Fiscal year 2022 results show that studio streamers are struggling to profit from their SVOD services. During the pandemic, there was a streaming boom from viewers, leading to US studios increasing spending to create digital originals and limiting content to be available only on studio-owned SVODs to raise their subscriber base. However, high subscriber numbers does not necessarily translate into profits and companies are now reevaluating whether focusing on streaming is the best use of their content.
Earlier this year, Warner announced its plans to cut costs and restructure its business approach by slowly removing exclusive and original content from its SVOD service Max (formerly HBO Max). Throughout 2023, Warner has been actively selling its content to third-party buyers instead of expanding its SVOD service into new markets. A volume deal was established with Viacom18 in India and HBO titles were sold to Netflix as part of a co-exclusive deal. Warner also closed a deal with Amazon Prime in France for first window rights to exclusive Warner series (e.g., Pretty Little Liars: Original Sin) and non-exclusive rights to library titles in addition to partnering for the launch of the “Warner Pass” channel on Prime Video.
Around the same time, Disney was reportedly exploring licensing out titles to third-parties. Disney has always shown a dominant presence in vertical integration by premiering shows from its subsidiary companies (Hulu, Fox, ABC) on Disney+ internationally, but 3Vision’s Show Tracker found signs of third party sales as Hulu series, “How I Met Your Father”, have gone to ProSieben in Germany and ABC’s “Mixed-ish” went to Channel 4 in UK as second windows in 2023. Dozens of titles were also pulled from Disney+ (e.g., Willow) as part of a cost-cutting move.
Another notable studio SVOD to mention is Lionsgate+ as the service closed down in seven international markets and recently announced to pull out Starz in Latin America. Lionsgate and Starz series will now be available through MGM+ in EU markets such as Germany, Italy and Spain (three of the exited markets) following a deal struck with Amazon with new seasons of shows such as “The Great” already premiering on the service in the first window.
Studios are now restructuring their business models to determine how to best utilise their content and prioritise profitability for their streaming service. Cutting down content on SVODs and licensing to third-parties seem to be a common denominator in a studio’s strategy to achieving profits.
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