Streamers are Slashing Spending; How This Will Affect Your Favorite Service

If you’re wondering where the streaming industry goes from here, you’re not alone. As cord cutting has continued, 2022 became the first year in which households without a pay-TV subscription passed the number of homes with such a subscription. It’s fair to say that streaming is in the process of slaying the cable TV beast, but what’s next when it’s finished?

Most streaming executives spent much of last year trying to answer that question, and many came to the same conclusion: it’s time to seek profitability. In part, that solution is market-driven; investors are no longer rewarding streaming platforms for building up huge subscriber numbers every quarter. Now, streamers have to demonstrate that they have a viable path to putting actual dollars into investor pockets (and their own pockets, as well).

An important part of the equation for many streaming services will be a reduction in content spending. An Ampere Analysis report from early in 2023 shows that content spending will still increase in 2023, but only by 2%. For comparison, content spending grew by 6% in 2022.

This means your favorite streaming platform may not be releasing as many prestige series in future years as it has in the past. Disney+ is one example of a platform that has already confirmed this; Marvel chief Kevin Feige has stated there will be fewer comic-themed series for the streaming service going forward, with an enhanced focus on quality over quantity.

A reduction in content spending does mean fewer tentpole series bringing new users to a service, however. That’s where an increased reliance on licensing content comes in. HBO Max pulled “Westworld” from its platform so it could license the series to third party streamers like The Roku Channel and Tubi, so you may want to keep an eye on your favorite series to make sure it’s staying put. According to The Wall Street Journal, who spoke with entertainment finance professor David Offenberg of Loyola Marymount University, HBO still had to give the show’s creators residual payments when it was housed on HBO Max.

“On HBO, it was likely not generating revenue to offset those residuals,” Offenberg said.

Disney will also explore licensing more content, though it will keep core franchises like Star Wars and Marvel in-house. Those franchises will see a greater theatrical presence in coming years, however, as more media companies start looking to theaters to enhance revenues. Amazon, for example, recently released “Air”— which tells the story of the invention of the popular Air Jordan basketball shoe brand— in theaters, after strong test screenings convinced the company not to simply drop the movie on Prime Video as originally intended.

So what does all this mean for the streaming user? Sadly, it will likely add up to a less exciting user experience, at least in the short term. Your favorite streamer will probably be debuting fewer expensive original titles, and may start licensing more of its popular content to other services. You could also notice that it takes longer for new movies to arrive on streaming, as their distributors try to bring more customers back to movie theaters where films are easier to monetize.

A period of adjustment is definitely in store for the streaming industry. Content spends are on their way down, and streamers will be looking to improve their own bottom lines instead of solely concentrating on user experience going forward.