TV & Streaming

What to expect from the streaming industry in 2023, according to experts

Only “the fittest of the fittest” will survive in a year of more ad-supported tiers and media consolidation, analysts predict.
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Francis Scialabba

· 4 min read

From the debut of ad-supported tiers on Netflix and Disney+ to Thursday Night Football’s migration to Prime Video, 2022 was a transformative year for the streaming industry.

But we still have plenty of questions. Which streaming services will keep thriving? How will their ad businesses fare? And which companies stand to get gobbled up as the business continues to consolidate?

We asked three researchers and analysts who keep a close eye on the media industry to help us make sense of the past year and what to expect in the coming 12 months. Some answers have been edited for clarity.

What is the biggest challenge facing streaming platforms in 2023?

Mike Proulx, VP, research director, Forrester: It’s likely that content quality will suffer in 2023. Streaming services have been paying exorbitant production and licensing fees, and it’s simply not a sustainable path to long-term profitability. As a result, we’ll see a mixed bag of content—likely more cheap and churnable content at the expense of quality original series and movies. This is a problem since what keeps users subscribed to their favorite streaming service is great content. Streaming services must find the right economic calculus that enables them to maintain quality while profitability growing.

Geetha Ranganathan, senior media analyst, Bloomberg Intelligence: Platforms have introduced ads, but given the overall macro weakness, it will be interesting to see if they can get the traction that they had hoped for. Cost rationalization and reinvigorating subscriber growth will continue to be the biggest challenges [while also] preserving legacy TV’s economics.

Eric Schmitt, research director, Gartner: The biggest challenge will be retaining the subscribers and the share of viewing that they have…It’s natural that we will see a winnowing and a narrowing of those services, especially as providers start to clamp down on account-sharing and password sharing…A second challenge, nearly as big, is getting their advertising formulas right. There are big, unanswered questions: How many breaks can you put in a show? How many minutes of interruption will consumers tolerate? How aggressively should you use folks’ personal data to target ads?...We’ll see the services separate according to how well they do.

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What major media deals do you anticipate in 2023?

Ranganathan: Consolidation is very much the natural outcome of an impending streaming shakeout. Sub-scale platforms like Paramount+, Peacock, and AMC+ will need to merge to cut costs and survive. I think a lot of attention will be on Paramount given the deterioration in its legacy business and an urgency to sell.

Schmitt: I think conditions are ripe for some fairly dramatic restructuring in the media business…The logic that held in the past around, say, combining all kinds of television programming—sports, news, children’s programming—into one structure may not be as compelling now as is other ways to align those assets…When you have a single player that owns the studio, the distribution, the ad-tech stack, the data that powers the ad-tech stack, and the device (including the screen and the speaker), that is a fundamentally different model than a studio that works through a cable or broadcast, or satellite telecom distribution model to an open marketplace of devices. We will potentially see more of that vertical integration.—Schmitt

Which streaming services do you think are best positioned for success in 2023?

Ranganathan: Netflix and Disney+ will continue to dominate even as new tech platforms (Amazon Prime) gain popularity. But the biggest question is what the future of ESPN+ will be and whether it will become the destination sports streaming platform with Disney biting the bullet and abandoning traditional TV distribution. Equally important will be Warner Bros. Discovery’s launch of its new streaming product and how well it executes.

Schmitt: It’s going to be the fittest of the fittest. The streaming services that have the backing, the scale, and the financial diversity to play the long game and to run at lower margins, or breakeven margins, will be best positioned for survival. The pressure is now on to profitably deliver these services. The days of just grabbing market share and eyeballs and being one of the five services that people have in their basket? That phase of market development is winding down.

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