I originally wrote this note in mid 2023, after I’d been VP of Product at the film streaming service MUBI for about a year. One of the interesting aspects has been returning to a different side of the industry I started my career in (I got my start as a filmmaker)—one that I’ve observed as an outsider and am now an insider to.
Like all industries, streaming undergoes continual evolution. While some elements have stabilized, we are approaching another inflection point that will challenge long-held assumptions.
Here are the key forces driving this shift:
1. STREAMING REVENUE ACCOUNTING
Netflix established the content acquisition model for streaming and how revenue is allocated to content. The rest of the industry, including MUBI, followed suit. For companies that rely primarily on streaming revenue, this model makes sense.
However, for companies with diverse revenue streams—such as Disney and Warner Bros. Discovery—this model is under scrutiny. These companies must balance streaming revenue against more established revenue sources, especially when a broader, more lucrative market exists for their content.
At a high level, streaming’s direct-to-consumer (DTC) model means companies constantly contend with subscriber churn, acquisition costs, and ongoing product evolution (across web and app platforms). While new content remains the primary acquisition lever, consumption patterns favor recent releases over older catalog titles, reinforcing the importance of a steady stream of fresh content for retention.
2. SUBSCRIBER ACQUISITION & MONETIZATION MODELS
Content attracts subscribers, but the challenge lies in breaking through the noise of competing services and broader entertainment options. Beyond winning attention, monetization strategies are evolving:
- FAST & AVOD: Free, ad-supported streaming services like Amazon Freevee and TUBI reduce friction by eliminating subscription barriers.
- Declining Free Trials: Many services are moving away from free trials, as they encourage short-term engagement without long-term retention.
- Ad-Supported Tiers: Disney+, Netflix, and Max now offer lower-cost, ad-supported plans.
- Subscription Shifts: Monthly plans remain dominant but face increasing pressure from retention challenges.
- Annual Plans: Expect continued experimentation with discounted or exclusive annual plans to mitigate churn and drive revenue predictability.
3. CONTENT WINDOWING: DRIP VS. DROP
Netflix popularized the full-season drop model, positioning it as consumer-centric, with massive hits like House of Cards, Stranger Things, and Squid Game driving growth. However, this model creates content scarcity issues—encouraging binge-watching but also prompting subscription churn once users consume a season.
Research suggests that weekly release models improve retention, extending the period of engagement. Disney, Apple, and HBO have embraced the drip-feed approach for their major series. Even Netflix has experimented with splitting seasons (Stranger Things 4 Volumes 1 & 2) as a churn mitigation strategy.
More broadly, content distribution across theatrical, streaming, and digital purchase (TVOD) continues to shift, influenced by ownership structures, licensing strategies, and evolving audience behaviors.
4. THE X-FACTOR: YOUTUBE
YouTube is the most valuable video platform in the world, yet it often flies under the radar in streaming discussions. Analyst Julia Alexander has pointed out its outsized influence, and this is becoming harder to ignore.
Key indicators of YouTube’s growing dominance:
- Subscription Growth: YouTube generates ~$10B annually from subscriptions (YouTube TV, Premium, Music), about 25% of total revenue—a stronger transition to subscriptions than Netflix’s shift to ads.
- Primetime Channels: YouTube launched this feature, similar to Amazon Channels, allowing users to subscribe to third-party streaming services through YouTube—leveraging its distribution scale.
- Personalized Discovery: YouTube’s recommendation engine, powered by Google’s AI, remains unparalleled in surfacing relevant content.
YouTube has struggled with original long-form content, but with Alphabet’s vast resources and an ultra-efficient monetization platform, it would be shortsighted to assume they won’t try again.
FINAL THOUGHTS
Streaming remains in flux, driven by shifting business models, evolving consumer expectations, and new entrants reshaping the landscape. As companies experiment with monetization, content distribution, and audience retention, the industry will continue to redefine itself—sometimes iteratively, sometimes disruptively.
The next phase of streaming will belong to those who understand these forces and build adaptable, scalable strategies that reflect the evolving nature of digital entertainment.