OPINION: Who would have thought that just three years ago, video streaming services would be struggling to make a profit?
When the pandemic struck, Hollywood studios either rushed to bring streaming services online or saw an uptick in already established offerings that had people’s eyeballs and attention when most of the world was restricted to staying indoors.
This was going to be the new normal for Hollywood, the future they felt was inevitable was now happening earlier than expected. Streaming came to bury cinema and take its place.
But the streaming ship seems to have run aground, or at least experienced a few leaks. What was once hoped to be a blip is becoming an altogether difficult reality for Hollywood: streaming services are losing massive amounts of money.
You would think that wouldn’t be a surprise to anyone keeping an eye on Netflix’s debt ceiling (which in case you didn’t know is currently $14bn) but chasing after subscribers to increase growth is not a recipe for instant profits.
When Warner Discovery sharpened its knives and began a bloodletting of HBO Max, I initially thought it would be specific to them.
But the first few months of 2023 have shown it’s an industry-wide issue: Paramount+ has eaten up Showtime in the United States to save on costs and cancelled several shows. Netflix is spreading the releases of its biggest shows across several months (so much for binge-watching) to keep people waiting and subscribing, while Disney is reducing its budgets and looking to spread its Marvel shows across a longer period, with big money-generating sequels announced for Toy Story and Frozen that are heading to cinemas.
Producing quality series for streaming is expensive, something I’ve said many a time, and despite these services having millions of paying subscribers every month, it’s not enough to make them self-sufficient.
As recent months have shown, the appetite for cinema might not be where it was once before the pandemic, the money made for a theatrical release – especially when you strike big – is something studios have been sorely missing.
Whatever you may think of the cultural impact of the Avatar series, The Way of Water seemed to cruise its way to $2bn+ box office receipts, and speaking of cruise – Tom Cruise had the biggest hit of a long career with Top Gun: Maverick, securing $1.5bn at the world box office.
With China’s box office open to international releases, there’s more scope for studios to make money quicker from cinema than there is from streaming. As I’ve mentioned previously, it never made much sense to me why Disney would restrict the release of Prey to its service. It doesn’t even appear to be available to rent or buy on any other service and that’s just leaving money on the table.
Hollywood appears to have woken up to that reality. So while it’s not as if the experiment with streaming hasn’t led to great stuff, there have been learnings that have clarified the direction services need to go to be sustainable.
One of those learnings is that cinema isn’t disappearing off the map as quickly as some would have thought. And who knows, if cinema can prop up the studio’s bottom line, perhaps that will play back into the streaming space for a more symbiotic relationship.
I much prefer watching films in the cinema – you can’t beat popcorn and the lights dimmed for a truly cinematic experience.