These aren’t your older sibling’s streaming wars.
The battle for audiences has evolved in recent months, as once-fierce rivals turn to frenemies and even team up on bundles. One key reason is that Hollywood titans like Disney and Warner Bros. Discovery have stopped following Netflix and are instead carving out distinct strategies.
Netflix is all in on “engagement” — how much people are watching and interacting with its platform — and no longer regularly shares its subscriber count, which was once its north star. It also just revamped its homepage with vertical video as it takes cues from social media giants like YouTube and TikTok.
Disney, meanwhile, is locked in on subscriber growth. Two Disney streaming employees told Business Insider that attracting new users remains a top priority, especially if they’re in its bundles.
And Warner Bros. Discovery is prioritizing profitability with Max. Its quality-over-quantity strategy hinges on preventing cancellations instead of reaching everyone or maximizing engagement.
Disney, WBD, Comcast, and Apple didn’t respond to requests for comment.
Engagement is in, thanks to ads
For years, Netflix focused on subscriber growth, which Wall Street was obsessed with. But as it approached and cleared the 300 million subscriber milestone, Netflix zeroed in on another goal (besides growing revenue and profit): engagement.
A Netflix spokesman said engagement is its “best proxy for customer satisfaction” and that highly active viewers are less likely to cancel.
Netflix drove about 8% of watch time on connected TVs in the US in March, the most recent data provided by Nielsen. Though Netflix was the highest among its paid streaming rivals, it trailed YouTube, which got 12%.
That’s why Netflix’s co-CEO Greg Peters said on the company’s first quarter earnings call that there was “plenty of room to grow” engagement.
Boosting watch time helps Netflix achieve another top goal: building out its nascent ad business. The company is playing catch-up here. It will generate $2.2 billion in US ad revenue this year, according to EMARKETER, which is well below Hulu’s $2.7 billion figure and in line with Peacock. However, those two streamers have had ad businesses for years.
John Conca, a media analyst at Third Bridge, said Netflix’s ad business will blossom as it builds out its own ad tech.
Amazon is also focused on its streaming ad business, which burst out of the gate in early 2024 thanks to an unconventional opt-out strategy. The e-commerce giant turned on ads for all Prime Video users who don’t pay $3 a month to remove them, instantly scaling its ad business. Nearly 34 million of Amazon’s 166 million US-based Prime Video users see ads, EMARKETER estimates.
Amazon has a treasure trove of shopping data, which Conca said can help boost the effectiveness of its ads.
An employee at a rival streamer who recently interviewed at Amazon told BI the company seemed aggressively focused on growing its ad business.
Subscriber growth is still in style
Not all streamers have shifted their focus to engagement. Disney still sees plenty of room for subscriber growth, as do midsize players like Paramount+ and Comcast’s Peacock.
“Disney is still not focused on engagement, as Netflix is right now,” one Disney streaming employee said, adding that subscriber count is the main focus. They said engagement should improve as Hulu and ESPN fold into Disney+ through the bundle, though.
Engagement still matters to Disney. A second streaming employee said hours watched largely determine if shows or movies are considered hits, though content can also be deemed successful if it drives signups.
Disney won’t go back to growth at any cost, however.
“Management’s made it absolutely crystal clear that yes, they want growth — but it’s got to be profitable growth,” said media analyst Joe Bonner of Argus Research.
Growth rarely comes cheap in streaming, as Paramount+ and Peacock have learned.
Paramount+ has been a consistent leader in new streaming signups, data firm Antenna found. The company said this month that its global subscriber base had risen 11% in the last year to 79 million.
And while Peacock plateaued for a time after the Olympics, the US-only service added 5 million subscribers last quarter, taking its total to 41 million.
Despite those gains, neither service is profitable, though both are getting closer. Still, Bonner expects to see the two eventually join forces through a merger or bundle, reasoning that “it’s hard to see them surviving on their own.”
Some on Wall Street are also perplexed by Apple’s streaming strategy. Apple TV+ has high-quality shows, but a shallow library means it’s plagued by an industry-leading churn rate, per Antenna.
“I’m not sure what the play with Apple TV is,” Conca said.
Apple’s services chief, Eddy Cue, has acknowledged the challenge of building a streaming library from scratch.
“We’re betting everything on the shows that we’re doing,” Cue said in March. “The ones that we do, they all need to stick. Otherwise, we have nothing else.”
All about the bottom line
While all of these streamers are looking to make money, some are more focused on profitability than others.
WBD once hoped Max would challenge Netflix. In 2023, it dropped HBO from its streamer’s brand so the service could have “truly something for everyone,” as CEO David Zaslav once said.
But after a slow start, executives pared content spending and doubled down on its strengths.
“We’re not going to flood the zone,” Zaslav said on the company’s first quarter earnings call. “We want to be telling the best stories, and we want to also be taking advantage of all the great quality content over the years.”
Max no longer aspires to be a Netflix killer, but it may not have to be.
WBD successfully bundled its streamer with Disney+ and Hulu. Max is smaller than streaming titans but is steadily growing, though that’s mainly due to international expansion.
While Max now has a lower ceiling, it’s profitable. That’s crucial for WBD, considering its hefty debt load. Max might not win the streaming wars, but it can still be a winner.
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