It’s a tale as old as time — or at least as old as the streaming wars: Should the entertainment business be focused on reach and mass scale? Or should they focus on profitability, to bring back an economic model a bit closer to the glory days of cable TV?
On corporate earnings calls across the sector, executives have been touting their streaming profits and planning, envious of Netflix‘s margins, which hover in the mid 20 to low 30 percent range.
“The way we’re going to get there is through revenue growth and through driving operating leverage through the business,” Disney CFO Hugh Johnston told Wall Street analysts Nov. 13. “We didn’t give a specific revenue guide, but our objective and our aspiration is very much to be growing the top line of that business by double digits, as we did on an apples-to-apples basis in Q4. That’s what we’re looking to do going forward is to grow the top line double digits.”
“The [direct-to-consumer] segment will be — it is profitable next year,” Paramount CEO David Ellison told analysts Nov. 10. “It will be increasingly profitable in 2026. And so from that standpoint, when we look at the growth rates across the business, we believe that we can grow and scale in service, and we’re doing that in a fashion that is profitable.”
It’s the profits, you see! Wall Street wants streaming to be profitable, so executives are focusing on profitability. Reality, of course, is a bit more complicated. Hence the barrage of Black Friday deals, including the Disney+ and Hulu bundle for $4.99 for a year (a steep discount from the $12.99 base price); HBO Max‘s ad tier for $2.99 per month for a year, down from $10.99 (a 70% discount, and by far the cheapest way to get HBO programming); and perhaps most surprisingly is Apple TV, which is offering to shave its monthly fee by more than half to $5.99 per month for the first six months. Apple has historically not participated in the Black Friday discounting, a further example of its efforts to try and grow the reach of its streaming platform.
Still, not everyone is playing the game.
Paramount+ is offering a relatively modest discount of $2.99 per month for only two months, perhaps teeing up next year’s price increase, and giving some heft to Ellison’s comments on profitability. And Peacock isn’t offering any discount as of writing, though Walmart+ subscription gives its users a choice of either Paramount+ or Peacock.
Netflix, of course, has never played the Black Friday discounting game. Given it’s leadership in the space, it’s hard to blame them.
But the steep discounts underscore just how much entertainment giants are still thinking about reach and scale, even as they try to cobble together a streaming business that can be profitable and lucrative. The Disney+ and HBO Max deals are for the ad tiers (of course) which provide ongoing monetization outside of the monthly subscription fee, while Apple’s deal feels more like another example of a service widely seen as subscale trying to get itself on a more level playing field with competitors (Apple TV, it is worth noting, is the only major streaming service without an ad tier).
Still, in order to make streaming profitable, you need to get people in the door. Perhaps this year’s deals are a reflection of that reality. The discounts will still be needed, but the long-term ROI will be higher.
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