By Hernan Lopez.
Companies mentioned: Alphabet, Amazon, Comcast, Disney, Hulu, Meta, Netflix, Paramount/Skydance, Snap, Spotify, TikTok, WB, YouTube.
Questions answered: Now that streaming is firmly profitable, what’s the next challenge for all streamers? What’s the Freemium Tightrope? How much money is there in all of vertical video today, and how much of that is going to short drama?
Many Streamonomics® readers work for Paramount/Skydance, Comcast or Netflix, the companies most often cited as potential winners of the WB auction. Add in their bankers, advisors and suppliers, and the circle gets wider.
But only one will end up owning WB, and whoever does, won’t get the keys until early 2027. That’s roughly 15 months from today—not an eternity, but plenty of time for everyone else to activate new levers of revenue growth, driving Streaming Enterprise Value™ (SEV). With the ‘streaming seven’ making a collective $7.4B in profits in Q3, of which “only” 44% came from Netflix, streaming has become more competitive and profitable than ever.
Due to the fixed cost nature of most of these businesses, you can expect margins to expand, even if the era of big-scale cost-cutting is behind us. However, the chart above highlights the biggest ‘to-do’: the need to accelerate revenue growth, ideally to match Meta’s (+26% in Q3) or Amazon’s ad business (+24% across all ad products).
In this edition, I make one case for how streamers can do just that...