Year: 2024

https://www.forbes.com/sites/carolinereid/2024/10/24/why-streaming-could-be-hollywoods-final-act/

The future of Hollywood was reshaped in 1997 with the founding of Netflix, an innovative mail-order DVD rental business by Reed Hastings and Marc Randolph. Unlike traditional rentals, Netflix allowed subscribers to retain DVDs as long as they wanted but required returns before ordering more, allowing the company to collect uninterrupted subscription fees. By 2009, Netflix was shipping nearly a billion DVDs annually but had already set its sights on streaming. The transition to streaming, launched in 2007, faced initial challenges due to limited broadband availability but soon became popular, outpacing the DVD business and bringing Netflix millions of subscribers.

Netflix’s dominance drove traditional media giants to reevaluate their strategies. Disney, initially hesitant, eventually licensed its vast library to Netflix, contributing to the latter’s rise. However, by 2017, Disney pivoted to launch its own platform, Disney+, breaking its Netflix partnership and acquiring 21st Century Fox for content diversification. Disney’s decision sparked a broader industry shift as other studios also developed streaming services, aiming to retain full revenue from direct-to-consumer content instead of sharing it with theaters or traditional networks.

Disney+ quickly gained traction, especially during the pandemic, reaching millions of subscribers and temporarily boosting Disney’s stock. However, the reliance on streaming and subscriber growth strained Disney financially, with high operating costs and content expenses. Content exclusivity backfired, creating complexity for fans, particularly with interconnected Marvel shows, and contributing to user dissatisfaction. Additionally, Disney’s decision to release films like Black Widow simultaneously in theaters and on streaming led to backlash, lawsuits, and lost box office revenue, highlighting the downsides of simultaneous releases.

Facing ballooning expenses and subscriber attrition post-pandemic, Disney’s leadership returned to more traditional revenue models, emphasizing exclusive theater releases and licensing content to third parties. They also introduced cost-saving measures like job cuts and content reductions to stabilize financial losses. This shift echoes a partial return to pre-streaming industry norms as Disney and other studios explore “always-on” channels within their streaming platforms, aiming to balance direct consumer access with sustainable profit models.