Streamers are suffering their worst subscriber churn, many are losing money, and they’re getting desperate enough to offer content for free.
Streaming has been a cash burn heavy game for over a decade. The idea that if you can simply make it to the end of the streaming wars and be one of the “survivors”, it means a bountiful return of never ending subscription fee and price hike cashflow, but is that actually going to be the end result?
Competition with the dopamine deity of social media apps, gaming, and the ubiquitous YouTube swallow up enormous swaths of Americans’ attention, which is a finite resource, and it could be the iceberg that sinks the age of stream.
The Apples, Amazons, Googles and to a lesser extent the Netflixes of the world have the capital to burn, a primary business not reliant on streaming income that provides that capital (aside from Netflix), and the luxury of playing the long game.
Apple uses Apple TV+ as a boutique offering. They dump billions into it so they can rub shoulders with so-called A listers (most of whom are far less relevant now than when they were actually featured in box office hits). Their shows and movies all have an overpolished and gentrified quality to them that comes off to me as dystopian. Yes, that is genuinely the feeling I get from them. They feel like the type of content shown in the latter stages of a fullscale technocratic takeover, and perhaps that’s exactly what they are.
Netflix doesn’t really produce shows or films, they produce “content.” They are diversifying their product, and I’m not talking about race swapping historical figures in a period piece, they’re buying up popular podcasts, offering gaming options, and dipping their toe, little by little, deeper into the live sports pool. They know the contest is for attention. But they’ve waited too long to gobble up live sports rights in a meaningful way, which is the most reliable way to get audiences to tune in and sit through highly profitable commercials. Their status as being the biggest because they were first won’t cover their warts forever. They must make the most of their current position before it’s too late, or their next modern remake will be the emperor has no clothes. The sequel to which will be a deep correction of their stock price.
Google has YouTube, and YouTube TV, and has positioned itself well with those services — offering things outside the competition’s mass production loops of churn slop. They’re attempting to create an all in one sports app with YouTube TV (insofar as that’s possible in today’s fragmented rights landscape): Local Networks, Cable Networks, NFL Sunday Ticket, ESPN Unlimited content integration coming, and add-on packages for niche content. They’ve also been dabbling in live sports broadcasts on YouTube, having an early season NFL game on the platform the last few years. I’d love to see the number of viewers the Super Bowl live and free on traditional YouTube would pull in.
NBC Universal (currently Comcast-owned) and Warner Brothers Discovery were not in such positions. Warner sold itself to Paramount this year for, debt included, $111 billion. NBC’s situation is its own flavor of frantic. Peacock lost $1.1 billion in 2024 and was still bleeding half a billion a quarter absorbing NBA and NFL rights, so Comcast did what a cornered giant does: it started cutting off limbs. First it spun the cable networks—USA, Syfy, Golf Channel, CNBC, MSNBC—into a separate company called Versant. Then, in June, Comcast announced it was spinning off the rest of NBCUniversal and Sky into its own publicly traded company, effectively stepping back from the media business to focus on broadband and wireless. If streaming is the golden goose of the future, why is Comcast calling it quits?
Paramount Plus has entered the fray with half-trillionaire Larry Ellison’s son David leading the recently merged Paramount Skydance. They’re in the process of getting regulatory approval for their acquisition of WBD which will see the apps likely merge and a goliath sports streamer emerge with rights to UFC, NFL, NHL, MLB, College Football, March Madness, and so on. They certainly have the cash to burn, and are currently very willing to do so.
Another thing to keep an eye on — Paramount paid $7.7B for 7 years of UFC content. The fight promotion’s parent company TKO has a market cap of $35B and that includes WWE. How long until a company has seen enough of these gargantuan sports rights contracts and simply begins buying up leagues when possible? No doubt the Saudi Public-Investment-Fund has its eyes on this angle as well — it already put $10 billion into the WBD deal and will be Paramount’s largest foreign shareholder when it closes.
Disney/ESPN can’t be forgotten in all this. There is talk of them offering a “free” tier of Disney+ in an attempt to compete for attention. They’ve lit more money on fire in the last decade than the federal K-12 budget. Their enormous sports library provides them a bulwark for now, but can Disney’s resorts keep printing cash fast enough to cover for their studio flops? Last quarter the parks threw off 71.9% of Disney’s entire operating income while the studio and streaming side limped along. The rides are carrying the company. Moana’s live-action remake just cratered — a $250 million movie staring down a $100 million-plus loss — and it’s not an outlier. It’s the latest name on a list that already includes Snow White, Dumbo, and The Little Mermaid. And yes, the streaming math does change the calculus on what a box-office bomb really is when the movies end up on the app in a few months where they can drive subscriptions.
Free streaming apps like Pluto TV, Tubi and Roku channel (who Fox just agreed to buy for $22 billion) recognize the new battlefield reality and opt to avoid the overhead: they replay classic television and movies and cheap-to-produce podcasts with ads generating all the revenue and avoid modern production costs and subscriber attrition.
The cliff we are approaching asks a simple question: will future earnings merit the acquisition costs of conglomerateting (yes, I just coined that term) and the exploding costs of live sports rights in a world with diminishing attention to give, and generationally receding live sports viewing habits?
What happens when the streaming investors realize they’ve been chasing a pot of gold that isn’t going to be under the rainbow?
Could we be heading for a hilarious era where we are down to four to five mega streaming networks: Google, Apple, Amazon, Netflix, and Paramount, and they all offer most of their content for free just to get as many eyeballs on their product as possible?
Congratulations, we’re back in 1965.