Netflix gives Wall Street pause, but the streaming money keeps flowing

Future. Netflix may have lost two-thirds of its value last week, but that doesn’t mean it (or almost any service) is slowing down the streaming gravy train. But now that the streaming market has been revealed not to be an all-growth industry, the focus of the over $140 billion spent on content this year may be on using that money as efficiently as possible and going back to a more theatrical-focused strategy.

Full stream ahead
Back in December, Morgan Stanley forecasted that the top streamers would collectively spend over $140 billion on content, encompassing film, TV, and sports.

According to THR, here’s how that breaks down:

• Despite announcing that it would be “pulling back” on content spend, Netflix is really only cutting back on “spend growth.” Co-CEO Ted Sarandos confirmed to a JPMorgan Chase analyst that it would keep up with last year’s $18 billion budget.
• Disney plans to spend a whopping $33 billion ($11 billion on sports rights alone), admitting that it doesn’t plan on breaking even on Disney+ until 2024.
• NBCUniversal is doubling its Peacock budget to $3 billion, while Paramount plans to spend $6 billion annually on Paramount+ by 2024 (mostly on Taylor Sheridan’s hundred shows).
• But then, of course, money means (almost) nothing to Apple and Amazon.

The lone holdout is the newly minted Warner Bros. Discovery, whose new CEO, David Zaslav, has vowed not to overspend to win the streaming war (and also find $3 billion in savings). Even though WBD has a huge $23 billion content budget, it’s already axed CNN+ and cut development at TNT and TBS… probably to focus on HBO Max and Discovery+.

Cinema sins
Still, the Netflix stock shock did shake up a lot of streaming-happy C-suite execs, who, for the past few years, have appeased growth-hungry Wall Street analysts while playing hardball with theatrical exhibitors. At this week’s CinemaCon, there was a definite vibe shift, with many studios expressing how key theatrical is to their strategies.

Are studios just blowing smoke at a theater-focused conference? It’s doubtful. (I mean, just look at those The Batman HBO Max numbers after playing in theaters). What it does signal is that maybe the legacy studios — Disney, Warner Bros., Universal, Paramount — no longer need to state that they’re all-in on streaming in an effort to compete with Netflix. Not even Netflix is immune from the ebbs and flows of economics.