If you have read any media analyst predictions about 2024, many will offer an angle on SVOD’s future that includes some variation on increased bundling, new partnerships, expanded non-exclusive licensing, or even some rumors of mergers and acquisitions. It would seem an absolute certainty that the era of consolidation is upon us in today’s SVOD marketplace. Gone are the days of subscriber growth at any cost. All SVOD companies have shifted to profit-centric models and that generated some creative partnerships. While Netflix is a profitable SVOD provider, numerous other streamers can only hope that their balance sheet turns from red to black in 2024. But as the saying goes, adversity make strange bedfellows. Here, we review some moves that have been made as well as some predictions from around the analyst water cooler.
While cable companies continue to shed customers to cord-cutting, one cable company negotiated a novel solution to mitigate the threat that streaming poses. Late last year, Charter and Disney were embroiled in a retransmission fee dispute, and their agreement could prove to be the template for future industry disputes. Effectively, Charter customers receive ad-supported Disney+ Basic for free, while Disney agreed to remove some underperforming networks. Those on higher tiers in the Spectrum portfolio will have access to ESPN+ and even the yet-to-be developed ESPN streaming product when it is launched. Charter’s customers now get two services in one, while Disney gains guaranteed revenue from the #2 cable company via a wholesale fee and Charter sheds some of the expensive channel bloat that plagues many cable providers.
Another decision involving collaboration amongst competitors sent shockwaves through the industry last summer. Warner Bros. Discovery ended up licensing content back to Netflix, a direct competitor in the space. Since this deal was announced, it would seem a floodgate has opened with licensing deals being made all across Hollywood. USA Networks’ Suits broke records for Netflix and really proved that licensed content can help both parties. USA’s parent company, NBC Universal, also made an interesting play: they licensed Seasons 1-8 to Netflix, but kept Season 9 for their own streamer, Peacock. And it may be paying off. While Suits Season 9 is certainly not the only contributing factor to its growth, Peacock recently crossed the 30M subscriber threshold up from 28M in the previous quarter.
Netflix also licensed the first five seasons of Young Sheldon from CBS, and just announced a Season 6 roll on ahead of CBS premiering Season 7. Disney and Netflix recently made headlines by bringing streaming juggernaut Grey’s Anatomyto Hulu in a co-exclusive deal which also sees fourteen popular Disney titles heading to Netflix, including This Is Us, How I Met Your Mother, ESPN 30 for 30, and The Bernie Mac Show.
And let’s not forget that Disney just took over full control of Hulu, having bought out Comcast’s remaining 33% share. As such, Hulu is now being offered within the Disney+ app interface. Currently in beta, the full integration is slated for March of this year, with the Grey’s Anatomy deal being a tentpole of that new iteration of Disney+.
And the licensing landscape hasn’t been bound to just television content. Sony Pictures made a huge multi-year deal with Netflix in 2021 for exclusive pay-one window rights. Movies in that deal include Morbius, A Man Called Otto, Spider-Man: Across the Spider-Verse (Part One), and The Equalizer 3. Others have followed suit. Indie movie studio A24 just signed a multi-year exclusive pay-one window deal that will bring their titles to HBO, Max, and Cinemax after their theatrical runs. Titles already part of the deal include Uncut Gems and Everything Everywhere All at Once.
Beyond plays for shared or exclusive content, streamers are also being bundled in other unique ways. Verizon just announced a deal that includes access to Netflix and Max for a 40% discount off the retail price. Other retailers have included streaming bundles, too. Walmart offered the ad-supported version of Paramount+ to its Walmart+ customers. And Paramount also partnered with Delta Airlines last year as well.
Speaking of Paramount, rumors are swirling about a potential bundle with Apple’s AppleTV+, but details are scant. And that’s just the small rumor surrounding Paramount. The bigger rumor is that Paramount is also likely going up for sale later this year, in whole or in part. Potential suitors including Warner Bros. Discovery and a cadre of other Hollywood players. The CEOs of Paramount and WBD recently shared a meal to discuss their mutual future, which set the industry abuzz about what could happen.
So yes, one way or another, streaming has entered into a convoluted space of strange bedfellows, odd arrangements, and unique partnerships meant to figure out new ways to find profit and be successful in this ever-crowded space.
The Circana Take:
- Consolidation will come in many forms. So far, we’ve seen rebranding, bundling, partnerships, exclusive deals, non-exclusive deals, acquisitions, buyouts, and mergers. The possible paths to profitability are pretty diverse. However, success isn’t guaranteed, so favorable outcomes will depend more on deep pockets, risk tolerance, and trial and error.
- 2024 will be a very dynamic year for the streaming industry and recent history has shown that no idea is off the table. The only certain thing to expect this year should be uncertainty.