The Real Oscar Winner

Streaming made its presence felt at Sunday’s ​​94th Academy Awards, punctuated by a Best Picture Oscar win for Apple TV+’s CODA. Hollywood’s new business model was shunned by the academy as recently as two years ago, with films required to have a theatrical run to be eligible for awards. But with Covid-19 closing theaters and consumers streaming more than ever, the 2022 Oscars were dominated by films that most viewers consumed at home.

It is Wall Street, not Hollywood, that has become more skeptical of the streaming business model of late. Despite a pandemic bump, shares of Netflix are flat over the past three years. Shares of Walt Disney, which runs the No. 2 streaming platform in Disney+, have fallen 25% in a year. Other old media names in the midst of pivots to streaming like Paramount Global and Discovery are down 22% and 39%, respectively. The S&P 500 has gained 14% in that time.

The streaming business remains in a land-grab phase, with companies throwing tens of billions of dollars into original series and movies, marketing, and promotions in an effort to win subscribers. Goldman Sachs analysts estimate that the top 10 streaming companies will spend some $130 billion on content in 2022, up 10% from last year. With the exception of Netflix, no one is making money in streaming today.

But investors are no longer content with subscriber growth alone when it comes to judging streaming services. There are more questions being asked these days about which services will be able to turn a sustainable profit in the coming years.

The most consumer-friendly feature of streaming—the ability to cancel subscriptions at any time—has put the business at a financial disadvantage to cable, which locked customers into long-term contracts with bloated bundles of channels.

Keeping streaming subscribers paying every month, it’s now clear, requires regular infusions of new content and thus heavy spending to keep viewers engaged. More streaming entrants has meant more choice for consumers, which forces more spending.

It's not a winner-takes-all game: American households subscribe to four or five services at once on average. But the rub is that there are perhaps eight or nine different services all competing for those five seats at the table.

In Barron's latest cover story, we surveyed today's streaming landscape—from Paramount, one of the country’s earliest movie studios, to Silicon Valley giants like Amazon.com and Apple, which can fund their streaming habit from their piles of cash.

Some services will be winners while others will not. Same goes for the stocks. Read the piece here.