Major streaming deal shows how the media landscape will soon look different

Entertainment giants Disney and Warner Bros. Discovery will sell their streamers Disney+, Hulu and Max (HBO) in the US as one package from this summer. This proves once again that the tangle of streamers will be reduced to a few big profitable guys in the coming years.

The redesign of the media landscape is accelerating. The streamers Disney+ (the separate Hulu is already integrated into the Disney streaming platform in the US) and Max from the media giant Warner Bros. Discovery (WBD)

will be available for purchase in one bundle from the summer. There is a choice of a cheaper rate with advertising and a more expensive alternative without. The rates will only be announced later. Both Disney-Hulu and Max – the ad-free formula – are now available for purchase individually for $9.99 in the US.

The deal makes substantive sense in the fight against the silent killers for streaming, such as Warner Bros. Discovery CEO David Zaslav discussed the latest quarterly figures in a chat with analysts. The enemy is called churn: customers who take out a temporary subscription and cancel it as soon as they have watched the most important shows and series. Disney is particularly strong in the segment for children and families, although the range is somewhat broader, just think of a hit series such as ‘The Bear’.

Concullega Max – which will be launched in Belgium on July 1 under the brand name HBO Max – is the top in quality fiction under the HBO label. But it has a broad palette, including reality TV and cooking shows. The bundling allows both giants to offer entertainment for ages 8 to 88 at a reasonable rate, so that someone in the household always has a reason to continue the subscription, which should reduce customer churn. Disney announced this week that its sports streamer ESPN+ will be integrated into the Disney+/Hulu platform.

The deal also makes business strategic sense. The streaming market is highly fragmented, even more so in the US than in our country, because all major media players launched their own platforms in the push from classic TV to online. That is not sustainable, as the billions in losses on their streaming services in recent years demonstrate.

The streaming pioneer Netflix is ​​spitting cash, precisely because its lead has made it the world leader. Disney+ made a profit in the first three months of 2024 for the first time in its five-year existence. Also Warner Bros. Discovery has recently become profitable in streaming: in the first quarter it posted a modest gross operating profit (EBITDA) of $90 million. Zaslav aims to achieve an EBITDA of $ 1 billion for the whole of 2025, while Disney wants to achieve profit margins of 10 percent and more in the longer term.

It is clear that even more profitability must also come from mergers and acquisitions. The entente between Disney and WBD is another important step in that direction. There is also a package deal between Netflix and Max via the telecom giant Verizon. And there are other examples of deals and ententes.

The essence is what Zaslav says about it: ‘Amazon and Netflix are extremely attractive, in a sense they have become utilities such as gas, water or electricity. The bottom line is that people will really want one, or at most two, bundles to meet their entertainment needs. In just a few years’ time the media landscape will look completely different.’

Zaslav’s message is that at most there will still be room for a few large players who collaborate, merge and perhaps absorb the small independent players. An interesting evolution is the joint bid by the investment fund Apollo and the Japanese Sony for Paramount. According to The New York Times, this is aimed at merging the Paramount film studio with Sony’s, and selling the TV network and streamer Paramount+. Another possible prey is Peacock, the NBC streamer, which is owned by cabler Comcast.

‘There has been a lot of talk about distribution in recent years (the streaming platforms, ed.) versus content, and that the distribution companies will be the big winner,” says Zaslav. ‘I’ve always said: in the long term, content is king. That’s why we started focusing on our film and TV production business, to have a full video library. The flow of new productions will be one of the strongest ever over the next year and a half to two years. ‘Dune: Part Two’ is this year’s highest-grossing film with $700 million at the box office. This month will see the release of ‘Furiosa’, in the Mad Max franchise.’