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Digital streaming has revolutionised the traditional content broadcasting industry. However, even a decade later, the streaming sector itself grapples with instability and the quest for a sustainable business model. Numerous companies have shuttered operations, and mergers abound. What are the industry's pain points, and is it undergoing a consolidation phase, akin to telecommunications, aviation, and other sectors where only a handful of major players eventually dictate the rules of the game? Gain insights into this hot topic in this week's newsletter.

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This newsletter will cover the following sections:-

• Top OTT Shows & Movies 

• Is Consolidation Key to the Streaming Industry's Future?

• Weekly Box Office figures.

• News Buzz

Top watched OTT Shows this week

Top Movie releases this week

Is Consolidation the Key to the Streaming Industry's Future?

Digital streaming technologies have fundamentally transformed how we search for and consume content. The disruption caused by these advancements has left the television and cable broadcasting industry struggling for breath. The ability to access favourite content from various genres worldwide, often without ads and in high resolution, prompted the global population to heavily invest in such services. Presently, there are approximately 1.5 billion subscribers across various Subscription-Based Video on Demand (SVOD) streaming services, accounting for nearly 20% of the world's population.

The streaming sector is experiencing explosive growth with a Compound Annual Growth Rate (CAGR) exceeding 19%. However, amidst this rapid expansion, news of companies in this space shutting down, merging, or being acquired is not uncommon. This trend extends beyond startups, affecting even legacy media giants like HBO, Disney, and Warner Bros, who are grappling with the challenges posed by this disruptive business. Consequently, three significant questions arise:

• What are the challenges faced by the Streaming companies as they grow?

• Why are they not able to pivot on a sustainable business model?

• How will consolidation help in Stabilising this sector?

Challenges Faced by the Streaming Companies

Hyper Competition 

The potential of this sector is so much and this is attracting a lot of traditional media companies and also massive VC investments in startups. The result is a huge influx of streaming platforms and ever growing content library. As an example, the USA alone has over 100 streaming services. Increased competition is eating into each other's subscriber base. Although the market is growing, retention on any one platform is still low.

Ever Growing Content Library

The perpetual expansion of content libraries poses a challenge. Simply establishing a tech-based streaming platform does not automatically confer preferred status upon it. Viewers seek a diverse array of content, compelling streaming platforms to consistently invest in the creation or acquisition of new material. As per a Broadcastprome report, streaming companies are projected to allocate nearly $42 Billion to original and acquired content in the year 2023. 

Evolving Viewer Preferences

The internet has ushered in an era of boundless content accessible from around the globe. Viewers find themselves inundated with choices and consistently seek high-quality content in diverse formats such as web shows, short stories, gamified content, and VR experiences. This dynamic landscape keeps streaming platforms on alert. Moreover, streamers must continually enhance their technology to ensure a smooth viewing experience across an array of devices, including mobile phones, laptops, and smart TVs.

Why Struggle with a Sustainable Business Model Persists for Streaming Platforms?

The challenge of pivoting toward a sustainable business model for streaming services revolves around the diverse types of models they operate on :-

1. Free to view with ads

2. Subscription fee without ads

3. Discounted subscription fee with ads

4. Exclusive content for rent within a paid subscription model

Despite the global Paid Subscription Video on Demand (SVOD) market reaching USD 95.88 billion in 2023, a significant portion, approximately USD 42 billion, is allocated for content library upgrades. The extensive costs related to technological upgrades, operations, new customer acquisition, and brand building often surpass the remaining income. Consequently, many streaming companies find themselves in a financial struggle, leading to experimentation with different revenue models in an attempt to establish a sustainable framework.

How Consolidation will help in Sector Stabilization?

The potential stabilising force in the streaming sector lies in consolidation. When multiple platforms either acquire or merge with one another, it results in the consolidation of content libraries, access to new technologies and intellectual properties (IPs), viewer databases, and analytics. Crucially, this contributes to increased revenue, bolstering the top line. Consolidation emerges as a natural progression amid the imminent shakeout in the streaming industry.

For example, smaller platforms like Paramount, Peacock, and AMC+, lacking the scale to thrive independently, may find mergers essential for cost-cutting and survival. Ultimately, consolidation is expected to yield a few major companies with the size and scale necessary to meet the evolving demands of the ever-expanding global viewer base.

Reach-out to me at [email protected] if you wish to know more about on the consolidation in the streaming industry.

Box Office Collection Report

News Buzz

• Warner Bros. Discovery stock sinks 19% as ad revenue falls, Zaslav warns of ‘generational disruption’. Read more on this here

• Ralph Macchio and Jackie Chan to kick off another chapter of much loved ‘The Karate Kid’ franchise Read more on this here

• There in an unsettling new trend where certain blockbuster films, despite having a massive fan base, are ending up discarded. Read more on this here

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Vipul