Streaming in 2023: Five Big Questions for the New Year

Combat tactics in 2022 streaming wars have changed from land grab mode to building durable and defensible posts.

Netflix saw subscriber rolls decline in the first half of the year following a fueled bump by COVID - prompting the industry leader to scramble to find new areas of growth. The company quickly rolled out an ad-supported tier, in a reversal of its years-long resistance to the idea, and aims to try to monetize rampant password sharing in 2023. Media conglomerates Disney, NBCUniversal, Paramount Global and Warner Bros. Discovery has been forced to rationalize its investments in streaming as Wall Street has refocused on bottom line results rather than subscriber numbers.

In 2023, for major streaming services, "the focus is increasingly on profitability and free cash flow generation, "in an environment of uncertainty about the direction the economic winds will take," notes John Harrison, head of media and entertainment for the Americas at EY. we're heading towards that very important decision point for media companies where they have to reconfirm their commitment to direct-to-consumer [streaming] - to make it as robust and engaging as possible - or they have to say, "Long term, this isn't will not be as large as expected."

Here are five key questions as we head into the new year for the industry.

How will Bob Iger recalibrate Disney's streaming strategy?

Iger is back as CEO of Disney, succeeding ousted Bob Chapek. Iger has previously signaled that he intends to step back from "aggressive marketing and aggressive content spending" for Disney+ in favor of profitability. How exactly this will play out in 2023 is an open question. MoffettNathanson senior analyst Michael Nathanson, in a research note this month, opined that Disney+ would be better served by focusing on “premium brand IP” rather than general entertainment or sports. "We believe new CEO Bob Iger should address the long-term viability of 'Disney+'s previous growth targets' and reduce investments in general entertainment content," Nathanson wrote. On a similar front, there is the question of Hulu's future ownership (Comcast has the right to sell its 33% stake in Hulu to Disney as early as January 2024, and conversely Disney can demand that Comcast sell it at that time. ). Chapek had expressed interest in striking a deal with Comcast to bring Hulu fully into the Mouse House fold as soon as possible. Iger may have different opinions on Hulu's strategic value to Disney going forward.

Will Netflix's password sharing ad level and monetization move the needle ?

Netflix sees an opportunity to generate millions in new revenue from its ad-supported streaming game , while also set to begin harassing password-sharing violators to pay for illicit account piggybacks in early 2023. It remains to be seen how well the company can execute on these plans. Third-party data indicates that the advertising level started relatively slowly. How much revenue Netflix can make from customers sharing accounts will depend on how aggressively the company intends to push - and the signs point to a softer approach to the honor system, at least initially. p>