My Most Important "Question of the Year" - 2023 Edition

How Do Entertainment Companies Change Their Strategies in 2023 (and Beyond)?

If I had my druthers, the “entertainment year” would start in September. That would put it between the start of the broadcast fall season (and three of the major sports seasons), and right after the grand finale of summer theatrical revenues. As is, the calendar year comes in middle of winter, so year-end analyses and year-ahead previews come in January. That makes for a slightly weird stopping point, but since all entertainment journalists and half the industry take December off, it makes some sense.

For the past three years, I’ve asked a question at the start of each year to help organize my coverage/thinking/writing in the year to come. With the start of a new year, it’s time to pose another question. And I’ll tease you with this: I’m very excited by this year’s question because, from a strategy perspective, 2023 might be the year where we see a lot of different strategies from a lot of different companies to address the changing media landscape.

My Most Important “Question of the Year” - 2023 Edition

For those who have just started following me—and based on my Substack growth in 2022, that’s a lot of you—here are the questions I asked in previous years (with one I didn’t ask, but should/would have):

2019 - Can the New Streamers Succeed in Streaming? (I Would Have Asked This)
2020 - What is the Same and What is Different Between Streaming and Traditional Entertainment
2021 - Is Streaming “Winner-Take-All”/Will Streaming Become More Competitive?
2022 - What does the Next Generation of Cord Cutters Look Like?

I’d add, one more question has been obsessing me since 2019:

2019/2020 - Who Will Win the Battle Between Aggregators (Streamers) and Bundlers (Devices/Operating Systems)?

Taken together, you can see a short history of the disruption wrought by the “streaming wars” over the last half-decade or so. In 2018 and 2019, the streamers were getting ready to launch their subscription services (Disney+/Apple TV+ in the fall of 2019, Peacock, Quibi and HBO Max in the spring of 2020.) That’s why my questions about 2019 focused on the new market entrants, where as 2020 and 2021 focused on how those entrants gained (or didn’t gain) a foothold in the market. (Note: Paramount+  rebranded in 2021; CBS All-Access had been around since 2014. It doesn’t quite fit my narrative.)

I’d add that three big “events” changed the course of streaming, and few folks could have predicted them ahead of time:

• A global pandemic in 2020

• The “Streaming Ratings Era” begins in March of 2020, as Nielsen publishes a public top ten list for streaming.

• Wall Street’s love affair with streaming ended in 2022.

(To be clear, the last two events were predictable, but not “when”. I thought Nielsen would start a top ten list circa 2017 or 2018, and I thought Wall Street’s love affair with streaming could have ended anytime between 2020 and 2024. Predicting the future is hard; predicting the timing is nearly impossible.)

Taken together, then, 2022 was an inflection point. Covid-19’s impacts had faded, but Wall Street losing faith in streaming’s growth hurt everyone’s stock prices. Thus, when looking for a question for 2023, 2018 to 2020 was about the new entrants, and 2021/2022 were about those markets maturing (while dealing with the Covid-19 pandemic).

2023 looks to be a year where the streamers vie with each other for stability and market share, and the key question is how they get there, plus who is succeeding.

The Questions That Didn’t Make the Cut

I actually brainstormed a few questions this year that didn’t make the cut. And we’ll start there, because explaining what questions I ultimately discarded may help explain the question of the year.

1. Who will make the most money/profit/revenue/cash flow in streaming?

The future of streaming looks much smaller and tougher than the entertainment age of old. Figuring out which streamers can eke out a profit (or eke one out realistically by 2024) may determine who is left standing and how powerful they are.

Unfortunately, this question is just a little too limited, a little too clinical, and not broad enough to let us explore. (That said, “strategy is numbers”, so let’s keep it in mind.) Not to mention, at least two streamers have said they won’t be profitable until 2024, so we should wait until then to ask this question.

2. How bad does it get in streaming?

Call this the flip side of the financial question above. Instead of focusing on the streamers, we could look at the entertainment industry as a whole. Remember, my name is “entertainment” strategy guy, not “streaming” strategy guy and that includes theatrical, linear, home entertainment, music, theme parks, and video games! In terms of declining stock valuations and lost revenue, 2023 could (hopefully) show us where the bottom lies.

But this question is also a prediction, and that’s dangerous. What if the entertainment industry rebounds, and it isn’t that bad? Sure, I wouldn’t bet on it, but that’s not ridiculous. Plus, the media (meaning journalists) has a well known negativity bias—a bias I’ve complained about in the past—so why ask a question that mandates negative coverage?

3. Who wins market share in 2023 and who loses it?

I’ll be monitoring this question no matter what in 2023. So it’s not a very insightful query, is it? In a way, it’s also a repetition of my question from 2021.

But unlike 2021—when it was an open question—it seems clear streaming isn’t a winner-take-all market, at least in the United States. It’s also basically just score keeping. Trust me, it’s important to keep score, and I’ll keep updating it throughout the year, as I mentioned in my last Ankler column. But there’s no strategic analysis required, so it seems more limiting than expansive.

4. Where Does Growth Go and Come From in Streaming in 2023?

This is a variation on last year’s question. To date, throughout most of the streaming wars,  folks have been leaving traditional “linear” TV and moving to paid, subscription-only “streaming”  TV. But 2023 looks like we’ll see other shifts too:

- Linear customers going to advertising-supported streaming.
- Subscription-only customer going to ad-only, free steaming.
- Linear customers going somewhere else entirely. (Piracy? YouTube? FASTs?)

If you map out all of the shifts, though, the flowchart would be crazy complicated, with folks bouncing all around between different types of digital video distribution. Customers have a lot of choice, and each will have different monetization strategies.

Like the previous question—but perhaps even more so—this question is too limited. It’s essentially asking what Nielsen’s The Gauge measure is finding every given month.

The Question of the Year Is…

I need a question that is broad enough to help me understand the landscape, but also focused enough to generate insights you can’t find elsewhere. So here it is…

How do entertainment companies (both traditional and tech) change their strategies in 2023 (and beyond)?

This question underscores the disruption that’s roiling the entertainment industry (streaming) while allowing us to think about all the other parts of distribution that still make money (linear, theatrical, home entertainment), and also ponder what comes next (advertising? FASTs? Social media?).

The other reason I selected this question is because it fit a pattern in past choices. Look:

2019 - Who Will Win the Battle Between Aggregators and Bundlers? (Competition)
2019 - Can the New Streamers Succeed in Streaming? (Company)
2020 - What is the Same and What is Different Between Streaming and Traditional Entertainment? (Context)
2021 - Is Streaming “Winner-Take-All”? (Competition)
2022 - What does the Next Generation of Cord Cutters Look Like? (Customer)

In a way, I’m rotating between the “Four Cs” framework I use to organize a lot my thinking:

Context (Industry/Fundamentals/Economics)
Customer
Competition
Company

And we’re due to ask a question about companies again. Neat!

The other takeaway I have from 2023 is that all the streamers will (probably) try different answers to the same problem in a way they weren’t in the past. In 2018, the solution to the “streaming” problem was to launch a subscription streamer, eschew advertising, price it as low as possible, deluge it with tons of programming, and an emphasis on prestige content (peak TV and what not).

When Wall St. burst Netflix stock bubble, it may have been a good thing for every company. Escaping from Wall Streetstreaming expectations may be liberating. Now the entertainment companies can pursue strategies that drive long term value. And we’ve seen the different streamers embark on somewhat different strategies, starting with Warner Bros Discovery, who has been the most aggressive at proving they won’t follow the traditional streaming playbook.

This is just fascinating from a strategy standpoint. Four or five years ago, it felt like every company had the same strategy and tried the same things. Starting in 2022, but really taking bloom in 2023, I think that changes. (Or should!)

But it’s not just streaming. When it comes to films, some companies are still eschewing theaters, some are back on theaters full-time, some are still half and half, and other strategies will evolve still. Do some studios experiment with even longer windows, a la Paramount+ and Top Gun: Maverick? We’ll see this with the linear TV, as well, with different companies pursuing different strategies, be it FASTs, ad-supported streaming, or vMVPDs. Do some companies make a renewed push for home entertainment sales?

I’d add that I expect “content” to matter a lot too. Not just how much is produced, but what types of shows and how they are made and who they appeal to. We may see more distinction in the types of offerings and pricing and lots of strategic variables. Does NBC/Peacock finally stopping making prestige dramas like everyone else? Does anyone but Paramount+ stream a procedural? Does Amazon continue on their “genre”/“dad” content-focus? Does Discovery+’s reality content fit into HBO Max prestige offering? Can Netflix survive without sports?

Meanwhile, I can’t answer this question without answering a lot of those other potential questions for 2023. Which streamers can gain market share (from Netflix to be honest) in 2023? Which streamers make money? And how much? And what new streamers/distributors/bundlers/aggregators grow the most in this new ecosystem? I still have my eyes on the FASTs in 2023—a pinnacle of Paramount’s strategy for example—to see if they’re more hype or fact in 2023 and beyond.

This is a return to basics for me. My middle name—of my nom de plume, to be fair—is strategy. And I shouldn’t veer too far from that core. In 2023, I’m going to focus on the all of the different strategies of all the entertainment companies.

Enjoy the ride.