James L. Dolan, the interim executive chairman of AMC Networks, has been perking up some of our sources’ ears with his frank assessments of the state of the entertainment business as studios and TV giants adjust to the realities of streaming.
The 2020 COVID-19 pandemic led more people to sign-up, including older consumers who were still paying for cable and satellite. Studios overspent on shows and weren’t charging enough to make up for it, while also doing damage to their traditional ways of generating revenue. Now, services are turning their focus to profitability. But this pivot comes at a time when household budgets are squeezed by inflation and recession fears.
And it seems to be working? Warner Bros. Discovery’s direct-to-consumer business lost $217 million during the fourth quarter, which sounds like a lot but is much better than the loss of $728 million the services recorded during the same quarter a year before. It’s also significantly less than its rivals are losing . But pursuing a less aggressive streaming strategy comes at the cost of growth. WBD’s streaming business gained just 1.
Many of the ideas he suggests are already common in the video game industry and in emerging markets where most of the subscription video growth is happening. New lines of revenue could include digital merch, flexible pricing plans that allow customers to pay for content a la carte with digital wallets, watch parties for marquee shows and technology that allows viewers to shop for real-world products that appear on-screen. Some of these initiatives are already happening at the studios.
Software blew up the business model