Traditional Media Streaming Has a Dim Future

Over the past 2-3 years, most of you will have come across at least a few news articles, YouTube essays, podcasts etc on how “Hollywood is Dying”. To be clear, “Hollywood” has now become shorthand for the entire American entertainment industrial complex (including legacy TV, cable networks, music, video games etc) rather than just movies- as it used to be, in the past . While this change might sound odd at first, it has a lot to do with the unprecedented levels of corporate consolidation in that sector within past two decades, convergent management styles as well as lateral movement of talent and executives between previously distinct parts of that industry. Curiously, this degree of consolidation and blurring of lines is largely absent in other parts of the world and has an important role in the ongoing demise of that sector- but that is best left for another post. Getting back to the topic of this post, almost every semi-famous commentator on this phenomenon thus far seems to have their own take on the ‘real’ cause/s for this obvious decline- influenced by their favorite hobby horse.

Here is a list of the most common alleged causes- excessive financialization of creative industries, corporate risk averseness and general sclerosis, forced incorporation of unpopular ‘woke’ ideologies into their products, technology driven shifts in viewership such as the availability of streaming services, rapidly increasing and ludicrously large production budgets, preferential hiring of borderline incompetent people with massive egos, LLM-based “AI” etc. To be fair, each one of these factors (except “AI” which is mostly a big fraud) has contributed to ongoing demise of traditional entertainment media- but they are, in my opinion, merely external manifestations of much deeper and systemic issues, some extending far beyond the American entertainment industry. To better understand what I am talking about, let us focus on something related to the current “Hollywood” situation, but which receives far less public attention- namely the much less obvious but equally real decline and dim future of traditional media streaming services such as NetFlix, Amazon, Disney+, Hulu, HBO etc.

At this point, some will be tempted to give me the “official numbers” which purport to show that streaming services have many tens to hundreds of millions subscribers each. Others will try to tell me that the many shows and films produced by these streaming services are among the only bright spots on the American entertainment landscape. But is that really the case? Let us use NetFlix, which is by far the most profitable of them, as an example. While Netflix made its first profit in 2003 (about 5-6 years after it was established in 1997), that was years before the streaming era started and when Netflix was a mail-order DVD rental service. Since its transition to a media streaming platform, its margin of profit was unusually low by Silicon Valley standards for many years. It was only after the COVID crisis of 2020, that Netflix became consistently and reasonably profitable- for obvious reasons. But more importantly, NetFlix is still the only somewhat consistently profitable traditional media streaming service. But why is that so and what is stopping other legacy media streaming services from replicating NetFlix’s relative success?

Alternatively, why did videocentric social media sites such as Instagram, TikTok etc became reasonably profitable much faster that streaming services such as NetFlix after their introduction. And yes.. I am aware that even in 2025, the biggest one of them, YouTube, barely breaks even or operates at a small loss, but is nevertheless kept afloat by Google because of how it ties into their core business model- which is based on harvesting user data and selling opportunities for advertising on other sites. So let us talk about what makes the production of mass entertainment profitable- whether legacy or new. Historically, the mass entertainment industry which began after the development of cinema towards end of 19th century has never been predictably profitable. Sure.. it made a small percentage of connected and lucky people plus their flunkies very rich, in addition to providing a decent lifestyle for many skilled technical workers in certain unionized occupations which support that industry.

But on the whole, the modern entertainment industry was never a safe and profitable industry. This was true decades before media streaming, platform fragmentation and silicon valley entered the picture. Every entertainment company still around today has come close to financial ruin on multiple occasions in its past. But why is this sector so risky and what does that have to do with legacy streaming platforms having a dim future? To understand that we have to be honest about some fundamental features of entertainment that are different from almost other product and service- starting with the fact that the success of any given entertainment product is very specific to culture, era and even fashion. How many of you think that seminal and very successful movies such as the Matrix, Jurassic Park, original Star Wars trilogy, Back to the Future trilogy or the even LOTR trilogy would have been made or become so successful in.. say.. India or China? Even more mainstream western blockbusters such as Forrest Gump, Twister, Notting Hill, the Sixth Sense, Saving Private Ryan etc were never big outside the West. Alternatively how many Bollywood hits have become huge commercial successes in the West? What about Chinese or Hong Kong films? What about Mexican and Latin American Telenovelas? You get the point..

The era and timing when an entertainment product is first released has a huge impact on its financial and critical success. Imagine the 1960s Batman TV series being made let alone released in the 1980s, or even 1970s. Would MASH be made in 1990s. There is a reason why the vast majority of spinoffs and sequels of famous TV shows and films are failures. Sometimes, it is about social and legal mores- imagine shows such as the Sopranos, Mad Men or Breaking Bad being even approved any time before cable TV became a fixture of entertainment in USA. Or imagine the sort of music which was successful in the 1970s being made in 1980s or 1990s.This holds for video games too as only a very small percentage (examples- Half Life 2, Diablo 2, GTA3-5) are truly classic, pathbreaking and stand the test of time. Then there is the often forgotten issue of one version or take of the story being much more popular than others. Most people will remember The Matrix, but few remember Existenz. The same is true for the Graduate (huge success) and You're a Big Boy Now (almost forgotten), Leviathan (success) and DeepStar Six (forgotten), Contact (success) and Arrival (forgotten). Or just look at the large numbers of songs where the cover was far more famous than the original. In other words, success in the entertainment industry has always been hard to predict.

But why is the fickle nature of success in the entertainment industry a much bigger problem than in the past? And why is it a far more serious problem for traditional media streaming services than new media streaming like TikTok and Instagram? The answer to the first question is as follows: in the past, people who produced and financed films, TV shows etc were fully aware of the unpredictable nature of success in that industry and accordingly put their eggs in many baskets- from low-budget flicks, medium budget cinema to expensive spectacle heavy films. Similarly, the vast majority of TV shows which failed to show enough promise were cancelled within a few episodes or even sooner. It was not unusual for only one show out of ten to get a second season and even the fragmentation of media landscape by cable TV networks in 1990s resulted in only a modest improvement in the odds of a show getting a second season. These sort of strategies did a lot to mitigate the risks inherent in that sector. And there used to be a lot of advertising revenue available for anything that was broadcast on TV networks- both traditional and cable.

Broadcast and cable TV networks (aka the predecessors of media streaming sites) could not have existed without advertising revenue- something that is no longer a serious option for traditional media streaming sites, because nobody below a certain age can tolerate the massively increased amount of advertisements which cause a far bigger disruption of the viewing experience than their predecessors. In other words, media streaming sites cannot depend on advertisements for most of their revenue- as was the case in past. Hence, user subscriptions account for over 90% of the revenue stream of traditional media streaming services. As it turns out, the vast majority of people are loathe to pay for more than one or two streaming subscriptions. But why not? Didn’t people pay for large cable TV packages in the past? Well.. yes they did- but that was in the era before there was any real competition to TV in the forms of social media, short-form streaming (TikTok, Instagram etc) and YouTube etc. The real competitors of traditional media streaming sites are free for the user, much easer to access on multiple devices, have a huge diversity of content, more engaging with both viral and sticky creators who get paid far less than actors and supporting crew in conventional media productions. In case you are wondering, the ‘free for user’ nature of new streaming media is subsidized by advertisements and user data harvesting.

Let us now move on to the self-inflicted problems of traditional media streaming services, starting with issues related to continuous budget inflation. By now it is well known that almost any movie or series financed by NetFlix, Amazon, Apple etc cost a lot of money. In extreme cases, a single season with 8 episodes costs more than entire movie trilogies did two decades ago- and they still perform dismally. It also does not help that even NetFlix has less than five culturally significant shows over the last decade- despite pending 10-20 billion dollars each year on developing new shows and films for streaming. Other streaming services have done even worse at developing true and lasting hits. Indeed, the most watched shows on traditional media streaming services are still those very popular old shows that were developed and produced by TV networks and Cable TV channels. It is telling that mediocre and often repetitive old shows such as the the Office, Friends, Suits, Grey’s anatomy, NCIS, the Big Bang Theory, Gilmore Girls and Supernatural consistently outperform those developed inhouse by streaming services such as NetFlix, Amazon Prime, Apple TV etc. The same holds true for animated shows where legacy offerings such as Family Guy, Bob’s Burgers etc outperform anything similar developed by streaming services.

While I could write a small book on the multitude of mistakes that streaming services are making- and many on YouTube have made multi-hour long video essays on that topic, that discussion is best reserved for another time. Instead let us focus on the consequences of the continued poor profitability of traditional media streaming services. Of all these services, only Netflix’s business model is principally built around the streaming of traditional entertainment media. The sharp eyed might have noticed that media streaming is a minor part of the business model of Amazon and Apple- and they could, and likely will, walk away from providing such services if they remain a drain on their other business ventures in the future. Disney+ is an interesting case because they do have a huge library of legacy media, mostly acquired through mergers in the past two decades. However that service is still struggling to make a profit, let alone do so consistently. Hulu is glorified cable TV and all the others are consistently running losses or are too niche. To make a long story short, even after displacing network and cable TV, traditional media streaming platforms are not doing too well and most don’t have a bright future.

So what does the future hold for such streaming services? Firstly, it is unlikely that all such services will disappear in the near future. It is clear that 1-3 such services could operate under conditions of modestly but consistent profitability in the current media environment. As things stand right now- NetFlix, Disney+ and perhaps Hulu have a future. However all three will have to seriously overhaul their current business model and practices if they want to remain in good shape past the next 2-3 years. Amazon streaming and Apple TV might be around for longer than many expect, they have no real future because they account for a tiny fraction of the business interests of their parent companies. Consequently, they are unlikely to make the massive and systematic changes in their practicesnecessary for real growth, cultural relevance and consistent profitability. In summary, traditional media services have a pretty dim future- even in the best of circumstances and even current leaders such as NetFlix, Disney+ and Hulu are still not out of the proverbial woods.

What do you think? Comments?