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Bob Iger is like you and me, he watches a lot of Netflix (NFLX) , but now the CEO of Disney is talking about it.
“Netflix is, in many ways, the gold standard in streaming,” Iger said during the company’s quarterly earnings call on May 7.
And he’s not the only big-name media executive to praise rival platforms.
“Disney itself is a great company,” Warner Bros. Discovery (WBD) CEO David Zaslav said Thursday.
Amazon also received praise, with WBD streaming head JB Perret saying, “Obviously, Amazon and Netflix are both very attractive.”
These quotes, taken from conference call transcripts of rival media companies this earnings season, make one thing very clear: the streaming giants have called a truce.
It’s no coincidence that this “Kumbaya” moment is happening now. The rules of the game were already changing. Wall Street was once rewarded only for subscriber growth as numerous platforms flooded the market. Profitability? Who cared? Free cash flow? Never heard of her.
The goal was to attract as many users as possible, which led to an era of overspending as platforms competed to attract top producers and secure the most popular shows.
Back then, the ringleader was Netflix (NFLX), which inked a $300 million deal with famed producer Ryan Murphy in 2018. Bridgerton creator Shonda Rhimes also signed with the company around the same time, in a reported $100 million deal.
Others soon followed suit: In 2019, Warner Bros. Discovery (then WarnerMedia) reportedly spent more than $1 billion for the streaming rights to “The Big Bang Theory.” Comcast’s NBCUniversal (CMCSA) paid $500 million for the streaming rights to “The Office” that same year. Even big tech companies went all in, with Apple (AAPL) spending $6 billion to launch Apple TV+, which at the time offered just nine original series.
LOS ANGELES, CA – APRIL 18: Netflix Chief Content Officer Ted Sarandos (L) and Walt Disney Company CEO Bob Iger attend the LACMA 50th Anniversary Gala Presented by Christie’s at LACMA on April 18, 2015 in Los Angeles, California. (Charlie Garay/Getty Images, Courtesy of LACMA) (Charlie Garay via Getty Images)
Then Wall Street’s view began to change. Streaming was a super-cheap way for consumers to access their favorite content at the touch of a button, but was it a real business? Investors weren’t sure. The industry rushed to prove them wrong.
Price hikes, crackdowns on password sharing, ad-supported plans, mass layoffs, etc. have all contributed to an overall increase in streaming profitability, but most companies (except Netflix and WBD) are still not making a profit in these segments.
The story continues
Recently, alliances and bundled services between competing media companies have become a trend, not only to combat profitability challenges but also fickle consumers.
Last week, Disney (DIS) and Warner Bros. Discovery announced a new bundle that brings together their Disney+, Hulu, and Max streaming services.
Earlier this year, Warner Bros. announced sports streaming partnerships with Disney’s ESPN and Fox (FOXA) that are set to launch later this fall. In December, Warner Bros. partnered with Netflix to offer a $10 ad-supported bundle through Verizon (VZ).
The embrace of competitors signals a clear shift for the industry: consolidation is on the horizon, with Paramount currently seeking an acquisition and WBD also at the center of M&A talks now that its two-year lockup period following the merger has officially ended.
As David Zaslav said last week, “We are stronger together.” We’ll soon find out if that’s true.
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Alexandra Canal is a senior reporter at Yahoo Finance. Follow her at Yahoo Finance. translatorvisit me on LinkedIn or email me at alexandra.canal@yahoofinance.com.
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