Streaming Battles

In the entertainment industry, the market of streaming used to be dominated entirely by Netflix. Gradually, other technology and telecommunications players got involved as the phenomenon of streaming took off. One of the companies that quickly understood the potential and invested heavily in the space is Amazon, which through its ‘Prime Video’ platform became very successful and is the most popular provider after Netflix. Third is Hulu, the streaming media service that is part of the broader Disney+ platform owned by the Walt Disney Company. For the rest, the competition and battle for subscriptions is very intense with players like Paramount, Warner Bros, and NBCUniversal all becoming involved and investing billions in the sector.

When the competitive field becomes more crowded and fragmented, it is inevitable that a wave of consolidation becomes a possible reality. One example is Paramount Global, which last month received a takeover bid from Skydance Media. Exclusive negotiations with a time window of 30 days took place, but ultimately did not lead to an agreement for a successful takeover. Last week, Paramount received formal interest from Sony Entertainment and private equity group Apollo Global Management with a joint bid of $ 26 billion in an all-cash offer, at a valuation per share between $17 and $19.50. The offer is being considered by Paramount’s management.

Going forward, the pressure on profitability and the competition will undoubtedly intensify. Big legacy media companies have so far invested very heavily but have not reached the desired profit levels that were perhaps expected. Therefore, they now face the crossroads of either finding targets for a merger or retreating from streaming altogether. Recently, advertising has become a serious option and some platforms are considering either introducing advertisements or increasing subscription prices. This is not great news for the consumers, who opt for streaming precisely for the flexibility of choice and the avoidance of time lost in commercials. The risk here is that the promise of ad-free content might eventually become distant memory and streaming platforms might not look that different vis-a-vis the old, traditional cable TV.

We thank you for your continued support.

The FAM team


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