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Report: Content Budgets Will Grow More Slowly as Streamers Try to Determine Future of Industry

David Satin

The salad days of the Streaming Wars are over. Companies can no longer pour endless amounts of money into their streaming budgets in the name of simply growing their subscriber bases. There will have to be a new model to measure success, and according to a report from Variety, companies are scrambling to determine just what that model will be.

That doesn’t mean that content budgets will freeze where they are in the coming years, however. Rather, they will likely no longer see the explosive growth that they have experienced since 2019. According to Variety’s reporting of Wells Fargo data, among companies that have pivoted from linear to streaming (excluding services like Netflix and Prime Video, which were always streaming-forward), direct-to-consumer content spending grew from $2.7 billion in 2019 to $15.6 billion in 2021.

That represents a growth rate of 79% in just two years. However, Wells Fargo’s numbers also indicate a projected slowdown in direct-to-consumer (DTC) content spending growth, suggesting that between 2022 and 2025 DTC budgets will only increase an additional 15%. The more modest growth of streaming budgets reflects the idea that companies will have to use a different metric to measure success than just subscriber numbers.

Some companies have already started down the path they think will become the next industry standard of doing business. Warner Bros. Discovery, for example, is committed to turning a profit with its streaming services HBO Max and discovery+, which are set to merge into a single service in 2023.

“Subscribers today are like clicks in the ’90s. I have been around for a while. And I was in that road where people run around buying companies and aggregating clicks,” WBD CEO David Zaslav said earlier this month. “We care about the ARPU [average revenue per user] of our subscribers. We want real subs that are going to pay real money. We said we’re looking in [2025] for $1 billion of profit that we believe we can get on our direct-to-consumer product, and we’re targeting 130 million subs.”

Other companies may attempt to revitalize their linear services with popular content. That’s the strategy Paramount is pursuing, as it rethinks its own streaming model. The company originally intended for its “Yellowstone” spinoff “6666” to head to Paramount+, but instead the show will air on the linear cable channel The Paramount Network.

Whatever strategy companies use in the future, one thing is clear: the days of being rewarded by Wall Street for amassing huge subscriber numbers is over. Investors and market analysts are much less forgiving of multi-billion dollar losses than they were when the Streaming Wars first began. The future of the streaming market is unclear, but some sort of evolution is definitely coming.

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