This year may mark the end of the Netflix-ization of that thing we used to call television. The clamor to meet consumers where they are — on their phones and Apple TVs, but most definitely not in front of a television with a cable box and a bundle of linear channels — produced a streaming gold rush that was a boon for writers and directors (and famous people) who could get barely baked projects green-lit without so much as a pitch deck. The rush by legacy media brands to launch streaming platforms was accelerated during the pandemic lockdown of 2020.
But with Wall Street no longer in thrall to a potential streaming gold rush that never really materialized, 2023 may be the year the media industry is finally forced to live within it means.
The streaming wars — the term is something of a misnomer since Netflix won the war before it even commenced — birthed a plethora of new platforms and a glut of content. Much of it forgettable and more than the population of connected consumers could realistically consume. It spurred all manner of irrational exuberance on the part of content providers flush with subscriber cash and hungry for ever more “original” content to feed the digital maw. Lavish development deals rained down on reliable hit makers (Shonda Rhimes, Ryan Murphy) and people who had never seen the inside of a development meeting (the Obamas, Harry and Meghan). Now, the economic headwinds (inflation, recession) are blowing home the roosting chickens.
A spate of pre-holiday layoffs rocked the industry — thousands of rank-and-file employees have been pink-slipped, but so have lavishly paid executives, most famously Disney chief executive officer Bob Chapek, who was unceremoniously dumped in the wake of a disastrous earnings report and succeeded by his predecessor who handpicked him, Bob Iger.
Warner Bros. Discovery shuttered streaming service CNN+, has so far laid off more than 1,000 employees across the company, canceled shows and scratched movies (the completed $90 million “Batgirl”) in favor of write-downs as CEO David Zaslav — saddled with an eye-popping $50 billion in post-merger debt — has promised to find $3 billion in annual savings. Paramount Global nixed its Showtime streaming app, parting ways with veteran executive David Nevins and CBS Entertainment chief Kelly Kahl, while enacting layoffs in multiple departments including marketing and ad sales. Disney rolled out a range of cost-cutting measures including layoffs, hiring freezes and limits on company travel.
At Netflix, which lost half its value in 2022 (compared to 17 percent for the S&P 500), hundreds of employees were let go (mostly in the U.S.). Though it still plans to spend about $17 billion annually on content, roughly what it has shelled out in recent years, late last year Netflix launched a lower priced ad-supported tier, after years of mocking the industry standard ad-dollar imperative. (Disney+ also launched an ad-supported tier while Peacock launched as an advertising-based video on demand, or AVOD, service, and Hulu, Paramount+ and HBO Max have all previously offered both ad-supported and premium tiers.)
For consumers, the industry’s annus horribilis will mean less content — though viewers will be excused for not noticing. This is not necessarily deleterious if development executives are forced to focus on quality over quantity. (Would Zaslav have canceled HBO’s “Westworld,” shocking the show’s staff and angering fans, if he had less bad TV on its books?)
This shift will not take hold everywhere. Amazon — which has the biggest inventory of content with no discernible original content strategy — shows no signs of identifying a strategy. This is, after all, the company that spent $20 million on the well-meaning but middling reviewed documentary “Wildcat” — about an Afghanistan war veteran and an adorable baby ocelot — an enormous amount of money for a nature film. But Amazon will streamline spending, announcing 18,000 layoffs on Wednesday — deeper cuts than expected — in the company’s devices, books and stores divisions, which includes its main site, as well as field and warehouse operations. Apple TV+ will continue apace, though the service has always green-lit far fewer programs compared to its streaming competitors.
With such stiff economic headwinds, 2023 likely portends the end of peak TV. The term was coined by FX chief John Landgraf at the dawn of a modern golden era for scripted television, especially hour-long dramas, but also half-hour dramedies. And while streamers are likely to still churn out reality TV and low-budget unscripted content, there will be much more budget scrutiny when it comes to big-ticket scripted programming. “ will mark the peak of the peak TV era,” predicted Landgraf during a conference call with reporters at the semi-annual Television Critics Association press tour last summer.
According to the FX Research department, 357 scripted series launched in the first half of 2022, an increase of 16 percent year-over-year. But post-Netflix stock swoon — which happened in April 2022 — the industry is very clearly in retrench mode. During the second half of 2022, the number of commissioned scripted series in the U.S. declined by 24 percent year-over-year, according to U.K.-based research firm Ampere Analysis. The companies that slashed scripted commissions the most were Netflix, Warner Bros. Discovery and Paramount Global.
The saturated streaming market that led to subscriber losses or sluggish growth and is overwhelming consumers with too much content and too many services is also spurring a demand for a streaming bundle that offers consumers the kind of one-stop shopping that the antiquated cable bundle delivered. According to a recent survey from e-commerce data firm Bango, 72 percent of U.S. subscription video on demand (SVOD) respondents said there are “too many subscription services,” while close to 80 percent said they want a single platform to manage all of their subscriptions. As if on cue, Warner Bros. Discovery revealed on Dec. 6 that HBO Max would once again be available on Prime video channels in the U.S.
Paramount+, Starz, AMC+ and Hulu also are available on Prime, for a fee. Netflix and Disney+ are not; they don’t need to be. Disney+ reported subscriber growth to 164.2 million for the final quarter of the 2022 fiscal year; across its combined intracompany streaming bundle that includes Hulu and ESPN+, the company finished the year with 235.7 million global subscribers, surpassing Netflix’s 223 million.
But for smaller services, a bundled approach may be the only way to realize scale in a saturated market. Paramount CEO Bob Bakish has been bullish on the bundle. Paramount+ reported 46 million global subscribers for the third quarter of 2022, rising to 67 million when its other streaming services (including the CBS News streaming service CBSN and CBS Sports HQ) are included.
There are impediments to a global bundle that includes competing services — lower revenue and control of a user interface among them. But with economic headwinds continuing to swirl in 2023, the new streaming could begin to look a lot like the old TV.