Media and entertainment industries pride themselves on their mastery in classical storytelling’s three stages: conflict, setup and resolution.

The streaming video wars are over. All major tech and media companies that want to join the streaming revolution have a flag, except for a late-comer. Peacock, Paramount+ and Disney+ are just a few of the new streaming services that have been launched around the world.

Chris Marangi is a portfolio manager for Gamco Investors and a media investor. “Act One was the land grab stage.” “Now we’re at the middle of it.”

The streaming wars were the main conflict that came to light last month. Following the crisis, the industry found itself on a turbulent path. Netflix disclosed its first quarterly drop in subscribers in more than a decadeThe company warned that subscribers would suffer further losses in the short-term.

This news raised concerns about the future of streaming and cast doubts on its viability. At stake are the valuations of the world’s largest mediaAnd entertainment companies — Disney, Comcast, Netflix and Warner Bros. Discovery — and the tens of billions of dollars being spent each year on new original streaming content.

Netflix had an interesting series called “Stranger Things”, which was aired on Friday in October. market capitalization more than $300 billion, toppingDisney currently has a market capitalization of $290 billion. However, its shares have fallen by 67% since the beginning of the year. This has slashed the company’s value to $86 billion. 

The legacy media companies who followed Netflix’s example and shifted to streaming video also suffered.

The Dow Jones industrials has seen Disney share prices fall by 30% this year. Despite the fact that series like “The Book of Boba Fett”, “Moon Knight” and others helped Disney+ grow to 20 million subscribers over the last two quarters, this is still a significant decline. On Friday, the highly anticipated series “Obi Wan Kenobi” debuted.

Warner Bros. The Warner Bros. The shares of the company have dropped more than 20% from April, when it began trading on the stock exchange. This is due to the amalgamation of WarnerMedia & Discovery.

No one knows if streaming will end in profitability, or which streamers might be the dominant. The formula to streaming success was simple not too long ago: Get more subscribers and watch stock prices rise. Netflix’s dramatic freefall forced executive to reconsider their next move. 

According to Michael Nathanson (MoffettNathanson’s media analyst), “The pandemic caused a boom with all these new subscribers efficiently staying at home and now it is a bust.” All these companies now need to take a final decision. You can either keep following Netflix across the globe or you quit the chase.

Disney stated late last year that it will spend $33Billion on content by 2022. ComcastBrian Roberts is the CEO pledged $3 billionNBCUniversal Peacock, this year; $5 billion streaming service in 2023.

These efforts have not yet been profitable and the losses keep mounting. Disney reported an operating loss of $887 million related to its streaming services this past quarter — widening on a loss of $290 million a year ago. Comcast has estimated Peacock would lose $2.5 billion this yearAfter having lost $1.7 billion in 2021

Technology executives understood that streaming would not be profitable immediately. Disney+ will eventually become profitable, as its trademark streaming service. Warner Bros. Discovery’s HBO Max, Paramount Global’s Paramount+ andComcast’s Peacock forecast is the same profitability timeline.

The reality is, however, that Netflix chasing may not be a profitable strategy. The company promised investors that the growth rate would accelerate in the second quarter of this year. However, investors are now noticing that the addressable market for streaming subscriptions is no longer 700 million-700 million homes. CFO Spencer Neumann has saidThis isn’t a figure that matches Netflix’s global total of 222 millions.

Chief executives in legacy media face a difficult decision: Should they continue to invest in streaming? Or is it better to reduce costs by holding back.

“We’re going to spend more on content — but you’re not going to see us come in and go, ‘All right, we’re going to spend $5 billion more,'” said Warner Bros. David Zaslav is Discovery’s CEO. during an investor call in February, after Netflix had begun its slide but before it nose-dived.“We will be cautious, careful and measured.

Ironically Zaslav might be echoing the philosophy of Richard Plepler who was once chief HBO. whose streaming strategy was rejected by former WarnerMedia CEO John Stankey.Plepler believed that “more is not always better”, and instead emphasized prestige over volume.

Zaslav has already preliminarily presented a streaming strategy, which would have HBO Max with Discovery+ and CNN news, with Turner sports added on top. But now he faces a market that does not support streaming growth. He may be able to continue pushing his most valuable content into the new streaming product, but that may not stop him from trying.

It has long been Disney’s favorite approach. has purposefully held ESPN’s live sports outside of streaming to support the viability of the traditional pay TV bundle — a proven moneymaker for Disney.

The downsides of limiting content available on streaming platforms could include censorship. Many shareholders wouldn’t be happy with slowing the inevitable decline of cable television. Investors tend to prefer growth over rapid decline.

Traditional TV lacks streaming capabilities, something many viewers love. You can watch digital TV on any device at any moment. Consumers have more options than having to pay nearly $100 per month for a bundle that includes cable channels, which most people don’t use. A la carte pricing allows consumers to choose from many different services.

A deal that combines CBS and NBC would be almost certain to fail due to government restrictions on broadcast station ownership. This is what it would look like likely eliminates a straight mergerParamount Global and NBCUniversal are parent companies. However, they do not have to divest one of their broadcast networks or its affiliated affiliates in a separate transaction.

If streaming is the dominant method of viewership, regulators might eventually concede that the concept of broadcast network ownership may be anachronistic. Possible deals that regulators might deny may become open to new presidential administrations.

Warren Buffett’s Berkshire Hathaway said this monthIt bought 69,000,000 shares Paramount Global — a sign Buffett and his colleagues either believe the company’s business prospects will improve or the company will get acquired with an M&A premium to boost shares.

Greenfield said, “I think about Bob Iger all the time.” said of the former Disney CEOHe left the company in December. He bought Pixar when he first came in. This was a bold and significant transaction that was done early in his career.

Greenfield pointed out that Disney CEO Bob Chapek could make a significant deal to change the perception of his company among investors, given the drastic pullback in Roblox shares. Roblox’s enterprise worth is now $18billion, which represents a drop of $60 billion from the beginning.

However, media companies are not known for their willingness to acquire gaming or other outside-of-the box acquisitions. Under Iger, Disney shut down its game development division in 2016. Acquisitions can help companies diversify and help them plant a flag in another industry, but they can also lead to mismanagement, culture clash, and poor decision making (see: AOL-Time Warner, AT&T-DirecTV, AT&T-Time Warner). Comcast rejected a merger of NBCUniversal and EA videogame company EA recently. according to a person familiar with the matter. Puck was first to report the discussions.

Eric Jackson, the founder and president EMJ Capital who invests in media and technology, stated that big media companies no longer offer compelling products.

Apple and Amazon developed streaming services in order to enhance the services offered by their main businesses. Jackson explained that Apple TV+ provides an extra reason for customers to purchase Apple smartphones and tablets. However, the service isn’t unique as a standalone service. Amazon Prime Video adds a value to Prime, although the primary reason to sign up for Prime is still free shipping for Amazon’s huge ecommerce business.

Jackson explained that Jackson doesn’t see any reason why the business would suddenly get valued differently. He said the days of pure-play media companies that could stand on their own may have ended.

“Media/streaming is now the parsley on the meal — not the meal,” he said.

Disclosure: CNBC, part of NBCUniversal owned by Comcast.

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