive even a tiny part of the benefits. Some benefits that now fall for everyone and no one is clear about what the solution may be for the future.
Subscriptions are wonderful until they’re not. And that is beginning to happen, especially since they are becoming especially expensive and restrictive. The latest to sign up for this strategy is DAZN, which already raised prices in January and is now doing so even more.
Netflix is the one who has pointed the way to the others, since it has not stopped raising prices in recent years after the elimination of shared accounts, although it later suffered a significant drop in the number of users. Now, however, its plans are coming to fruition, and it is growing promisingly in subscribers and revenue. In fact, to further encourage things, it has decided to reduce prices in more than 30 countries (this possibility is not contemplated in Spain, at least for now).
Squeezing subscribers therefore seems to work, so everyone has jumped on the bandwagon. Spotify raised its prices for the first time in its history a few days ago, HBO Max did the same in June. Disney + seems to resist — the last increase occurred in February 2022 — but even Apple increased the prices of its services months ago, from Apple Music and Apple One to Apple TV +.
The panorama posed by streaming was, as I mentioned at the beginning, promising. Seeing what you want when you want seemed like a dream come true. Now that dream that has become very expensive is turning into a nightmare.
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