Welcome back to What I’m Hearing+, coming to you from my beloved Brooklyn. My grandfather, an avid traveler who spent his short time on Earth visiting as many cities as possible, used to say “East, West, home’s best.” I like to think I inherited his passion.

Programming note: Next Wednesday at 3 p.m. ET/12 p.m. PT, I’ll join my partners Bill Cohan, Jon Kelly, and Dylan Byers, along with special guest Jonathan Rosen, for Puck’s next Quarterly Call—a virtual earnings-style event featuring analysis of the macro trends consuming our industries. We’ll certainly discuss the media M&A landscape, and the latest content strategies in Hollywood. Click here to register!

Tonight, an analysis of how WBD and Disney’s licensing strategies are really playing out, and whether the short-term gains will bring long-term pain for everyone but Netflix.

But first…

• Disney+(Taylor’s Version): If you took the over on Taylor Swift’s D+ debut at a 20 million viewer betting line, you wouldn’t be alone. But Disney’s streaming premiere of Taylor Swift: The Eras Tour received just more than 16 million views globally during its first three days, and fewer than an estimated 5 million completed views. To quote Mad Men, “Not great, Bob!”—especially when comparing those figures to Damsel, Netflix’s new Millie Bobby Brown movie, which amassed some 35 million views in its first three days.

  A few caveats: This was the streaming exclusive, but it was by no means the global debut. The initial run of sold-out Swift concerts was widely shared on TikTok and Instagram. Then the theatrical release of the Eras movie brought in more than $260 million globally, with nearly 70 percent of that domestic, where D+ is concentrated.

  I know some were hoping for another Hamilton moment for D+, but that was never going to happen. Hamilton attracted new subscribers not long after launch, when everyone was stuck at home during the pandemic. And it was a true premiere for those who hadn’t seen the play. But Disney could still justify the $75 million-plus price if Eras engages new audiences in international territories where Netflix has the upper hand. That could mean an increase in engagement, or a boost in subscribers. But I wouldn’t hold your breath for any announcement from Disney on that front.

• Quibi reborn?: Over the weekend, I was made aware of an app called Short TV—not to be confused with the far more professional Shorts TV—a bizarre, potentially A.I.-supported video service that allows users to scroll through minute-long clips of stories based on online romance tropes. The content is not good. But the format (similar to TikTok) is compelling… enough so that it became the second-most-popular download on the App Store, and broke into the Top 10 on Google Play.

  How did this happen? Hyper-targeted, paid marketing on TikTok, of course. Once users downloaded the app, they were met with some free programming and then an onslaught of micropayment options. Anyone who’s played a free iOS game will recognize the tactic. Google Trends data over the past seven days suggests that Short TV is unlikely to have much longevity, but the fact that it was able to convert engagement from one app to another is something that streamers trying to compete with TikTok should study.

The answer, as always, is complicated, but the signs all point one direction. First, I shared data from Parrot Analytics, where I work as V.P. of strategy, highlighting how Netflix has steadily grown its share of audience demand—a proprietary metric encompassing video consumption and social media activity—over the past four quarters as this licensing trend took hold. Peacock also grew somewhat during the same period, but for the rest of the streamers, the data is grim: Demand for Max, Disney+, and Hulu has been relatively stagnant, and demand for Paramount+ has decreased.

Second, I noted, this slowdown is happening while the number of original premieres is declining across the board. Yes, even Netflix is getting smarter about how it spends money, especially in its film division. (Quality over quantity is the mantra for 2024-25, as Matt Belloni and I have both previously reported.) But Netflix also has such a massive financial edge—free cash flow grew to $6.9 billion last year—that it can afford to compound its advantage by buying up co-exclusive rights to many of the best titles produced by its rivals. There’s a reason that Suits (USA), Young Sheldon (CBS), and Band of Brothers (HBO/Max) all surged in popularity once they hit Netflix. That’s the benefit of unparalleled scale. Simply put, Netflix is creating a safety blanket using licensed content from former partners turned competitors to keep its engagement high, churn rate low, and mitigate the risk of investment in other areas.

Finally, the most eye-popping statistic of all: If we project current levels of content licensing, subscriber activity, and revenue trends out to 2028, Netflix could theoretically account for 41 percent of all major SVOD revenue globally, according to Parrot. Add in Disney+ and Prime Video, and those three companies could account for just under 70 percent of all global streaming revenue. Yes, yes, this analysis is speculative, since it doesn’t account for scenarios including potential M&A activity or a broader shift toward AVOD. But Netflix will almost certainly continue to gain revenue share so long as it has the ability to complement its existing catalog with all the best licensed titles.

All this raises the question that I initially posed to the bankers in Palm Beach: If the licensing strategy currently employed by the second-tier streamers isn’t going to work for them in the long term, what’s the alternative? Raising prices to meet profitability targets, but potentially losing customers? Merging with another platform to attain greater scale? Or do they take the path that Sony took early in the streaming wars, and become arms dealers to the biggest streamers, rather than combatants?

It’s not an exact science, but there are a few instances where licensing to a direct-to-consumer competitor makes sense. Namely, when it doubles as a marketing opportunity for a new installment in a series or franchise; when it can entice audiences back to the original platform by increasing awareness of a particular title; or when the data proves that the revenue will not be offset by a negative impact to the licensor’s core subs business.

For studios like Warners or Paramount, for example, licensing a movie to a bigger streaming platform, ahead of the release of a sequel or spinoff in theaters, is a perfectly logical tactic to build excitement and reach a wider, younger audience. This, in turn, creates a more valuable Pay-1 deal. For example, WBD’s decision to license Dune: Part One to Netflix resulted in tens of millions of extra views—including an additional 3.6 million estimated views in its last week of availability on the platform, the same week that Dune: Part Two hit theaters. For WBD, potentially improving Dune: Part Two box office by exposing the first film to a wider audience was more valuable than whatever marginal subscribers it may have gained by keeping the first movie exclusively on Max.

Likewise, there was a clear rationale for WBD licensing Sex and the City—a more than 20-year-old series—to Netflix (beginning April 1) in order to attract a younger audience back to Max for And Just Like That, a successor/spinoff series whose third season drops next year.

Of course, this content-licensing-as-marketing strategy relies on consumers doing a bit of internet research and switching apps. While this isn’t exactly brain surgery, the more friction there is for a customer (especially a young one) between thinking about a piece of content and streaming that content, the less likely they are to subscribe. This is especially true as competition increases.

Alas, as I noted, the streaming industry still lacks the ability to decisively track whether licensing a piece of content to a competitor increases customer retention or acquisition on its own platform. It’s equally difficult to determine the opportunity cost of losing exclusivity, or the price they might pay in higher churn. We can, however, look at overall engagement across different third-party firms to see what type of content is providing the most engagement, and therefore where it might most benefit a competitor. Suits, for example, was a top-charting show on Netflix for months on end, almost certainly generating more value for Netflix, in terms of higher engagement (and increased ad impressions), than the small number of new fans who signed up for Peacock to watch the final (NBC-exclusive) ninth season. As streamers rely more on advertising revenue to offset slowing subscriber growth, the value of licensed content is likely to increase, leading to higher revenue for licensors in the form of higher upfront fees.

Indeed, as advertising becomes a larger revenue driver for streamers, some may determine that it is actually more valuable to simply give up on their own subscription services and license their catalogs instead—becoming content suppliers, rather than platforms. I’d certainly recommend this to at least one legacy company whose rumored sale is a hot topic of conversation these days. Others will be absorbed via M&A. But for those who want to play long-term, being able to make the right move at the right time, not in the service of debt-repayment or short-term gains, will make all the difference between competing with Netflix or cannibalizing themselves.