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Business Insider
13-05-2025
- Business
- Business Insider
Disney, Netflix, and others are shaking up their battle strategies
These aren't your older sibling's streaming wars. The battle for audiences has evolved in recent months, as once-fierce rivals turn to frenemies and even team up on bundles. One key reason is that Hollywood titans like Disney and Warner Bros. Discovery have stopped following Netflix and are instead carving out distinct strategies. Netflix is all in on "engagement" — how much people are watching and interacting with its platform — and no longer regularly shares its subscriber count, which was once its north star. It also just revamped its homepage with vertical video as it takes cues from social media giants like YouTube and TikTok. Disney, meanwhile, is locked in on subscriber growth. Two Disney streaming employees told Business Insider that attracting new users remains a top priority, especially if they're in its bundles. And Warner Bros. Discovery is prioritizing profitability with Max. Its quality-over-quantity strategy hinges on preventing cancellations instead of reaching everyone or maximizing engagement. Disney, WBD, Comcast, and Apple didn't respond to requests for comment. Engagement is in, thanks to ads For years, Netflix focused on subscriber growth, which Wall Street was obsessed with. But as it approached and cleared the 300 million subscriber milestone, Netflix zeroed in on another goal (besides growing revenue and profit): engagement. A Netflix spokesman said engagement is its "best proxy for customer satisfaction" and that highly active viewers are less likely to cancel. Netflix drove about 8% of watch time on connected TVs in the US in March, the most recent data provided by Nielsen. Though Netflix was the highest among its paid streaming rivals, it trailed YouTube, which got 12%. That's why Netflix's co-CEO Greg Peters said on the company's first quarter earnings call that there was "plenty of room to grow" engagement. Nielsen Boosting watch time helps Netflix achieve another top goal: building out its nascent ad business. The company is playing catch-up here. It will generate $2.2 billion in US ad revenue this year, according to EMARKETER, which is well below Hulu's $2.7 billion figure and in line with Peacock. However, those two streamers have had ad businesses for years. eMarketer John Conca, a media analyst at Third Bridge, said Netflix's ad business will blossom as it builds out its own ad tech. Amazon is also focused on its streaming ad business, which burst out of the gate in early 2024 thanks to an unconventional opt-out strategy. The e-commerce giant turned on ads for all Prime Video users who don't pay $3 a month to remove them, instantly scaling its ad business. Nearly 34 million of Amazon's 166 million US-based Prime Video users see ads, EMARKETER estimates. Amazon has a treasure trove of shopping data, which Conca said can help boost the effectiveness of its ads. An employee at a rival streamer who recently interviewed at Amazon told BI the company seemed aggressively focused on growing its ad business. Subscriber growth is still in style Not all streamers have shifted their focus to engagement. Disney still sees plenty of room for subscriber growth, as do midsize players like Paramount+ and Comcast's Peacock. "Disney is still not focused on engagement, as Netflix is right now," one Disney streaming employee said, adding that subscriber count is the main focus. They said engagement should improve as Hulu and ESPN fold into Disney+ through the bundle, though. Engagement still matters to Disney. A second streaming employee said hours watched largely determine if shows or movies are considered hits, though content can also be deemed successful if it drives signups. Disney won't go back to growth at any cost, however. "Management's made it absolutely crystal clear that yes, they want growth — but it's got to be profitable growth," said media analyst Joe Bonner of Argus Research. Growth rarely comes cheap in streaming, as Paramount+ and Peacock have learned. Paramount+ has been a consistent leader in new streaming signups, data firm Antenna found. The company said this month that its global subscriber base had risen 11% in the last year to 79 million. And while Peacock plateaued for a time after the Olympics, the US-only service added 5 million subscribers last quarter, taking its total to 41 million. Despite those gains, neither service is profitable, though both are getting closer. Still, Bonner expects to see the two eventually join forces through a merger or bundle, reasoning that "it's hard to see them surviving on their own." Some on Wall Street are also perplexed by Apple's streaming strategy. Apple TV+ has high-quality shows, but a shallow library means it's plagued by an industry-leading churn rate, per Antenna. "I'm not sure what the play with Apple TV is," Conca said. Apple's services chief, Eddy Cue, has acknowledged the challenge of building a streaming library from scratch. "We're betting everything on the shows that we're doing," Cue said in March. "The ones that we do, they all need to stick. Otherwise, we have nothing else." All about the bottom line While all of these streamers are looking to make money, some are more focused on profitability than others. WBD once hoped Max would challenge Netflix. In 2023, it dropped HBO from its streamer's brand so the service could have "truly something for everyone," as CEO David Zaslav once said. But after a slow start, executives pared content spending and doubled down on its strengths. "We're not going to flood the zone," Zaslav said on the company's first quarter earnings call. "We want to be telling the best stories, and we want to also be taking advantage of all the great quality content over the years." Max no longer aspires to be a Netflix killer, but it may not have to be. WBD successfully bundled its streamer with Disney+ and Hulu. Max is smaller than streaming titans but is steadily growing, though that's mainly due to international expansion. While Max now has a lower ceiling, it's profitable. That's crucial for WBD, considering its hefty debt load. Max might not win the streaming wars, but it can still be a winner.
Business Insider
13-05-2025
- Business
- Business Insider
How Disney, Netflix, and others are shifting their battle tactics in the next phase of the streaming wars
These aren't your older sibling's streaming wars. The battle for audiences has evolved in recent months, as once-fierce rivals turn to frenemies and even team up on bundles. One key reason is that Hollywood titans like Disney and Warner Bros. Discovery have stopped following Netflix and are instead carving out distinct strategies. Netflix is all in on "engagement" — how much people are watching and interacting with its platform — and no longer regularly shares its subscriber count, which was once its north star. It also just revamped its homepage with vertical video as it takes cues from social media giants like YouTube and TikTok. Disney, meanwhile, is locked in on subscriber growth. Two Disney streaming employees told Business Insider that attracting new users remains a top priority, especially if they're in its bundles. And Warner Bros. Discovery is prioritizing profitability with Max. Its quality-over-quantity strategy hinges on preventing cancellations instead of reaching everyone or maximizing engagement. Disney, WBD, Comcast, and Apple didn't respond to requests for comment. Engagement is in, thanks to ads For years, Netflix focused on subscriber growth, which Wall Street was obsessed with. But as it approached and cleared the 300 million subscriber milestone, Netflix zeroed in on another goal (besides growing revenue and profit): engagement. A Netflix spokesman said engagement is its "best proxy for customer satisfaction" and that highly active viewers are less likely to cancel. Netflix drove about 8% of watch time on connected TVs in the US in March, the most recent data provided by Nielsen. Though Netflix was the highest among its paid streaming rivals, it trailed YouTube, which got 12%. That's why Netflix's co-CEO Greg Peters said on the company's first quarter earnings call that there was "plenty of room to grow" engagement. Boosting watch time helps Netflix achieve another top goal: building out its nascent ad business. The company is playing catch-up here. It will generate $2.2 billion in US ad revenue this year, according to EMARKETER, which is well below Hulu's $2.7 billion figure and in line with Peacock. However, those two streamers have had ad businesses for years. eMarketer John Conca, a media analyst at Third Bridge, said Netflix's ad business will blossom as it builds out its own ad tech. Amazon is also focused on its streaming ad business, which burst out of the gate in early 2024 thanks to an unconventional opt-out strategy. The e-commerce giant turned on ads for all Prime Video users who don't pay $3 a month to remove them, instantly scaling its ad business. Nearly 34 million of Amazon's 166 million US-based Prime Video users see ads, EMARKETER estimates. Amazon has a treasure trove of shopping data, which Conca said can help boost the effectiveness of its ads. An employee at a rival streamer who recently interviewed at Amazon told BI the company seemed aggressively focused on growing its ad business. Subscriber growth is still in style Not all streamers have shifted their focus to engagement. Disney still sees plenty of room for subscriber growth, as do midsize players like Paramount+ and Comcast's Peacock. Please help BI improve our Business, Tech, and Innovation coverage by sharing a bit about your role — it will help us tailor content that matters most to people like you. What is your job title? (1 of 2) Entry level position Project manager Management Senior management Executive management Student Self-employed Retired Other Continue By providing this information, you agree that Business Insider may use this data to improve your site experience and for targeted advertising. By continuing you agree that you accept the Terms of Service and Privacy Policy . "Disney is still not focused on engagement, as Netflix is right now," one Disney streaming employee said, adding that subscriber count is the main focus. They said engagement should improve as Hulu and ESPN fold into Disney+ through the bundle, though. Engagement still matters to Disney. A second streaming employee said hours watched largely determine if shows or movies are considered hits, though content can also be deemed successful if it drives signups. Disney won't go back to growth at any cost, however. "Management's made it absolutely crystal clear that yes, they want growth — but it's got to be profitable growth," said media analyst Joe Bonner of Argus Research. Growth rarely comes cheap in streaming, as Paramount+ and Peacock have learned. Paramount+ has been a consistent leader in new streaming signups, data firm Antenna found. The company said this month that its global subscriber base had risen 11% in the last year to 79 million. And while Peacock plateaued for a time after the Olympics, the US-only service added 5 million subscribers last quarter, taking its total to 41 million. Despite those gains, neither service is profitable, though both are getting closer. Still, Bonner expects to see the two eventually join forces through a merger or bundle, reasoning that "it's hard to see them surviving on their own." Some on Wall Street are also perplexed by Apple's streaming strategy. Apple TV+ has high-quality shows, but a shallow library means it's plagued by an industry-leading churn rate, per Antenna. "I'm not sure what the play with Apple TV is," Conca said. Apple's services chief, Eddy Cue, has acknowledged the challenge of building a streaming library from scratch. "We're betting everything on the shows that we're doing," Cue said in March. "The ones that we do, they all need to stick. Otherwise, we have nothing else." All about the bottom line While all of these streamers are looking to make money, some are more focused on profitability than others. WBD once hoped Max would challenge Netflix. In 2023, it dropped HBO from its streamer's brand so the service could have "truly something for everyone," as CEO David Zaslav once said. But after a slow start, executives pared content spending and doubled down on its strengths. "We're not going to flood the zone," Zaslav said on the company's first quarter earnings call. "We want to be telling the best stories, and we want to also be taking advantage of all the great quality content over the years." Max no longer aspires to be a Netflix killer, but it may not have to be. WBD successfully bundled its streamer with Disney+ and Hulu. Max is smaller than streaming titans but is steadily growing, though that's mainly due to international expansion. While Max now has a lower ceiling, it's profitable. That's crucial for WBD, considering its hefty debt load. Max might not win the streaming wars, but it can still be a winner.
Yahoo
18-04-2025
- Business
- Yahoo
Netflix posts strong earnings despite economic headwinds
Rising economic uncertainty amid a global trade war did little to dampen Netflix's financial results in the first quarter. The Los Gatos-based streaming giant said its first quarter revenue grew 13% to $10.5 billion, fueled by membership growth and higher prices. Net income jumped 24% to $2.89 billion in the quarter, well ahead of the $2.48 billion that analysts had forecast, according to FactSet. The robust growth provided further evidence of Netflix's dominance in the streaming market during an uncertain economy. On Thursday, Netflix executives projected confidence about the company's ability to weather tariff-fueled economic concerns, noting that its low-cost ad plan gives consumers options, that its engagement is still strong and that it produces content and has viewers throughout the world. 'We're paying close attention, clearly, to the consumer sentiment and where the broader economy is moving, but based on what we are seeing by actually operating the business right now, there's nothing really significant to note," Netflix co-Chief Executive Greg Peters said during an earnings video interview. "Stepping back, we also take some comfort in the fact that entertainment, historically, has been pretty resilient in tougher economic times.' Analysts, too, felt that Netflix's market position could give them more of a cushion. "In times when consumers may be scrutinizing their spending on streaming services, expert sentiment remains consistent: Netflix will continue to be the default platform and the last to be cut by the vast majority of users," said John Conca, an analyst at investment research firm Third Bridge. Netflix stock rose 1% on Thursday, closing at $973.03 a share. Read more: WWE begins its Netflix era after years of controversy, drama and ratings Earlier this year, Netflix raised prices on certain subscription plans in the U.S., including for its lower cost ad-supported plan, which has been growing. During the first quarter, Netflix became home to "WWE Raw," which analysts said helped boost the streamer's advertising and drew significant viewership. Some analysts said they believe Netflix will weather any pullback in the advertising market caused by global trade disputes. Netflix launched its cheaper ad-supported tier in 2022 and it is still a small, but growing, part of its business. "Because Netflix relies on advertising less than most of its competitors do, in some ways it will be less exposed to tariffs that constrict upfront commitments," said Ross Benes, senior analyst at research firm EMarketer. "I don't think the macro economic problems the world is facing are going to hit them." Read more: Using one-shots, 'Adolescence' effectively portrays a powerful story Read more: Netflix had a record-breaking quarter. Here come the price hikes Programs that Netflix launched in the first quarter included limited series drama "Adolescence," about a 13-year-old boy suspected of murdering his classmate. The series has drawn 124.2 million views so far and is ranked third in Netflix's most popular English language shows of all time, surpassing the first season of Regency romance series "Bridgerton." The Jamie Foxx and Cameron Diaz-led spy comedy "Back in Action" was also a hit for the streaming service, garnering 146 million views and making it Netflix's 6th most popular English language film ever. Other shows that launched in the first quarter included the Shondaland mystery series "The Residence," reality TV program "Million Dollar Secret," Kate Hudson comedy series "Running Point" and romance movie "The Life List." "We're executing on our 2025 priorities: improving our series and film offering and growing our ads business; further developing newer initiatives like live programming and games; and sustaining healthy revenue and profit growth," Netflix said in a letter to shareholders on Thursday. Last year, Netflix said it had more than 301 million subscribers. Company executives also addressed a recent report in the Wall Street Journal that Netflix had internal financial goals of reaching a $1 trillion market capitalization and doubling its revenue by 2030. Netflix co-Chief Executive Ted Sarandos acknowledged the report, saying that on "rare and very disappointing occasions," the company's "confidential and internal discussions can leak into the press." "We often have internal meetings and we talk about long term aspirations, but it's important to note that this is not the same as forecast," he said during an investor presentation. "Our operating plans is the same as our external forecasting guidance. We don't have a five year forecast or five year guidance, but you can assume that we're long-range thinking." Sign up for our Wide Shot newsletter to get the latest entertainment business news, analysis and insights. This story originally appeared in Los Angeles Times. Sign in to access your portfolio
Los Angeles Times
17-04-2025
- Business
- Los Angeles Times
Netflix posts strong earnings despite economic headwinds
Rising economic uncertainty amid a global trade war did little to dampen Netflix's financial results in the first quarter. The Los Gatos-based streaming giant said its first quarter revenue grew 13% to $10.5 billion, fueled by membership growth and higher prices. Net income jumped 24% to $2.89 billion in the quarter, well ahead of the $2.48 billion that analysts had forecast, according to FactSet. The robust growth provided further evidence of Netflix's dominance in the streaming market during an uncertain economy. 'In times when consumers may be scrutinizing their spending on streaming services, expert sentiment remains consistent: Netflix will continue to be the default platform and the last to be cut by the vast majority of users,' said John Conca, an analyst at investment research firm Third Bridge. Netflix stock rose 1% on Thursday, closing at $973.03 a share. Earlier this year, Netflix raised prices on certain subscription plans in the U.S., including for its lower cost ad-supported plan, which has been growing. During the first quarter, Netflix became home to 'WWE Raw,' which analysts said helped boost the streamer's advertising and drew significant viewership. Some analysts said they believe Netflix will weather any pullback in the advertising market caused by global trade disputes. Netflix launched its cheaper ad-supported tier in 2022 and it is still a small, but growing, part of its business. 'Because Netflix relies on advertising less than most of its competitors do, in some ways it will be less exposed to tariffs that constrict upfront commitments,' said Ross Benes, senior analyst at research firm EMarketer. 'I don't think the macro economic problems the world is facing are going to hit them.' Programs that Netflix launched in the first quarter included limited series drama 'Adolescence,' about a 13-year-old boy suspected of murdering his classmate. The series has drawn 124.2 million views so far and is ranked third in Netflix's most popular English language shows of all time, surpassing the first season of Regency romance series 'Bridgerton.' Other shows that launched in the first quarter included the Shondaland mystery series 'The Residence,' reality TV program 'Million Dollar Secret,' Kate Hudson comedy series 'Running Point' and romance movie 'The Life List.' 'We're executing on our 2025 priorities: improving our series and film offering and growing our ads business; further developing newer initiatives like live programming and games; and sustaining healthy revenue and profit growth,' Netflix said in a letter to shareholders on Thursday. Last year, Netflix said it had more than 301 million subscribers.
New York Times
17-04-2025
- Business
- New York Times
Netflix Beats First-Quarter Forecasts
There may be turmoil in the financial markets, but Netflix continues to roll. The streaming giant earned $10.5 billion in revenue and nearly $2.9 billion in net income in the first three months of the year, exceeding Wall Street's forecasts, the company reported Thursday. The announcement represents the kickoff to media earnings season, which is turning into an even more anxious affair than usual. Many media companies that rely heavily on advertising revenue are preparing for a difficult year ahead as marketers begin to pull back on spending amid uncertainty around tariffs. Some analysts believe, however, that Netflix is something close to recession-proof, and should be able to weather any economic tumult, a point that the company underscored. The company said in a Thursday letter to shareholders that its 'revenue and profit growth outlook remains solid,' and that it is not making any changes to its forecast for the year ahead. 'Netflix will continue to be the default platform, and the last to be cut by the vast majority of users,' said John Conca, an analyst at Third Bridge. Thursday's earnings also represented the first time that Netflix didn't disclose quarterly subscriber figures. The company said last year that it would prioritize other metrics, including time spent on the service, and financial targets like revenue and operating margin. Some industry observers believe Netflix stopped releasing quarterly subscriber updates because it was anticipating slower growth. Antenna, a subscription research firm, estimated that Netflix lost subscribers in the United States in the first quarter. Still, Netflix attributed its 12.5 percent growth in revenue both to higher subscription prices and 'membership growth.' At the end of 2024, Netflix said that it had roughly 301 million subscribers. Indeed, in its letter to shareholders, Netflix underscored its ability to create programming that would 'appeal directly to local audiences' across the globe. The company also said it was buoyed by the performance of its out-of-nowhere hit 'Adolescence,' which came from its United Kingdom team. 'We believe this steady drumbeat of must-see entertainment is what allows us to capture our members' attention and, in return, delight them every time they visit Netflix,' the company told shareholders.
