The Year the Streaming Bubble Burst – The Ringer

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2022 was a year that undermined some of the core assumptions driving Hollywood’s digital revolution, and one that made it clear that the salad days of streaming are firmly behind us
In late November, AMC Networks announced impending layoffs and the departure of Christina Spade, its CEO of just a few months. The move itself was not unusual amid rising economic uncertainty; earlier that month, tech giant Meta had eliminated more than 11,000 jobs. But a memo to AMC employees from executive chairman James Dolan—yes, that James Dolan—explaining the decision struck a nerve across entertainment. “It was our belief that cord-cutting losses would be offset by gains in streaming,” Dolan wrote. “This has not been the case. We are primarily a content company and the mechanisms for the monetization of content are in disarray.”
In a corporate-jargon kind of way, Dolan summed up the lay of the land: Streaming may be the future, but in the present, it’s not paying the bills. The subtext of the Streaming Wars always has been that the heady days of free-for-all spending wouldn’t last forever. The battle between heavyweights like Apple, Amazon, and Disney—and smaller companies like AMC, which operates more niche services like AMC+, Shudder, and ALLBLK—was to be one of the handful of players left standing, not to generate a rising tide that lifts all boats. But 2022 was a year that undermined some of the core assumptions driving Hollywood’s digital revolution. It was also a year that made clear the salad days of streaming are firmly behind us in ways tangible to the average consumer, not just the professionals reading Deadline comments on their lunch break.
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At the beginning of the year, for example, you could stream Westworld on HBO Max in anticipation of the onetime hit’s upcoming season. Now, not only is Westworld canceled; it’s been removed from the platform entirely so its catalog can be sold to some as-yet-undetermined third party. A few months ago, millennial home cooks like me could look forward to streaming chef Alison Roman’s new show on CNN+. Now, the project has been delayed because its entire platform was abruptly scrapped. Back in January, you couldn’t find ads anywhere near Netflix’s interface. Now, you can trade a few minutes of your time for a cheaper subscription rate, a violation of what was once one of the company’s most closely held principles.
That principle could be summed up as follows: The future of entertainment is a revenue model that trades traditional sources of income—the box office, syndication fees, advertising—for ease of access (by the consumer) and explosive growth (for the company). Powered by subscriptions, debt, and investors, Netflix seemed like it could actually make good on this promise for much of the past decade. It spent an enormous sum of money to create movies and shows that appealed to a truly global audience, then attracted enough paying customers to justify the expense. Along the way, it quite literally changed the way we watch TV. Users were trained to expect entire seasons to binge on release, marathoned hour-long episodes without act breaks, and became accustomed to imports with subtitles as a simple fact of life.
Other entertainment companies soon followed suit. Among them were Disney, which launched Disney+ in late 2019, and WarnerMedia, the original parent company of HBO Max. But since the latter officially merged with Discovery Networks this April, almost a year after the new entity was announced, it’s come to symbolize the limits of streaming dependency for businesses and fans of their output alike. That’s in part because CEO David Zaslav, faced with tens of billions in corporate debt, has made himself a spokesperson for the idea that putting all one’s eggs in a very expensive basket is deeply unwise. “The grand experiment of creating something at any cost is over,” he declared last month, dismissing his competitors’ (and predecessors’) strategy of “spend[ing] money with abandon, while making a fraction in return.”
Some of this pivot has been relatively easy to root for, like an increased emphasis on theatrical releases after the previous regime put its entire 2021 slate on HBO Max and in theaters simultaneously. (The tactic successfully boosted the service, but also alienated longtime collaborators like Christopher Nolan, who called Max “the worst streaming service” before decamping for Universal.) But it’s also led to some deeply unpopular decisions. This summer, HBO Max began the first of what would turn out to be multiple purges: canceling shows (Los Espookys), removing them from the platform entirely (Vinyl), or both (Gordita Chronicles, Love Life, Raised by Wolves, and more). Most shockingly, the service scrapped entire near-completed films (Batgirl) and seasons of TV (the previously renewed Minx).
Such drastic measures can be partly ascribed to tax writeoffs specific to the aftermath of a merger. But they also represent a return to how TV used to work—a restoration of old ground rules, and a rupture of new ones a whole generation of viewers have grown accustomed to. It wasn’t always the case that a show’s complete archive could be accessed on command, nor that its initial distributor would hold on to it in perpetuity. Shows like FBoy Island and Raised by Wolves would be leased out to make extra money for their studio, and that’s exactly what Warner Bros. Discovery plans to do with them now. If you wanted to watch them after the fact, you could buy a box set, or hope to catch a rerun while channel surfing. Many former HBO Max series seem headed for the latter’s modern equivalent: free, ad-supported services like Pluto or Tubi.

Even entertainment’s great disruptor has taken steps toward a more traditional model. Less than two weeks after Warner Bros. Discovery was born, Netflix announced its first subscriber loss in over a decade, followed by an even steeper drop the next quarter. The ensuing drop in its share price—still less than half of what it was at the start of this year—had a ripple effect throughout the industry, with peers like Disney and Paramount Global sinking, too. In response, Netflix announced the aforementioned advertising tier; it’s also rolled out more minor experiments like an upcoming Chris Rock special to stream live, another reversal of a once-sacrosanct internal rule.
Batch releases, like the recent two-part rollout of Harry & Meghan, have grown more common in recent years, both on Netflix and other platforms, splitting the difference between binge and weekly release. Meanwhile, Knives Out sequel Glass Onion will be closely watched when it lands on the service this weekend; if it performs well enough, the film could make a case for more trial balloons like the strictly limited, one-week run around Thanksgiving that brought in an estimated $15 million from just 700 theaters. For all the complaints that Netflix was leaving money on the table by not extending that window, if there’s evidence the week helped boost Glass Onion’s performance on the platform itself—as Zaslav says has been the case with titles like The Batman on HBO Max—it could lead to even more experimentation down the road.
A common joke holds that media has innovated itself right back to where it started. Commercials, movie theaters, secondary markets: All of them, we’re rediscovering, had their virtues all along. But it’s not as easy as flipping a switch to bring back the old way of doing things. Pay cable continues to decline, while the box office still lags behind its pre-pandemic totals by a full third. Part of that drop is due to lack of supply, but also a general reluctance to head to the multiplex for genres we’ve been conditioned to think of as home viewing. Even Netflix’s ad tier is hardly a panacea. According to the Wall Street Journal, just 9 percent of new signups in the U.S. last month opted for ads, slightly less than half of whom were existing subscribers switching over from an ad-free plan. Before that, Digiday reported that Netflix is falling short of the viewership it promised to advertisers to the point of offering refunds. The company is having a hard time undoing the expectation of interruption-free amusement it helped create in the first place.
That leaves companies between a rock and a hard place—or, as Dolan would put it, in disarray. Take Disney, whose shocking CEO shuffle last month was the direct result of a billion-dollar loss on streaming. (Other factors played into the board’s dissatisfaction with Bob Chapek, but that was the deciding one.) But once the high of Bob Iger’s return wears off, Disney will be left with the same hard facts facing everyone else. Unlimited growth and pre-streaming profits have been revealed as the fantasies they always were, while previous paths to sustainable production are crumbling in our rearview mirror. It’s a grim note to end the year on, but better to head into 2023 with open eyes.
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