Here are the takeaways from today’s Morning Brief. Sign up to receive the following in your inbox each morning:
Bob Iger, like you and me, watches a lot of Netflix (NFLX). But now Disney’s CEO is talking about it.
“Netflix is, in many ways, the gold standard when it comes to streaming,” Iger said during the company’s quarterly earnings call on May 7.
Nor is he the only big media executive praising rival platforms.
“Disney itself is a great company,” Warner Bros. Discovery CEO David Zaslav said Thursday.
WBD Head of Streaming JB Perrette also praised Amazon, saying, “Obviously, Amazon and Netflix are both incredibly attractive.”
These quotes, taken from the call transcripts of competing media companies this earnings season, make one thing very clear: That means the streaming giants are calling a truce.
It is no coincidence that this “Kumbaya” moment is now upon us. The rules of the game were already changing. Once upon a time, with so many platforms flooding the market, all Wall Street got was more subscribers. Profitability? Who cared? Free cash flow? I’ve never heard of her.
The goal was to attract as many users as possible. This ushered in an era of extravagance as platforms competed to lure top producers and secure the most popular shows.
The mastermind at the time was Netflix (NFLX). The platform signed renowned producer Ryan Murphy to a hefty $300 million deal in 2018. “Bridgerton” creator Shonda Rhimes also signed with the company around the same time, reportedly finalizing a $100 million deal.
Others soon followed. In 2019, Warner Bros. Discovery (then known as WarnerMedia) reportedly collected more than $1 billion for the streaming rights to “The Big Bang Theory.” That same year, Comcast’s NBCUniversal (CMCSA) spent $500 million to acquire the streaming rights to “The Office.” Even Big Tech went all in, with Apple (AAPL) plowing $6 billion into the launch of Apple TV+, which at the time only offered nine original series.
LOS ANGELES, CALIFORNIA – APRIL 18: Netflix Chief Content Officer Ted Sarandos (L) and Walt Disney Company CEO Bob Iger attend a meeting on April 18, 2015 in Los Angeles, California. Attending the LACMA 50th Anniversary Gala sponsored by Christie’s. (Photo by Charley Gallay/Getty Images for LACMA) (Charley Gallay via Getty Images)
Then Wall Street started changing its attitude. Could streaming, an incredibly cheap way for consumers to access their favorite content with the push of a button, become a real business? Investors weren’t so sure . The industry was out to prove them wrong.
There were also price increases and a crackdown on password sharing. Advertising-based stratification and mass layoffs. This has increased overall streaming profitability, but the majority of companies (with the exception of Netflix and WBD) are still not profitable in these sectors.
story continues
More recently, partnerships and bundled product offerings between competing media companies have become a trend to address not only profitability challenges but also fickle consumers.
Last week, Disney (DIS) and Warner Bros. Discovery announced a new bundle that brings together Disney+, Hulu, and Max streaming services.
Earlier this year, Warner Bros. announced a sports streaming partnership with Disney-owned ESPN and Fox (FOXA), set to debut later this fall. In December, WBD partnered with Netflix to offer a $10 ad-supported bundle offered through Verizon (VZ).
Paramount is currently looking for an acquisition, while WBD is also at the center of M&A negotiations after the two-year post-merger lock-up period officially ends, with a merger on the horizon. The acceptance of competitors signals a clear change in the industry.
As David Zaslav said last week, “We’re stronger together.” We’ll soon find out if that’s the case.
simple morning image
Alexandra Canal is a senior reporter at Yahoo Finance. Follow her on X @allie_canalEmail LinkedIn, alexandra.canal@yahoofinance.com.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
