2022 was a tough year for streamers. In a very real way, the streaming economy totally changed. Since day one, streaming companies measured success by one thing: how many subscribers they had. That’s a good metric for an industry in a growth phase. All of a sudden, in ’22, the focus shifted. I’m not surprised it did, since companies like Netflix were spending insane amounts of money on original content. People started asking if there was any profit coming out of these companies at all. It turns out… there wasn’t.
Apps like HBO Max and Netflix, it turns out, aren’t necessarily financial winners. They may be popular but they aren’t making money. And in the case of Netflix, they weren’t even as popular as they could be. Part of this is the way the industry set expectations for people. Streaming was always sold as an inexpensive alternative to pay-TV, but if you’re creating a lot of original content it gets expensive.
The real question is, what will streaming look like next year?
Streampocalypse?
A couple of years ago I projected that the streaming industry was heading for a collapse. The gold rush days, I said, were behind it; it was time for the weak companies to get culled out. I still stand behind that prediction, although it hasn’t happened yet.
I think that at least two major streaming apps will either disappear or change majorly in ’23. One, HBO Max, that’s a given. We know that HBO Max will disappear in ’23 in favor of a new app that combines Discovery+ and HBO Max content. I think at this point we all expect that the new company will be more like Discovery+, with a massive library of repetitive content.
What will the other failure be? Will it be Prime Video, which launched as an extra added perk to free shipping? What about Hulu, which has found itself without a real reason to exist independently now that Disney+ is taking a lot of its content? It’s hard to know. Hulu would be my guess. Disney+ could easily grow to encompass Hulu, and that might allow Disney to streamline things and pay less, while making people pay more.
The end of authentication?
The big push a decade ago was for each broadcast network to have its own app, which then connected to the viewer’s TV service to allow for more on-demand content. I think that we’re close to the end of that ride. I think premium services will still keep apps, but all these little apps like Bravo, HGTV GO, and even the ABC and NBC apps are probably headed for the trash bin. If your corporate parent has a much more inviting app, why are you spending money maintaining a second one?
Less content
It’s a slam dunk that we’ll see less original content on streaming in ’23. I think that the economic model for that content is in jeopardy, and there are probably a lot of executives who want to know just how many subscribers they’ll lose if they stop producing original content. After all, it’s about the dollars and cents now.
To me the real question is how much “captive” content there will be. Captive content is the content your company makes for other channels. For example, Marvel movies are captive content for Disney+, and Universal movies are captive content for Peacock. For the last several years, conventional wisdom held that we were going to see ALL Marvel movies go to DIsney+ exclusively, ALL Universal movies go to Peacock exclusively, etc. Now that model might change.
If you keep your captive content, you’re not making money on it. Paramount has always had this policy of licensing out their content to other apps. That’s why you can’t watch all the Star Trek movies in one place. It’s a way to make money to subsidize other content. It’s also very customer-unfriendly. If streaming companies start licensing content to each other, it just might make people throw up their arms and give up when they want to watch their favorite movie.
The upshot
I think that streaming companies will be willing to experiment in ’23. The problem is that their experiments probably won’t benefit the customer. They’ll keep pushing the price higher to see how high it can go before people quit. They’ll keep cutting more content until people notice, and they’ll keep licensing their core brands until no one knows where to get anything. In other words, they’ll experiment on just how much they can disillusion their customer base without bad things happening.
That’s not a good look for anyone, honestly. But it’s the look I think they’ll take.
