This analysis was first published in SvD Näringsliv, in Swedish, on June 19th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
Fewer streaming services and cheaper programming — that is the future that awaits as high interest rates and inflation force the TV giants to cut costs.
“Max is the one to watch, because everyone in the family can see exactly what they want, whenever they want.”
David Zaslav, CEO of Warner Media Discovery, presented the company’s new streaming platform Max earlier this year. It was previously called HBO Max. And before that, there were variants called HBO Go, HBO Now, and HBO Nordic.
It has, as you can tell, been a bit chaotic. And it may get worse.
With his brief platitude at the opening, Zaslav — inadvertently — summed up the state of streaming services. They all now offer households exactly the same thing: “everything for the whole family.”
And there are good reasons to position yourself as the one service people need.
In times of inflation, consumers cut back on their subscriptions. A survey by auditing firm KPMG last autumn found that 20 percent of respondents were planning to cancel a streaming service. If inflation kept rising — which it did — as many as 37 percent would cancel one or all of their services.
It likely won’t be quite that dramatic. Television entertainment still has a good future ahead of it. But there is much to suggest that there will be fewer competing services — and cheaper productions.
Looking at the American market gives us a preview of what may also happen here in Sweden.
We start with Paramount+, which in a few weeks will merge with the service Showtime. This sounds more dramatic than it actually is. The two have the same owner — the equivalent service in Sweden is called SkyShowtime, to make it even more confusing.
Having multiple streaming services within the same corporate group was a phenomenon that belonged to the era of zero interest rates. Now consolidation is the name of the game.
The aforementioned Max is also itself a merger of HBO Max and Discovery+. It is part of a cost-saving plan of 32 billion kronor that the company is undergoing.
Disney has a similar deal on the horizon.
Disney currently owns two thirds of the American streaming service Hulu. The remainder is owned by telecoms company Comcast. That Disney will buy out the final portion is already decided — it will likely happen early next year. The question is more about what the price tag will be, and what happens after.
A likely scenario is that Hulu will then be merged with Disney+ to create a mega-service. There is also speculation that Disney might use such a deal as an opportunity to sell its third streaming service — sports channel ESPN+. If that happens, Disney would have only one streaming service left, compared to three today.
So it looks as though consumers will have substantially fewer — but larger — services to choose between.
That trend could become a challenge for local services, such as Sweden’s Viaplay. Following a profit warning earlier in June, CEO Anders Jensen was let go immediately, and the share price fell over 60 percent in a single day. Viaplay operates in 33 markets, but has relied heavily on local sports rights to attract customers in the Nordics. That could prove a tough strategy as sports prices rise and the paid streaming market slows in Sweden.
The next worry is profitability. Disney+ lost 4.3 billion kronor — just in this year’s first quarter. All the major streaming services — including Netflix, which promised it would never do this — now offer ad-supported alternatives. In more economically pressured times, viewers more often choose that type of subscription. Looking at all new subscriptions taken out in the US, ad-supported ones grew from 18 percent in 2020 to 32 percent in 2022.
More ads can also mean a different type of content. Internal cost pressure, a consolidated market, and a greater focus on advertising point to one thing: cheaper programming. Think more reality TV and less “Succession.” It is tried-and-tested, popular, and substantially cheaper than competing with too many expensive drama productions.
The last ten years have been a golden era for anyone who enjoys television and film. Never has so much good content been made available to so many, at such a low price. Now much points to that era being over. Time to prepare for fewer services, lower quality — and the occasional ad break.
