OTT streaming: US media conglomerates forced to revamp their strategy

2022 was a particularly stormy year for the main players in the streaming game, and especially for the major media conglomerates. NBCU lost close to $1 billion dollar in the last quarter on its direct-to-consumer business. Paramount and Warner Bros Discovery also disclosed heavy losses worth around $2 billion each in 2022. Finally, Disney reported a loss of more than $4 billion for its D2C business last year. In light of these results, and in a tough global economic environment, the last 3 already announced cost-cutting measures, by laying off employees, reducing the huge content spending, pulling old movies and series from the platforms, and raising subscription prices. As an example, Disney plans to save $3 billion in programming costs (outside of sports) in 2023. Under the pressure from investors to reduce the deficit, SVOD players will have to take significant strategic decisions to overcome the hurdles of a so far unprofitable race. Comcast bet big on Xumo In January, Comcast announced that Peacock's free option would be blocked to new users. This move can appear as surprising since the ad-supported tier was reportedly a significant source of revenue in the US. New users will now have to choose between the Peacock Premium and Premium Plus, respectively priced at $4.99 and $9.99 per month. Encouraging people to actually pay for Peacock represents a good start for Comcast to stop the bleeding. Comcast also stopped giving Peacock Premium for free to Cox subscribers since January, and it should apply to Xfinity customers in the coming months. Comcast can expect a reasonable share of Cox and Xfinity clients to opt to pay for Peacock Premium, now they are not provided with free access anymore. But ending the free ad tier does not mean that Comcast decided to lean against the wind and give up on the FAST opportunity that most media and tech companies have been embracing lately. In other words, this move actually rather proves Comcast’s willingness to crown Xumo as its FAST engine and keep Peacock as its SVOD platform. In a highly competitive streaming landscape, differentiating brands and services cannot hurt. Moreover, last November, Comcast announced that its Smart TVs (manufactured by Hisense) and streaming devices (manufactured by its joint venture with Charter) would rely on Xumo’s interface and brand. This aligns with the strategy of the main OEMs fighting for the very competitive TVOS market, which have all developed a FAST engine at the core of their operating system: Samsung with Samsung TV Plus, LG with LG Channels, or Vidaa with Vidaa Free. Warner Bros. Discovery at a strategic crossroads On its side, Warner Bros. Discovery is reportedly planning to keep discovery+ as a standalone streaming service in...