Three years into their "Streaming Wars" quest to run down the renegade tech company that stole their mojo, the major media conglomerates are stalled out in their trenches with heavy losses deemed unsustainable by their Wall Street overlords.
And the rabbit they're chasing, Netflix, now appears further ahead than ever.
On Thursday, Warner Bros. Discovery is expected to once again report heavy quarterly losses on its direct-to-consumer businesses, after disclosing a $634 million earnings-before-taxes-depreciation-and-amortization loss in Q3, and $560 million worth of EBITDA red ink on DTC in Q2.
With WBD enduring as much as $2.3 billion in DTC EBITDA losses for 2022, the combined EBITDA bleed on subscription streaming for Warner, Disney, NBCUniversal and Paramount Plus just might have approached $11 billion last year.
Earlier this week, Paramount disclosed total DTC losses of $1.8 billion for 2022, as the company finished the year with 77 million subscription streaming customers globally.
Comcast's NBCUniversal unit finished 2022 with 20 million paid Peacock users, doubling its ranks last year, but losing $2.5 billion in the process.
Disney finished the year with nearly 162 million Disney Plus subscribers globally, but reported staggering DTC losses of $4.1 billion.
At this point, among the four major media incumbents that launched subscription streaming services in 2019-20, only Disney -- which ended 2022 with 235 million subscriptions across its Disney Plus, ESPN Plus and Hulu DTC brands -- is even remotely close to Netflix's global scale of 230 million paid members. (Remember in a world in which Disney aggressively bundles its services, total "subscriptions" isn't the same as total "subscribers.")
WBD, Disney -- and now, Paramount -- have announced plans to pare back on streaming content, raise prices on subscription services and lay off workers. In fact, Disney is planning to pink-slip 7,000 employees.
The cost-cutting sentiment has spread to smaller media companies, with AMC Networks on Friday morning pledging to trim 20% from its programming budget.
AMC interim executive chairman James Dolan said the TV/video industry's current business model isn't working, with pay TV distribution eroding too quickly, and streaming monetization growing too slowly.
Analyzing the four largest publicly traded pay TV operators still transparently reporting their subscriber numbers, Next TV reported last week that cord-cutting accelerated 60% in 2022.
AMC, said Dolan, who just put his wife, Kristin Dolan, in charge of AMC's day-to-day operations, needs to "course correct" like everyone else in the media business, whether they're inclined towards nepotism or not.
Notable: Netflix, the pure-play streaming company everyone in the media business set about running down when this whole DTC spending bonanza started more than three years ago, reported an operating profit of $6.531 billion in 2022.
While Netflix started up a nascent advertising-supported tier in November, and its also dabbling in things like licensing and games, the vast majority of its $31.6 billion in 2022 came from selling subscriptions to movie and TV show streaming smorgasbords.
None of Netflix's revenue came from distributing content on linear platforms.
Netflix once again proved that its model does work. As they probably should have understood all along, those who wish to duplicate it must have the will to swim through heavy losses, build scale and get to the other side.
