Hollywood is on the verge of entering the next phase of the streaming revolution as more and more investors and executives begin to understand how profound the effects of the change will be on the entertainment industry and its profitability.
An respected group of Wall Street analysts at MoffettNathanson stated as much in a fresh research report published on January 18. The media-tech finance specialists said, for instance, that “Investors and executives have acknowledged that streaming is, in reality, not a successful business — at least not compared to what came before,” echoing similar previous forecasts in stronger language.
The research was released right before the start of the Hollywood earnings season, which begins on Thursday with Netflix. Management teams in the industry are anticipated to remark in the coming weeks on their businesses’ performance in the last quarter of 2022, including advertising patterns in the face of tough economic conditions and high inflation. However, the state of the cord-cutting and streaming industries is a major concern for many analysts and investors. They are interested in hearing updates on the development of direct-to-consumer streaming’s profitability as well as organisational changes in conventional TV units that industry businesses have been announcing or considering in an effort to cut costs and improve the bottom line.
For instance, Bank of America analyst Jessica Reif Ehrlich recently stated in an earnings preview that given Bob Iger’s unexpected return as CEO of The Walt Disney Co., “We predict Disney is likely to make structural reforms as well as cost savings.” We think Disney Media and Entertainment (DMED) and the organisation of the content business will be Bob Iger’s top priorities, as opposed to Bob Chapek’s restructure in 2020, which combined all content under Distribution. Additionally, cost management is probably going to get a lot of attention. We wouldn’t be shocked if the DTC (direct-to-consumer) prediction for Disney+ subs changed, Reif Ehrlich said.
But a rising number of financial analysts anticipate that the streaming narrative will continue to evolve throughout the entertainment industry this year. The MoffettNathanson team of analysts stated in their study titled “Hurtling Towards Act 3” published on Wednesday that The Godfather, Star Wars, or even Minions: Rise of Gru are not the finest stories that America’s story-telling business has ever produced. “Of course, it’s the tale of the sector as a whole over the previous 15 years. Additionally, this narrative has a fundamental three-act framework, much like virtually every other story created in the Western tradition.
