Phase 1: The Land Grab (2017-2021)
- Goal: Acquire subscribers at any cost.
- Strategy: Launch new services (Disney+, HBO Max, Peacock) with massive marketing budgets and deep libraries of content. Spend billions on splashy original series and movies to make headlines.
- Key Metric: Subscriber growth. Wall Street rewarded companies that posted the highest net subscriber additions, ignoring profitability.
- Financial Impact: Enormous cash burn. Companies like Disney and Warner Bros. Discovery sacrificed billions in high-margin licensing revenue (by pulling content from rivals like Netflix) and incurred massive operating losses in their DTC segments.
Phase 2: The Reckoning & Pivot to Profitability (2022-Present)
- Goal: Achieve profitability and sustainable free cash flow.
- Strategy:
- Price Increases: Sharp and frequent price hikes across most major services.
- Advertising Tiers: Launching cheaper, ad-supported plans to boost Average Revenue Per User (ARPU) and attract price-sensitive consumers.
- Content Rationalization: Pulling back on the "content for content's sake" model. Focusing on quality over quantity, removing underperforming shows to cut costs, and even re-licensing content to rivals to generate revenue.
- The "New Bundle": Partnerships and bundles to reduce churn (e.g., Verizon offering a discounted Netflix/Max bundle).
- Key Metrics: ARPU, churn, operating margin, and free cash flow.
Phase 3: The Endgame & Consolidation (Future)
- Goal: Survival and long-term market position.
- Prediction: The market is unlikely to support the current number of major streaming services. This will likely lead to further M&A and consolidation as weaker players are acquired, forced to merge, or become pure content arms that license to larger platforms.