Streaming Wars Heat Up: Mergers Loom as Smaller Platforms Struggle to Compete
The proliferation of streaming services has created a crowded and competitive landscape, with industry giants like Netflix and Disney dominating subscriber numbers. This intense competition is forcing smaller players to explore strategic alliances and mergers in an effort to gain market share and achieve profitability. Several reports indicate that executives at NBCUniversal’s Peacock service are actively seeking ways to boost their subscriber base, suggesting a growing realization that standalone success may be challenging to achieve.
According to a report by The Information, Peacock’s "monthly active ad-supported accounts" stand at approximately 11.3 million. This figure pales in comparison to the subscriber numbers of its larger competitors. Disney+, for example, boasts a staggering 95 million subscribers, while Netflix has surpassed 200 million. While NBCUniversal disputes the accuracy of the reported figure, calling it "inaccurate and low," the discrepancy highlights the challenges Peacock faces in gaining traction in the crowded streaming market.
One potential avenue for growth involves merging or bundling with other services. The Information reports that NBCUniversal has approached ViacomCBS with a proposal to bundle Peacock with CBS All Access, which is soon to be rebranded as Paramount+, at a discounted rate. ViacomCBS executives reportedly expressed interest in this concept, particularly for potential offerings in overseas markets. This suggests that both companies recognize the potential benefits of combining their content libraries and subscriber bases to create a more compelling value proposition.
Interestingly, NBCUniversal CEO Jeff Shell, prior to assuming his current role, reportedly suggested that the company would need to merge with WarnerMedia to remain competitive in the long term. While there is no indication that such a deal has been proposed, the fact that senior executives are considering such drastic measures underscores the intensity of the competition. Neither ViacomCBS nor WarnerMedia has publicly commented on these reports.
The exploration of potential mergers and partnerships among smaller streaming services is hardly surprising, especially for legacy media brands like CBS, NBC, and Discovery. These companies are facing the challenge of adapting to a rapidly evolving media landscape dominated by tech-driven giants. NBCUniversal has reportedly approached Discovery about potential content licensing agreements, further demonstrating the willingness of these companies to explore collaborative strategies.
The sheer volume of streaming options available to consumers has created a situation where the market is oversaturated. With Netflix and Disney+ establishing themselves as the primary subscription services for many households seeking to cut the cord from traditional cable, other platforms are struggling to carve out a significant share of the market.
A key consideration for consumers is the overall cost of maintaining multiple streaming subscriptions. At some point, the cumulative monthly fees can exceed the cost of a traditional cable package, undermining the original goal of saving money. Additionally, there is a limit to the amount of content that any individual or household can reasonably consume. For budget-conscious consumers, it makes more sense to prioritize a few services that offer high value rather than paying for numerous subscriptions that are not fully utilized.
The question of which streaming services might ultimately team up remains uncertain. A partnership between Peacock and Paramount+ or Discovery+ would seem more logical than a combination with HBO Max, given the different content strategies and target audiences. However, the launch of HBO Max demonstrated that conventional logic may not always prevail. AT&T’s decision to consolidate all of WarnerMedia’s assets into a single mega-service, despite potential brand dilution and audience confusion, suggests a belief that quantity trumps quality.
The presence of advertising is another crucial factor in the streaming landscape. Peacock offers both ad-supported and ad-free subscription tiers, while CBS All Access and Discovery+ also feature ad-supported plans. HBO Max, however, currently operates without advertising. There are indications that this may change, with plans to introduce ad-supported tiers as early as this year. A potential merger involving HBO Max could involve segmenting content, with broadcast and licensed programming featuring ads and premium projects residing behind a paywall.
HBO Max has also faced challenges in subscriber acquisition. With just over 17 million activations, it lags behind its competitors. The pressure to increase subscriber numbers and generate revenue is likely to drive further consolidation and strategic partnerships.
The underlying message is clear: mergers are inevitable. No streaming service can be sustained indefinitely without generating substantial revenue. As the streaming wars intensify, the need for strategic alliances and consolidation will become increasingly urgent. The landscape is constantly evolving, and the next few years will likely witness significant shifts in the competitive dynamics of the streaming industry.
The added responses from WarnerMedia and ViacomCBS declining to comment further emphasizes the sensitive nature of these potential deals and the high stakes involved. The streaming wars are far from over, and the battle for subscribers and profitability is just beginning.
