Interview Synopsis

Streaming Platforms – Q3 2023 Update

  • Public Equity
  • TMT
  • North America

Consumers have become “serial churners” and streamers are fighting back on password sharing – just two of the many dynamics shaping today’s streaming landscape.

Streamers prioritise business fundamentals

At the beginning of August, a former VP at Netflix (view Netflix on Maps) shared their views in a Third Bridge Forum Interview on why streaming platforms are likely to push subscribers towards ad-supported tiers. They told us this is due to ad tiers offering more favourable economics and levers (primarily base subscription price, ad load and CPM charges) to improve monetisation. 

“You have a lot more room to grow your ARPU on an ad tier by manipulating those three levers vs your pure SVOD tier, your pure subscription tier, where it’s purely about price.” – Former VP at Netflix

Our expert predicted that following Netflix’s successful initiative to crack down on password sharing, other streamers would soon follow suit – a prediction that was validated after Disney announced1 it too will be cracking down on password sharing later this year as well as raising prices on ad-free tiers, thereby making ad-supported appear more attractive.

Experts say this dual approach could expedite Disney’s (view Walt Disney Studios on Maps) path to profitability within its streaming segment, and is a further sign of how streaming players are prioritising business fundamentals over subscriber growth.

The Interview also covered the impact of the writers’ and actors’ strikes on streaming players as well as potential industry M&A scenarios. Regarding the strikes, we heard Paramount and Peacock could be particularly challenged given their reliance on linear TV pipelines, whereas free ad-supported streaming services channels, such as Tubi, Pluto and Freevee, may enjoy an engagement uptick as audiences look for new platforms. 

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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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