The Complex Dynamics Of The Streaming Market

Sebastien Callebaut -

Ads Are The New Revenue Driver And Subscribers Growth To Come From Overseas

Last week, Walt Disney announced a better-than-anticipated 26% increase in revenue thanks to record performance at its theme parks sector and the addition of more new subscribers to its main streaming video platform Disney+.

  • Walt Disney announced plans for a new ad-supported tier of Disney+ while raising prices on its streaming offerings
  • Meanwhile the company cut its subscribers growth forecasts for Disney+ and claimed that almost all of the streaming service's growth is coming from overseas

"Since the launch of Disney+, advertisers have been asking for the opportunity to connect with audiences alongside the most premium brands in content and streaming. As we shared earlier today, the Disney+ ad tier goes live on December 8," Bob Chapek, Disney's Chief Executive Officer during the Q3 earnings call

Walt Disney's earnings release is indicative of the challenges it and competitors like Netflix Inc. face in luring new subscribers. Additionally, in light of the challenging economic climate, some households are reevaluating their in-home entertainment spending.

Streaming Services As New Outlet For Movie Releases

The recent drive by Hollywood studios toward streaming and the reduction or elimination of the exclusive "windows" that theaters have to screen new releases increased the worry among theater operators that Hollywood may not be a trustworthy partner.

In 2020, as the pandemic was hitting movie theaters hard, Warner Bros. announced it would release its entire 2021 slate of theatrical films simultaneously in theaters and on its HBO Max streaming service. The move signaled the shift from big movie studios away from movie theaters and toward in-house streaming services.

“We see an opportunity to do something firmly focused on the fans, which is to provide choice. Whether that choice is to enjoy a great new movie out at the cinema, to open up HBO Max, or to do both.” WarnerMedia CEO Jason Kilar in a memo

  • Streaming services, some of which have struggled to find ground-breaking releasers in a competitive market, may see subscriber growth as a result of streaming big releases on their platform rather than in movie theaters
  • Movie studios are now judging a film on two metrics: box-office grosses and subscribers growth driven by the release

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Glenn Carstens-Peters on Unsplash