Media companies get back to basics in 2023 with monetisation mindset

Mark Zuckerberg

Meta CEO Mark Zuckerberg announced this week that 2023 would be “a year of efficiency”. He was, of course, referring to his own company’s belt-tightening plans – but he could have been speaking for any major firm in the media business. With the economy turning sour and content & innovation losses mounting, the emphasis among big tech giants, telcos and streamers is suddenly on good housekeeping.

‘Efficiency’, which is sanitised shorthand for job cuts, axed shows and innovation write downs, is just one part of 2023’s unfolding narrative, however. Reviewing this week’s stories on DTVE, it’s evident that ‘monetisation’ is also staking a claim to be the media industry mantra for 2023. After all of the profligacy and breakage of the last few years, a top priority for boardrooms this year is to remember what this business is really all about – squeezing extra cash out of consumers and making IP assets sweat.

Looking at the first point, Netflix’s heavily flagged move to restrict password sharing is a high-profile attempt to improve monetisation of its eye-watering expenditure on original content. Poised to commence in the coming months, the streamer is likely to experience a short-term consumer backlash before reaping the rewards of additional subscriber revenues. Coupled with the introduction of its new ad-supported tier in December, analysts will be looking for improved margins in the back end of 2023.

Peacock’s decision to scrap its free entry tier for new subscribers is from the same monetisation playbook. Peacock, which launched in 2020, was a primer mover in the shift towards lower-cost ad-funded streaming tiers and proudly announced that it was as “free as a bird”. However, with losses expected to peak at $3bn in 2023, its looks as if the chickens have come home to roost. Like its main rivals in the streaming business, the future for Peacock is a hybrid model, where subscribers at the entry level pay a monthly fee while also having to put up with interruptions from ads.

These stories are part of a broader move to generate incremental revenue. As reported on last week in DTVE, consumers in the Netherlands are experiencing a wave of price increases to their streaming subscriptions. Sports streaming DAZN has also been upping its monthly fees across Europe while Sky’s Now platform in the UK has just announced plans to increase prices on some packages from February 2023. In every case, platforms are taking a risk that consumers might choose to churn out of their services, but with rampant inflation they have little room for manoeuvre.

Revamped pricing is only part of the monetisation puzzle. The other theme that dominated this week’s news coverage is the increased willingness among premium content owners to forge flexible business models to grow revenues. The idea that streaming platforms can exist as some kind of rarified and exclusive walled garden increasing looks like a busted flush. The addition of ad-supported tiers, integration into pre-existing platforms, an openness to content rights sharing and an increasingly flexible approach to programme distribution are all symptomatic of a new mindset.

Warner Bros Discovery CEO David Zaslav has been quick to acknowledge all of the above. While WBD still has grand ambitions for its soon to be unveiled global streaming platform, the canary in the goldmine was a distribution deal at the end of last year which granted ITVX in the UK access to shows like Arrow and Gotham.

In the last two weeks, the market has seen WBD cosy up to Amazon Prime once more and launch a full frontal attack on the FAST market with a portfolio of new WB TV branded channels launching on Roku and Tubi. The message from all of this activity is that companies are doubling down on the realities of generating ROI.

A spirit of collaboration

Other stories this week extend this theme. A new alliance between Starzplay and Watch IT is one manifestation of the race to prioritise monetisation, while DAZN’s decision to open up a PPV window on OneFootball is another. Lionsgate’s decision to join Samsung platforms in the UK, Ireland and LatAm is a similar example, with Darren Nielson, EVP, international networks for Starz, noting that “Samsung’s global reach and premium devices make them an ideal partner for us.”

A key feature in this regard is that effective monetisation often demands a spirit of collaboration – and in this respect the news of an enhanced partnership between Fox Entertainment and Disney-owned Hulu was especially eye-catching this week. Both a content distribution deal and a multi-platform marketing alliance, the new partnership can help Disney control ballooning content costs while saving Fox the bother of launching its own SVOD platform. In fact, there’s something rather old school about the fact that Fox content is travelling to a Disney-backed streamer at the very same time that Warner content is making its way to Fox’s AVOD platform Tubi.

For Rob Wade, CEO of Fox Entertainment, the “long-standing partnership with Hulu consistently generates impressive results and creates an important pathway for our series to maximise viewer reach. Under this new deal, Fox solidifies its longer-term streaming strategy, while harnessing the strength of both Hulu and Fox to better serve our audiences and bring visibility to premium content across our platforms.”

In truth, the shift towards a more flexible partnership-led business model is probably a more sustainable route to monetisation than constant subscription rises. While some additional cost to consumers can be justified on the grounds of inflation, death by a thousand price hikes simply exacerbates the risk of cherry-picking, churn and piracy.