Hollywood's streaming formula for success has changed dramatically over the past two years, from "maximum content spend = subscribers = profit someday" to "maximum content spend + pray subscribers don't churn = hopefully profit soon."
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This shift has already had a major impact on the contact landscape (RIP, peak TV), but the effects on profits are less clear. No traditional studio other than Warner Bros. Discovery has yet to grow its streaming segment — and WBD did so in part by bundling HBO’s paid TV subscriptions with direct-to-consumer revenue.
However, data shows that profitability has indeed improved as expenses have fallen, and is expected to increase further or remain stable for most major players this year.
Global content spending by media and technology companies is expected to grow at the slowest pace in more than a decade this year (excluding the COVID- and labor strike-hit years of 2020 and 2023). New estimates from Wall Street research firm Bernstein predict higher returns on content investments overall across traditional media streamers, as well as Netflix, from around 30 to 34 cents on the dollar in 2024.
