After the pandemic gold rush, streaming giants have cut their budgets and slashed their output, leaving us to pay the price From left: Millie Bobby Brown in Stranger Things; Crater on Disney+, and Priyanka Chopra Jonas in Citadel Morfydd Clark in The Lord of the Rings: The Rings of Power on Amazon Prime At the end of this month, the second season of The Lord of the Rings: The Rings of Power will launch on Amazon Prime Video. This comes two years after the first, infamously the most expensive season of television ever produced, with reports placing the budget somewhere between $715m and $1bn for eight episodes. However, the streaming landscape looks very different now.
To quote the opening of The Lord of the Rings : “The world is changed.” In hindsight, the first season of The Rings of Power was among the last gasps of the streaming boom. Much has been written about the absurd amounts of money thrown around in this gold rush.
Netflix spent $55m on Conquest , a series that never produced a single finished episode. Disney routinely burnt $25m per episode on its streaming Marvel and Star Wars shows. In 2022, the fourth season of Stranger Things reportedly cost Netflix $30m an episode.
At the time, studios could almost rationalise this spending. The pandemic and lockdowns had driven streaming subscriptions, and media companies assumed this level of growth could be maintained. There was also a push from legacy studios such as Warner Bros and Disney to catch Netflix no matter the cost, triggering an arms race.
For its part, Netflix had built up its debt during a time of historically low interest rates, allowing it greater spending power. Unfortunately, every bubble bursts. In April 2022, Netflix posted a drop in its total subscriber base, which caused a panic in the markets and halved the company’s share price.
This wake-up call came to be known as “the Great Netflix Correction”, and it signalled a sea change in how these studios approached streaming. Ironically, Netflix itself would weather the storm. Its share price is almost back to what it was before the correction.
Other studios are not so lucky. The past two years have seen the streaming wars end by inches, as the studios gradually conceded the near impossibility of turning a profit on such expensive investments. Studies suggest the average household tops out at subscriptions to four streaming services, making it a very competitive market.
It’s hard to establish a foothold in a space where Netflix has near-total dominance and services like Amazon Prime Video and Apple TV+ come packaged as part of larger services. In the past two years, services have cut spending on streaming content. The number of scripted television shows has dropped dramatically, from 599 in 2022 to in 516 in 2023.
However, studios didn’t just save money by declining to produce new shows, or “unrenewing” existing shows; they also junked completed material. In August 2022, Warner Bros scrapped the streaming movie Batgirl , arguing that the tax write-off would lose less money than actually releasing it. There was understandable outrage at the deletion of a movie that was functionally complete.
However, this approach quickly became the new normal. Disney began deleting existing films and television shows from its streaming services, including high-profile series such as Willow , because the studio was losing money simply by hosting them on their own service. The science-fiction film Crater was pulled from Disney+ just 48 days after it premiered.
During the streaming boom, studios had sought to build silos of content built on established brands. The goal had been to both starve Netflix of content and to develop their own libraries: Disney had its Marvel and Stars Wars brands, Warner Bros had its DC characters and HBO shows. With a shortage of cash, that approach ceased to be viable.
The studios began selling content back to Netflix, dealing arms to their enemy. In June last year, Warner Bros began licensing HBO shows, its crown jewels, to Netflix. As such, these streaming services were no longer self-contained environments.
At Comic Con in July last year, Paramount+ announced itself as “the home of Star Trek”. Twelve months later, the second season of the Star Trek show Prodigy would premiere exclusively on Netflix. In June, Warner Bros announced that much of its slate of franchise properties — including the upcoming Harry Potter show — were moving from their streaming service Max to their cable network HBO.
When audiences didn’t go to the cinema to see Ant-Man and the Wasp: Quantumania, Lightyear or The Marvels, was it in part because they had enough (or too much) branded content at home? Paradoxically, this deluge of branded content might have caused lasting harm even outside the streaming eco-sphere. Disney+ leaned heavily on new content from Pixar and Marvel, conditioning viewers to expect that level of production as part of their monthly subscription and creating incredible volumes of material. When audiences didn’t go to the cinema to see Ant-Man and the Wasp: Quantumania , Lightyear or The Marvels , was it in part because they had enough (or too much) branded content at home? Does the sheer volume of these streaming spin-offs come to feel like “homework”? More fundamentally, what does this mean for consumers paying for these services, who can no longer count on access to the content that they subscribed for? These shifts have been accompanied by price hikes, as services extract maximum value from subscribers.
In Ireland, Netflix’s most expensive plan cost €13.99 a month in June 2019, but today costs €20.99.
Disney+ launched in Ireland at a price of €6.99 a month in December 2019, but now costs €10.99.
Services sought to monetise their subscriber base in other ways. As recently as 2018, Netflix vowed it would never sell advertising. Today, it is in the process of introducing ads on its cheapest plans.
While Netflix is still committed to the “binge” model of releasing, dropping large numbers of episodes all at once, the service has taken to “splitting” seasons of popular shows such as Stranger Things , The Crown and Bridgerton across months and even financial quarters to retain subscribers. Even the larger services show signs of attrition, retreating from the battlefield to lick their wounds. It was recently reported that Apple hopes to curtail spending on films and television shows for its streaming service.
For all the money that Amazon spent on The Rings of Power , the company didn’t receive a solid return on investment. Leaked internal documents suggest only 37pc of people who started the season made it to the end of the eighth episode. Morfydd Clark in The Lord of the Rings: The Rings of Power on Amazon Prime Amazon has enough money that it could continue burning through cash for longer than most of its competitors.
In April last year, it followed the most expensive season of television ever produced with the second most expensive season of television ever produced, reportedly paying close to $300m for a total of six episodes of the spy thriller Citadel . While these costs were reportedly driven by expensive reshoots, that is still a mindboggling amount of money. Still, even Amazon seems to be facing reality.
The studio recently laid off hundreds of staff in Prime Video and Amazon Studios. The second season of The Rings of Power was shot in the UK rather than in New Zealand. In September last year, the studio announced that its streaming service would include “limited advertising”.
Things are even less rosy for smaller services. To paraphrase another fantasy franchise: winter isn’t coming, it’s already here. Media companies are cutting losses, consolidating services and huddling together for warmth.
In the past nine months, both Universal’s Peacock and Lionsgate+ have retreated from the Irish and British markets. In April, Paramount shut down Showtime, folding it into Paramount+. In the States, Warner Bros and Disney began bundling Disney+, Hulu and Max as of last month.
With advertising and bundling, the future of streaming looks increasingly like classic television. Customers can no longer trust that their most anticipated new arrival will actually be released or that their old favourite will remain available High-profile streaming shows like Ahsoka and The Rings of Power are no longer released at midnight, but instead streaming in prime-time slots to maximise viewers. Services that were once opaque about their share of the audience have begun providing viewership data.
These companies are investing heavily in live events: Disney+ broadcast Elton John’s farewell concert, while Netflix is streaming live comedy events. Services like Apple, Amazon, Disney and Netflix are investing heavily in live sports rights. Appointment viewing is back.
This is just television, but at a premium. The customer is paying the price. The early days of streaming promised something genuinely revolutionary at a moderate price point: big stars, great directors, lavish budgets, blockbuster scale and freedom from the tyranny of the broadcast schedule.
Critics like the New York Times ’ James Poniewozik argued that streaming was not simply an extension of television, but “a distinct genre all their own”. It is debatable whether that promise was ever deliverable or sustainable, but that potential has faded from memory like Tolkien’s Middle Earth. Over the past few years, the cost of these services has dramatically increased, while the volume of content provided has decreased.
Customers can no longer trust that their most anticipated new arrival will actually be released or that their old favourite will remain available. Even streaming’s simple pleasures have been eroded by staggered release drops and the arrival of advertising tiers. There is a clear winner in the streaming wars, one service to rule them all.
This quarter, Netflix announced $2.15bn in profits, up from $1.5bn last year.
However, every war has a loser. In this case, it’s everyone else. Join the Irish Independent WhatsApp channel Stay up to date with all the latest news.
