Bubble on global platforms? Netflix's dominance threatens alternatives

BarcelonaThe call golden age The popularity of series does not arise spontaneously: it is flooded with billions that large global platforms invest in producing their content in the hope of gaining good positioning in the so-called streaming wars, aware that not all of them will survive. But, for now, this strategy is proving costly, and some of the efforts to attract subscribers are resulting in a bottom line that's difficult to justify. This is the current situation for the major global platforms.

Netflix

A giant with clay actions

The saying goes, "He who strikes first strikes twice." In the last quarter, Netflix surpassed the psychological barrier of 300 million subscribers thanks to its recent commitment to including live sports in its offering. This allowed it to generate revenue in the last fiscal year (from October to September) of €36.1 billion and report a massive profit of €7.566 billion, after deducting the €15.9 billion it spends on content purchases and the €12.6 billion in other expenses. The main factors that explain this positive performance during 2024 are considered to be two: the operation to make it more difficult to share passwords and the implementation of the economic subscription model in exchange for ads.

The outlook may seem rosy for the platform led by Ted Sarandos, but there are some clouds to keep in mind. First, there is the perennial danger of stagnation in an increasingly competitive environment, especially now that other platforms have also implemented restrictive password policies and ad-supported options. But above all, investors fear that the trade war Trump is launching will have a negative impact, especially if it affects the country's economy.

In this sense, Forbes It recalled that in 2022, when Netflix seemed to be stagnating, its shares lost 72.1% of their value in just five months. Having many small shareholders makes its shares more volatile and, therefore, more exposed to circumstantial fluctuations. The publication believes there is a real risk of a 60% depreciation in the company's value if the American economy enters a recession. The recent fee increases applied by the platform could also work against it if the time comes to tighten its belt again on a global scale. The emerging commitment to live sports is one of the company's strategies to try to continue growing and setting the pace.

Disney+

First (and timid) benefits

It was one of the last giant platforms to join the fray, but it did so with great success. Disney+ appeared in the fall of 2020, in the midst of the pandemic, and benefited from the huge need for family television content during the lockdown. The century-old film studio, however, invested such a huge amount of resources to ensure its relevance that the question is whether it will ever be able to recoup its investment. To give an idea of the magnitude of the drama, Disney's platform division (which also includes Hulu and the sports division ESPN+) had €10.5 billion in losses in less than four years. And this is triple the total loss the company has made with its iconic Disneyland Paris, which until now was considered one of the most notorious failures of this entertainment conglomerate.

All in all, the trend is positive, and after quarter after quarter of losses, this direct-to-consumer (DTC) content division has emerged from the red in the last three fiscal years. In the last quarter, it reported an operating margin of €271 million. Once again, strict password policies, cost cuts, price increases, and ad-supported subscriptions have been key in marking a turning point in the downward trend Disney has been experiencing since early 2022, when the end of the pandemic slowed the platforms' growth. The company's CFO, Hugh Johnston, believes they could end 2025 with more than €900 million in profit. If this trend continues, they would not recoup their investment until 2035. Hulu has nearly 50 million subscribers, and ESPN+ around 24.9 million.

Apple TV+

Little, good... and deficient

Apple's television division is far from the waterline that would represent the balance between content expenditures (around €5.65 billion annually) and revenue. A recent article in The Information, with anonymous sources, claims that, despite having cut series purchases by 500 million annually, the service is still loss-making by around 935 million euros annually.

In any case, it doesn't seem like the mobile giant has any reason to lose sleep over this. It's still a company that had a turnover of 362 billion euros and generated a profit of 87 billion in the last fiscal year, which ended in September 2024. And, after all, the decision to set up a platform wasn't so much about profitability in itself as becoming another player in the content system. , which come with a free three-month complimentary subscription.

In this way, with a relatively small offering of titles but generous budgets and sufficiently applauded artistic results, this service has managed to add around 45 million subscribers, although Apple does not specify how many of them actually pay for the service or are part of the promotion.

Prime Video

Waiting for the return, still

Amazon's platform shares with Apple TV+ the fact that it was conceived as a promotional system for another product, in this case not iPhones but for the Prime system, which guarantees fast and free deliveries of physical products (in exchange for an annual subscription). The company has found that Prime users buy more from Amazon and, therefore, offering them a friendly gateway with a cheaper on-demand video service than other platforms stimulates its turnover in the virtual store, although their subsequent consumption of films and series is relatively moderate.

Thus, Amazon invests nearly 8 billion euros in content and boasts of having the most expensive series in history, The Lord of the Rings: The Rings of Power, based on the universe of JRR Tolkien. But the return has yet to arrive: (estimated) losses amount to €1.87 billion. This is again little more than a rounding error, for an ocean liner with a turnover of €591 billion and a profit of €59 billion.

Max

The old world can drag her down

The HBO channel is going invent Pay TV has been around for just over half a century. But traffic in the platform era is proving difficult. Despite having a reputation as the ultimate brand of prestige, having changed hands several times in recent years as part of merger processes has compromised this identity, as Warner Bros. Discovery—its current owner—wants it to compete with the rest of the global platforms, which have a more generalist spirit.

From then on, HBO transformed into Max and has achieved a more than decent share of subscribers: 116 million. The company spends $18 billion on content, but doesn't specify what fraction goes to Max and what to the other multiple business lines. In any case, the platform posted profits of €1.2 billion. Of course, there is some joy among shareholders, but above all, there is concern, because the company's core business is traditional channels, which have shrunk 5% in just one year, have seen profits drop 13%, and have seen advertising fall 17%. If television continues to decline and enters losses, Max's profits may not be enough to prevent another seismic shift in the company.

This fear is reflected in the company's share price, which three years ago was around $25 per share and now barely trades around $11. However, a recovery is seen compared to the lows of a year ago.

Others

Arriving late is paid for

The other contenders are paying the price for having started the race late or for not enjoying the global penetration of their competitors. Paramount Plus (not yet available in Spain) lost €1.48 billion last year for the media conglomerate controlled by Shari Redstone. Peacock, the Comcast platform, is also unavailable here, currently losing €2.7 billion annually by maintaining its streaming service. In the case of SkyShowtime, the service's financials are improving, but the parent company reports €240 million in losses due to its other loss-making business lines.