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Condensed Script:
Intro
Streaming Isn’t Profitable
To prove this, let’s take a look at the major platform Disney has lost some $1.5 billion despite being one of the fastest growing platforms.
Warner Bros recently merged with the Discovery Channel and has posted net loss of $2.3 billion and Amazon Prime Video does not disclose its numbers.
Which is a little bit suspicious because if they were doing super well you'd think they'd be bragging about how much money they were making off of it Prime Video. After all, if streaming media is the future, then Amazon would want to be seen by investors as at the cutting of technology, and doing it successfully.
But given the hush hush nature of Prime Video’s profits, it’s easy to assume it’s turning a loss, especially when they’re going to spend an estimated 20 billion dollars in 2023 on content - and that’s more than Netflix makes in several years.
Speaking if Netflix, not only are they the most profitable streaming platform, but in their third quarter letter to shareholders they state
“Our competitors are investing heavily to drive subscribers and engagement, but building a large,
successful streaming business is hard - we estimate they are all losing money, with combined
2022 operating losses well over $10 billion, vs. Netflix's $5 to $6 billion annual operating profit.”
Now, take this statement with a grain of salt since Netflix has a lot of motivation to make it’s competitors look bad, but even Netflix with it’s success is still losing subscribers, and that’s because there’s simply too much competition.
Too Much Competition
When Netflix first started it had an advantage in timing and in usage rights because there were no other streaming platforms at its scale they were able to buy up the rights to all sorts of movies from a ton of different studios making them the central place that you would want to find movies if you were interested in streaming them directly to your TV.
But then other gigantic corporations started seeing the amount of money Netflix was making. It was in the billions and suddenly all of them wanted a piece of that delicious streaming profitable pie that we call market share.
and as individual companies began pulling back the rights that they had originally given Netflix and putting them on their own streaming platforms the market began to get very saturated as competition skyrocketed and consumers were forced to choose which streaming platforms they wanted to join and which movies and TV shows they wanted to be able to watch.
There are enough consumers in the North American market to support several streaming platforms, but not enough to support as many platforms as there are at the prices these platforms were charging, and because of that market saturation, companies began raising prices in order to have any hope of being profitable - because stream is very expensive.
Stream Is Expensive
Streaming companies have to pay for things like server space, employees, media rights for different films that they plan to distribute, and marketing, but that's not even mentioning the cost of the original productions that they seem to have to put out constantly in order to maintain their subscriber base.
Having those amounts of costs for something often as cheap as just $10 a month it's just not a sustainable model, especially since there are no ads running on it like there are on UKposts or Facebook; it's purely subscription based.
And if everybody wants cheap streaming, but it's just not a sustainable model then stream has to become a loss leader for huge companies to get consumers in the door. They need to be willing to take the hit on the streaming platforms and leverage that as advertisements for the other aspects of their businesses that are profit.
Imagine Disney losing losing money on Streaming, but gaining more fans so people see movie premieres in theatres and make more trips to Disney world.
Or Amazon using prime video as a way to get people to shop on Amazon.com and get free shipping.
Companies may just have to use the ability to stream their shows as a way to get people in the door and then find other ways to profit Because they're not going to find those profits with video streaming.
So here's your complete answer: streaming platforms are merging by being bought or they're being made the subsidiary of a huge already profitable platform like Amazon because there's not enough money in streaming for them to be able to exist on their own.
and bless your Netflix you go little guy we believe in you.
**DISCLAIMER**
Nothing in this video is meant to be taken as financial advice, it's purely to educational and entertainment purposes. Before making any significant financial decisions, consult an expert.