The conventional wisdom in the streaming business is a bit like the Mark Twain joke about New England weather: if you don’t like it, wait 15 minutes. In the beginning, the thinking in Hollywood was that there were only a few big streamers, Netflix, Hulu, and Prime Video, none of which yet posed an existential threat, so why not license them The Avengers or The Office and enjoy the hundreds of millions of dollars in fees? This era, of course, was followed by a mad scramble by virtually all the major players—Disney, WarnerMedia, NBC Universal, Paramount—to launch their own platforms and claw back hits to out-walled-garden each other. As Bob Iger famously put it, “We had been selling nuclear weapons technology to a third world country, and they were now using it against us.”
Now, in this post-Covid, post-correction, belt-tightening era, Hollywood has realized that winning market share is hard, and the streaming business is expensive and comparatively low-margin. So another, David Zaslav-articulated pivot has begun: spend less but also efficiently monetize each piece of content based on its inherent value. Suddenly every executive that I talk to is surveying their overflowing vaults to determine which titles should remain exclusive and which have more value if they’re rented out or sold entirely to third parties. And just as meaningfully, many are wondering if they can strip-mine assets without supercharging competitors, as HBO did by licensing Westworld to Tubi, or Peacock accomplished by selling Girls5Eva rights to Netflix. They’re trying to feverishly make the numbers work without harming their brands.
If the past few years were an arms race, this next phase is all about free trade—or, as C.F.O.s like to call it, capital efficiency. So how should companies rejigger their content strategies now that the rules are being re-written again? It likely comes down to four issues that will define the era as the streaming economy contracts.