Consumers are swimming in a sea of choices from streaming TV services, reveling in what is ostensibly the golden age of in-home entertainment, while a tidal wave of mergers and acquisitions looms on the horizon.
The 2022 merger of AT&T’s WarnerMedia and Discovery, now branded Warner Bros. Discovery, was only the first swell of the gravitational forcefield that will reshape the streaming landscape’s global geography and challenge the dominance of Netflix and Disney+.
Amateur Hour Is Over
After AT&T raced to exit the stage before it got crushed struggling to win a war that it had no business entering in the first place, its vast library of content is now being steered by people who do.
With iconic brands like HBO, CNN, Warner Brothers Entertainment, Discovery Channel, Cartoon Network, and category-killing streaming services HBO Max and Discovery+, the combined company is strategically positioned to emerge as a third dominant industry player.
The fragmentation of multiple offerings competing for attention, subscription revenue, and advertising dollars may be great for consumers but it squeezes profitability for operators.
Path To Profitability
This makes the case for consolidation and bundling channels a no-brainer. That’s why Warner Bros. Discovery will almost certainly consolidate its streaming powerhouse brands on a single platform, validating the business model for rivals to follow.
Meanwhile, Amazon’s $8.5 billion acquisition of MGM and Disney’s $52.4 billion takeover of Fox’s entertainment assets have sparked concerns over the concentration of power and influence in the media industry.
In a single pen stroke, Amazon acquired more than 4,000 films and 17,000 TV shows from MGM, including the James Bond franchise as Disney acquired the 20th Century Fox film studio and the Sky and Star satellite broadcasters from Fox.
This is a game changer because Amazon is now in a stronger position to compete as a stand-alone streaming business beyond simply a “value add” to its Prime membership. This could provide the foundation for a spin-off from the parent company to unlock value in its journey to independence.
A separate company would empower Amazon to invest billions in original content and exclusive deals while upselling its 200 million subscribers on a separate streaming service with a special “Prime member-only” monthly streaming subscription.
Perfect Storm For Consolidation
By combining vast collections of shows, movies, and characters, there will only be room for three to five huge media companies.
Smaller players will either have to merge with the giants or risk being blown out entirely. Consolidation drives economies of scale, increased bargaining power, and access to more diverse and loyal audiences.
On the flip side, when large corporations dominate the market and stifle competition, antitrust issues, loss of creative diversity, and higher prices for consumers are inevitable.
It’s no surprise that the Disney-Fox deal has cast a hot floodlight on Disney’s dominance over the box office and its potential impact on the creative freedom and artistic expression of filmmakers.
A natural consequence is that smaller streaming services like Peacock, Paramount+, and Hulu may struggle to survive or grow in a market dominated by a few juggernauts.
Zero Sum Game
Considering that the global video streaming market is expected to swell to an estimated $1.9 trillion by 2030, the pressure to swallow smaller rivals and sweep up content in multibillion-dollar deals will continue to accelerate exponentially.
Ultimately, the future of streaming TV hinges on the outcomes of the regulatory, legal, and consumer battles over these mergers and acquisitions.
The golden age of streaming is over. Consumers will be forced to compare the benefits and drawbacks of a smaller number of streaming services at higher monthly price points and settle on one or two that fit the bill.
SWOT Report is now Business Intelligence Weekly. The creator and journalist behind the digital publication, Andrew Ellenberg, is President & Managing Partner of Rise Integrated, an innovative studio that creates, produces, and distributes original multimedia content across digital touchpoints. To submit story ideas or inquire about custom multimedia publishing, call 816-506-1257, email [email protected], or read more of his work in Forbes. To learn about his company check out this profile story.