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Streaming: It’s the future of the entertainment industry! It’s also kind of a money pit.
Making shows and movies is often expensive, and as legacy media companies continue to try to compete with streaming-native companies like Netflix and boost their subscriber counts, the losses on their balance sheets remain considerable, according to quarterly figures released by Disney, Paramount, Comcast, and Warner Bros. Discovery:
- Disney, which lost 2.4 million Disney+ subscribers in Q4 after losing rights to cricket matches for its Disney+ Hotstar product in India and Southeast Asia, ended 2022 with 234.7 million streaming subscribers across Disney+, Hulu, and ESPN+. Streaming operating loss increased to $1.1 billion last quarter due to higher programming and production costs.
- Paramount ended 2022 with more than 77 million subscribers across its streaming portfolio, which includes Paramount+ as well as Showtime OTT. Its streaming segment’s quarterly adjusted operating loss was $575 million.
- NBCUniversal’s Peacock ended the year with more than 20 million paying subscribers as it phases out its free, ad-supported tier, which CEO Jeff Shell said has made the company “feel better” about delivering “a return on investment.” But the company reported an adjusted EBITDA loss of $978 million in Q4.
- Warner Bros. Discovery reached 96.1 million streaming subscribers globally across HBO, HBO Max, and Discovery+ as it prepares for a rebooted service later this year, but its streaming division incurred a $217 million operating loss in the quarter.
Netflix, meanwhile, ended its most recent quarter with more than 230 million subscribers worldwide. The rare profitable streamer, it reported $55 million in net profit, a fraction of its $7.85 billion in quarterly revenue.
Turn this ship around? As investors are no longer rewarding companies for subscriber growth at any cost and are instead increasingly focused on profitability, companies are continuing to look for places to cut costs and gin up revenue. Disney, which raised the prices of its streaming services late last year, said this month that it would cut 7,000 positions across the company, and Paramount+ plans to raise its prices while planning reductions at cable brand Showtime. (Netflix took the other tack, lowering the price of its service in some international markets as it aggressively pushes into advertising.)
Patience, please: But other companies reminded investors that success comes at a cost. Comcast executives, for instance, said Peacock’s losses will peak this year to as much as $3 billion before seeing an improvement, while Warner Bros. Discovery CFO Gunnar Wiedenfels insisted that patience was key.
“As always, we are not managing this company for short-term financial performance, but rather with the next 100 years of this vibrant creative organization in mind,” he said last week.—KS