Hollywood Struggles to Increase Profits on Streaming Platforms

Hollywood is experiencing a slump after streaming sites failed to make the expected profit for some studios.

Streaming Platforms' Declining Profit

For years, Netflix has been enjoying a massive revenue from its video-on-demand service. However, the past few years have been difficult even for the largest streaming site.

Aside from Netflix, Disney has also seen a decrease in revenue. Both companies are now pressed to implement a password-sharing crackdown. In addition, the streaming platforms have increased their subscription prices.

Other media companies are also seeking cost-cutting strategies for content creation. For instance, Disney CEO Bob Iger emphasized the importance of focusing on quality instead of quantity.

Media Companies Followed Uncertain Path

Ever since Netflix paved a new entertainment strategy in 2007, other big media companies have tried to follow and catch up with the ever-changing trends in the industry. However, the strategy has proven to be costly as legacy companies experienced a huge loss along the way.

CNBC reported that companies like Disney and Warner Bros. Discovery are now relying on layoffs and reorganization to compensate for the loss. These days, each streaming platform is pouring money into creating original content and getting licensing deals from cult favorites.

Media companies are now trying to incorporate strategies that made traditional media profitable back in the day.

"Netflix understood finally, because of the Street, that subscriber numbers don't mean jack, if the economics don't pencil out," founder and chair of advisory firm Creative Media Peter Csathy shared with CNBC.