The Rise and Fall of Streaming TV?

Written by Billy Thompson

The streaming service industry is one that just about every person is familiar with. Being led by companies like Netflix, Disney, and Amazon, digital media consumption has become a critical part of our daily lives. An area once dominated by cable TV was changed entirely in 2007 when Netflix changed its business model from being a mail-in DVD service to an online platform that gave viewers immediate access to its list of movies at their viewing pleasure. Now in 2024, the streaming service industry has completely evolved to the point that a person cannot watch their favorite TV shows or movies without a subscription to one of several providers.

Looking back, the rise of the streaming service industry started with Youtube, before its acquisition by Google. While the company did not stream TV shows or movies, its business platform is what ultimately drove Netflix to change from a mail-to-home service to the typical streaming service we are all familiar with today. Several key factors allowed streaming services to prosper. Given that companies like Netflix’s main competition were cable TV, streaming service companies offered a lot to consumers that made their services far more attractive. Streaming services were more affordable, gave viewers access to more shows and movies at one time, avoided advertisements, and allowed watchers to enjoy from anywhere on any platform, all categories that cable TV could not compete with. The pivotal point was that viewers could watch their favorite titles at any time they wanted. This led to the ‘binge’ movement where viewers could start and finish entire shows within a week’s time. Without the TV schedules that cable companies used to air TV shows and movies, viewers could watch their favorite shows at will without having to worry about recording ahead of time. This led to the streaming service industry being valued at $554.33 billion in 2023, with 2024’s revenue expected to hit $43 billion.

Entering into the 2020s, subscription-based streaming services became incredibly competitive. Once dominated by Netflix, the market saw increased competition bringing more variety in the TV shows and movie titles offered across providers. However, with increased competition, more companies fought over the rights to the most popular shows and movies. This left most households with no option but to purchase a subscription plan with one or more of these companies. In 2015, around 50% of US households held subscriptions to streaming services. This number has only seen growth and in 2023, 83% of households owned a subscription to one or more of the major streaming providers. With the struggle to produce original content as a result of high competition, streaming service companies turned to alternative options to continue to produce original content in order to keep revenue high. The first alternative to produce original content was streaming service providers making their own content. With Amazon Prime Video, Netflix, and Apple+ leading the way, these companies have been casting, directing, and filming their own shows and movies. Netflix, for example, signed Adam Sandler back in 2017 to shoot 4 movies for the streaming service provider. The contract was extended in 2017 and again 2020 at a value of $250 million, leading to hit movies like Murder Mystery and Murder Mystery 2. The second alternative to producing original content was the acquisition of competing companies. Companies in the streaming service industry have found buying out the competition to be one of the cheapest options. For example, Disney bought the majority share in Hulu from Comcast, giving Disney full control in late 2023, in a deal valued at $8.6 billion. Other deals have included the Paramount merger with Skydance and Disney’s acquisition of 21st Century Fox.

Issues continued to arise as companies struggled to put out original content to capture more of the market share and to continue to increase revenue. In 2022, Netflix saw a plateau in their subscriber growth, and then a dip causing them to lose a million subscribers. For other companies, problems were even bigger as they struggled to see any profit. In 2022, Disney reported a profit of -$1.1 billion with Paramount reporting a -$575 million profit and Warner Bros a -$217 million. All of these companies were taking on massive debt to grow at a rapid pace to compete with Netflix. In short, every competitor was trying to do what Netflix did in 10 years in half of that time. Two solutions came from these problems, both being a negative to viewers around the world. First, all companies cracked down on password sharing. Netflix changed their entire view on the topic. In 2017, Netflix tweeted “Love is sharing a password” as they saw no harm in doing so. They were under the assumption that password sharing exposed them to a wider range of potential subscribers who, if they liked the service, would eventually buy their own subscriptions. However, when subscriber growth plateaued, Netflix and all competitors cracked down on password sharing, which did boost their subscriber count, but frustrated many viewers. The second solution was ad-supported subscription options. Hulu was a pioneer in this field for a long time. Since the 2010s, Hulu always offered an ad-supported option, which saw a lot of success. In fact, in 2020, the ad-supported plan was so successful that Hulu decreased the monthly subscription from $7 to $5. However, as streaming services began to see decreases in revenue growth, they also turned to ad-supported plans, not as an affordable option for consumers, but as a way of increasing their revenues. Almost everything that once made streaming services so desirable over cable TV disappeared as streaming companies did all they could to boost their profits.

It is unclear what the future holds for the streaming service industry. Many analysts estimate the industry to continue to trend upwards in the upcoming years, but as viewers continue to become unsettled by higher prices and more ads it is uncertain that subscriber count will continue to increase in the coming years. Perhaps service providers will continue to see negative profits and will have to sell off their rights to their entertainment titles leading to a single monopolistic provider that reverts TV watching back into the old cable-style. Perhaps innovation and further global expansion can lead to a boom in subscriber count and profit. Either way, the future for the streaming service industry is unclear and only time will tell.


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