![]() “While the stock has hit a bit of a lull post earnings given soft 3Q guidance and a somewhat light summer content slate, we continue to believe Netflix will deliver normalized high double-digit top line growth with sizable margin expansion over time. prices again, likely signaling strong quarter ahead Discovery, and Paramount-and they can continue to remain relevant in streaming by supplying films and television shows to other platforms, he said, rather than running their own.RELATED: Netflix raising U.S. Many streaming companies have been in the studio business for decades-including Disney, Warner Bros. What makes more sense, Greenfield said, is if companies shut down their streaming platforms and become “content arms dealers” to the highest bidder. “It can eliminate losses, but I’m not sure it makes it into a great business.” “The macro, high-level view is that there are too many streaming services losing too much money, and someone is going to raise the white flag,” said Rich Greenfield, analyst at LightShed Partners.īundling services together is an option that provides a larger value to consumers and could drive subscriptions, but “it doesn’t fix the problem,” he told Fortune. The streaming industry is on the verge of losing some of its major players, analysts agree. With so many streaming services, and no end in sight to price hikes, something will have to give at some point. ![]() ‘Someone is going to raise the white flag’ Bernstein estimates that Netflix’s ad-based tier currently generates $8 per user in ad revenue each month, on top of the plan’s $6.99 subscription cost, which positions its average revenue per user for that tier roughly flush with that of its $15.49 ad-free service. Despite being one of the newest platforms to show ads, Netflix is in a position to earn big because of its high engagement, Yoon told Fortune. Today, there are no premium, ad-free streaming plans that are not in the double digits.įor the advertising strategy to pay off, however, a streaming company needs an audience that spends a lot of time on its platform watching shows, and ads. Once upon a time, it wasn’t difficult to find a streaming service that cost less than $10 a month. The number of ads displayed and the rates a streaming platform can charge marketers for the ads are constantly fluctuating, offering unlimited revenue upside. Why? Unlike a paid subscription, which brings in a fixed amount of revenue each month, there is no ceiling to advertising revenue. Some observers see another reason for the frequent price hikes: to push subscribers to their breaking point, and compel them to opt for a lower-priced, or even free, ad-supported plan instead.ĭisney CEO Bob Iger said as much during an August earnings call: “We’re obviously trying, with our pricing strategy, to migrate more subs to the advertiser-supported tier.” And Paramount+ revenue growth is not going to outpace the revenue decline of CBS, he said. “In the near future, the next three or so years, Peacock is not going to outpace the decline of NBC,” he told Fortune, referring to NBCUniversal’s streaming platform. ![]() According to AllianceBernstein analyst Laurent Yoon, the incremental revenue that Disney generates from Disney+ and Hulu in 2024 will outpace the revenue decline in the company’s linear TV business.īut that’s not the case for every company. The deal gives Disney full control of Hulu, which, along with Disney+ and ESPN+, rounds out the media company’s lineup of streaming services. On Thursday, Disney announced that it was acquiring the 33% of Hulu that it didn’t already own from Comcast. Discovery, Comcast, and Paramount are losing money on their once reliably profitable TV businesses. As consumers increasingly cancel their cable TV subscriptions in favor of streaming platforms, companies like Disney, Warner Bros. Raising prices for existing subscribers is an effective way to pump up the top line and keep investors happy.įor legacy media companies, increased streaming prices are a step toward recouping lost revenue from their slowly dying traditional television businesses. Netflix has started clamping down on password sharing to boost its paid subscriber rolls, but that only goes so far. and Canada, finding new paying subscribers to keep revenue growing is not easy. For a company like Netflix, which has 77 million paid subscribers in the U.S. Part of what’s driving the price hikes is how saturated the streaming market has become. But it’s hardly the only platform that has doubled its monthly price. Best Online Master's in Computer Science DegreesĮSPN+ has seen the largest total price increase, increasing by 120% since it launched.Best Online Master's in Cybersecurity Degrees.Best Online Master's in Data Science Programs.
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