In the battle for viewership, intense competition between the top streaming services is reshaping the entertainment landscape. Netflix, which has long been the most profitable streaming service, posted its recent quarter earnings report, which displays its retention of that lead.
Streaming competition
Streaming services emerged initially in 2007 as a response to the limitations of traditional television (TV) and movie distribution. The need to break free from scheduled programming and allow viewers to access content on their terms prompted platforms like Netflix, Hulu, and Amazon Prime to pave the way for an entirely new industry.
As many new streaming services pop up to compete in the ‘Streaming Wars,’ the industry’s immense competition becomes more evident.
Price increases and subscription losses
The streaming industry has recently dealt with price increases and subsequent subscription losses. Popular services like Netflix and Disney+ have progressively funded expensive content libraries that are losing relevance from other services and technological enhancements. To afford this, the streaming services are forced to raise subscription fees, which has led to significant subscriber pushback.
Netflix currently charges $15.49 monthly for their standard subscription, up from their previous $7.99 monthly. These price hikes also aim to offset rising production and operational costs. Recent writers’ strikes have also resulted from low wages and lack of benefits, hurting the rate of continuing media circulating through the original services. This has led to a notable churn in subscriber numbers as consumers reassess their subscriptions to offset inflation-related price increases.
Netflix’s Q4 earnings
In its most recent quarterly earnings report, Netflix showcases robust financial performance, affirming its dominance in the competitive streaming landscape. The streaming giant reported impressive subscriber growth, surpassing market expectations. Netflix (NFLX) share prices have increased by about 35% in the past year (at market close on Jan. 23). This news of their success surprised many investors who were used to the constant financial struggles of the industry.
Netflix also reported the addition of 13.1 million subscribers to the service, keeping the company at the top with 260.8 million total paid subscribers.
Other services
Other streaming services also saw large successes in 2023. Hulu, another major platform, displayed an increase from 30.4 million at the beginning of 2020 to 48.5 million in its recent fourth-quarter report for 2023. Hulu, along with other services, aims to increase the relevance of its platform by implementing live TV.
Disney+, however, revealed $512 million in losses in its quarterly report, and expects to raise prices further to continue to compete with other services profitably. HBO’s Max also reported losses recently, attributed to a lack of original content, loss of subscribers, and subsequent price increases.
What this means
Netflix is still very profitable and expects continued subscriber growth. The competition in the streaming industry means that other services like Disney+ and Max will continue to struggle with losses in numbers and price increases in 2024.
