HBO Max, Disney, and Paramount Shift Strategies to Keep Streaming Alive

This past year has been a wake-up call for streaming studios. As post-pandemic churn set in, these services started to report huge losses. The strategy to offer as many original titles to their users was a losing proposition, resulting in mergers, restructuring, and a reduction in new production.

One of the more shocking strategies came when CEO David Zaslav took over with the merger of Discovery+ and HBO Max. Zaslav promised investors he would find $3.5 billion in savings. His plan included immediately removing many popular HBO titles.

Taking down these series saved the company on royalties paid to cast and crew and eliminated future production costs on those titles.

The result of the strategy was reported on a recent investor's call. The streaming division dropped to $217 million in the fourth quarter, about a third of what it lost in the third quarter of 2022.

Subscribers could no longer watch shows that include: Westworld, The Nevers, Raised by Wolves, The Time Traveler's Wife Love Life, Made for Love, Minx, Finding Magic Mike, Head of the Class, FBOY Island, Legendary, Gordita Chronicles, and The Garcias. But, as Zaslav commented then, the shows are being streamed elsewhere.

A Hollywood Reporter article claims that many of these titles have found new homes on free-ad-supported TV (FAST) channels.

Disney-owned Tubi has deals to stream Westworld, Raised by Wolves, Legendary, FBoy Island, The Nevers, Finding Magic Mike, Head of the Class, and The Time Traveler's Wife. Tubi planned to roll out the content in February, but it still hasn't been made available.

Other titles are moving to the Roku channel, including Westworld, The Bachelor, Cake Boss, Say Yes to the Dress, and FBoy Island, among other titles. Some will be available on both services. Roku has hinted that their licensed content will appear sometime in Spring 2023.

At the same time, HBO Max has had great success with the new seriesThe Last of Us. The popularity of the second season of The White Lotus has been a draw for subscribers as it got a bump when it won ten Emmys and two Golden Globe awards.

Zaslav revealed that Warner Bros Studios has struck a deal to make more Lord of the Rings movies. And, it plans to "take full advantage" of Superman, Batman, and Harry Potter.

A recent subscription price hike from $15 to $16 for the ad-free plan will undoubtedly help improve the bottom line in future quarters if the strategy to spend less for less content works.

Disney Finds its Own Strategy

When Disney+ first launched, the strategy was to release as many titles as possible to attract subscribers. It was expensive to run the streaming service, as the additional content created additional costs requiring even more subscribers to foot the bill.

Disney was also feeling the pinch and made a bold move in November 2022 to replace Disney CEO Bob Chapek by bringing back the previous CEO, Bob Iger.

Rather than offering tons of titles, Iger chose another option to focus on one fabulous title at a time, the kind of movies and series subscribers would never want to miss.

By offering less content and raising the quality of the offerings, Disney expects to cut expenditures by $3 billion over the coming years. Part of the strategy includes a focus on the most popular franchises like Star Wars and Marvel movies where it releases a new episode weekly.

Reduce Costs by Combining Services

Paramount Global used another strategy still. Rather than drastically cutting titles, it cut delivery costs by combining Paramount + and Showtime into one app. CFO Naveen Chopra also expects a boost from popular titles like Mission: Impossible, Transformers, Dungeons & Dragons: Honor Among Thieves, Teenage Mutant Ninja Turtles, and the Paw Patrol movies.

There are rumors that combining services may catch on. While Hulu, Disney+, and ESPN has offered a soft bundle with lower rates for subscribing to all three services, the company may combine delivery like Paramount+ and Showtime. All shows will be streamed from a single app if this hard bundle occurs.

The Bottom Line

Streaming is in an evolutionary state, with the bottom line dictating its future. The idea that a streaming service could simply throw money at content and try to offer as many original titles as Netflix has backfired for these major companies. It put them in a bad position as they lost money, and after the pandemic, they lost more with the churn of subscribers.

Although there will be fewer titles for higher monthly fees, we can only hope that the companies choose wisely and offer more truly quality content.

rjmedich's picture

Of course the streamers had to make big cuts and mergers. The present model was unsustainable. They're all running countless shows and movies—many hugely expensive—and there's nowhere near enough eyeballs out there to consume it all. Unfortunately, there's no way streamers can continue to all churn out such great content. Something's gotta give. Streaming may simply turn into cable TV.

Billy's picture

The bottom line is about profit, period. The question is, how much is enough? If you ask the people currently in charge and reaping the rewards of that profit, the answer will always be, it is never enough profit. They will nickel and dime their employees and the customers as much as they can, and because we have no true antitrust laws here anymore, they will be able to get away with it. I really do not believe they actually lost money, maybe made it look that way on paper. All they really wanted was a better stock price to pad their stock options. The very popular shows that were canceled, they were already paid for, so why axe them? Because this way they didn't have to pay the actors and others involved with them a few residual payments. Not all that much money, but it fits the narrative that they want to make, that they are losing cash fast and unless us customers are willing to pay more (a lot more), the boat may sink. There has been little economic honesty from the elite of this world for many decades now, and no one will call them out about it.

barfle's picture

I subscribe to Netflix, Prime, and Hulu, and have hoopla and kanopy through my local libraries. That’s more programming than I can ever hope to consume.

Honestly, I don’t know what another service could offer that would make me cough up the money for another subscription, especially one that’s over $15 per month. I have all I can use.

thehun's picture

so they finally admit what we told them for years now, that their content sucked big time.People just want entertainment not woketard ideology interlaced with everything they produce. Having said that their idea of "quality over quantity" is probably differing from the vast majority of paying customers. We shall see!!