By Philip Alberstat, Managing Director — Embarc Advisors
In 2017, the battle for domination in the entertainment business began when Disney acquired 21st Century Fox, giving it a boatload of movies, TV shows, and networks like FX and the National Geographic channel.
The Disney move was immediately followed by AT&T acquiring Time Warner in 2018. The past decade has been a relentless acceleration of media consolidation with names like Pixar, Marvel, Lucasfilm, and more being swallowed up by some large corporation.
There is only one driving force behind this media merge frenzy: Streaming!
The dawn of streaming
In the late 2000s, with the advent of platforms like Netflix transitioning from DVD mailing to online streaming, Hollywood felt the first tremors of change. These platforms introduced a novel concept to viewers: limitless entertainment at the click of a button. For the first time, viewers were no longer bound by time slots or geographical barriers.
Traditional media titans’ initial response was a blend of skepticism and passive licensing deals, underestimating streaming’s potential to disrupt the established order. However, as streaming services began producing original content that captivated audiences worldwide, the industry giants awoke to a new reality. The streaming age had dawned, and they were quickly losing their competitive edge.
M&A brings the emergence of giants
Netflix paved the way with a successful foray into original productions with hits like “House of Cards” and “Orange Is the New Black.” Tech behemoths like Amazon and Apple quickly followed, seeing the opportunity to expand their dominion into entertainment by leveraging massive resources to build their own platforms.
In this emerging battlefield, content became the most prized weapon. Traditional media companies realized they needed to multiply their content offerings swiftly to stay competitive. The resulting scramble ignited a series of mergers and acquisitions (M&As) as corporations sought to consolidate content and capitalize on the streaming surge.
M&A activities reached a fever pitch with several landmark moves. In 2016, AT&T announced its intention to acquire Time Warner and merge its telecommunications prowess with a treasure trove of content from networks like HBO, Warner Bros., and Turner. The deal, finalized in 2018, gave birth to WarnerMedia, a parent of the new streaming platform, HBO Max (now simply known as MAX).
Not to be outdone, The Walt Disney Company escalated the stakes by acquiring 21st Century Fox in 2019. This monumental deal brought a vast array of studios, networks, and franchises under Disney’s umbrella.
Similarly, Viacom and CBS remerged as ViacomCBS, which is called Paramount Global today. The new company strengthened its streaming service offerings with Paramount+ (then known as CBS All-Access) at the helm.
With major players armed and ready, the streaming wars truly began, and a global audience basked in the spoils. They received a trove of original content, more choice, and greater control over what, when, and how they watched.
Impact of YouTube and Social Media
YouTube and social media platforms have also significantly altered entertainment consumption habits. YouTube democratized content creation, allowing anyone to become a creator and reach global audiences.
This shift has led to the rise of influencers and independent creators who attract millions of followers and compete with traditional media for viewer attention. Social media platforms like Instagram, TikTok, and Twitter have transformed how audiences discover and engage with content, often serving as marketing tools that drive viewership and engagement for streaming platforms.
The new era of entertainment
This period of intense competition among digital streaming platforms redefined how content is consumed, produced, distributed, and monetized. Its shockwaves impacted industry dynamics, consumer behavior, and the broader narrative of entertainment.
Gone are the days of scheduling evenings around television broadcasts or waiting for a weekly release. By empowering consumers to watch their favorite shows and movies whenever and wherever they choose, streaming platforms increased media consumption and raised consumer expectations for instant accessibility.
Streaming platforms also introduced the concept of simultaneously releasing entire seasons of a series — a strategic move that drastically changed viewing habits. Binge-watching, or watching multiple episodes of a television series in a single sitting, has become commonplace, altering the rhythm of how audiences consume stories. This shift has implications for storytelling, with narratives now designed to be consumed in large chunks rather than spaced out week by week.
Traditionally, films followed a set release pattern: cinema premiere, home video, pay television, and finally free-to-air channels. Streaming platforms disrupted this model, sometimes choosing to release films directly online. This strategy reached new heights during the COVID-19 pandemic when even major blockbusters premiered on streaming services, fundamentally challenging the cinema’s role in the movie industry.
The subscription model of streaming services has also revolutionized the entertainment industry’s financial architecture. Unlike the variable revenue generated from box office sales, subscriptions provide a steady stream of income, altering budgeting, forecasting, and content valuation practices.
Additionally, fierce competition among streaming platforms sparks more significant investments in original content. Streaming platforms are continuously exploring new genres, formats, and storytelling techniques to captivate audiences and stand out from the crowd. This drive for excellence has elevated the quality of content across the board, with television series and films produced for streaming platforms regularly receiving critical acclaim and industry awards.
Hollywood’s traditional gatekeepers are finding their roles increasingly under threat. Once, green-lighting power rested predominantly with studio heads. Today, however, streaming platforms’ data-driven approaches now decide which movies and series will be produced.
The streaming wars have irrevocably altered the entertainment landscape. Questions about market saturation, the sustainability of current models, and the ongoing battle for viewer attention are still uncertain, but one thing is clear. The evolution driven by the streaming wars has forever changed how stories are told, consumed, and cherished, and traditional Hollywood structures will never be the same.
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