The following is based on data from Variety Intelligence Platform’s “Media & Tech Stocks Q1 Preview” special subscriber report.
The first quarter of 2021 saw the majority of media stocks rise significantly in a streaming bubble, only for it to cruelly pop in the latter weeks of March.
For companies such as ViacomCBS and Discovery, the boom was fueled by hype around new or updated streaming services launching that investors seized upon as proof apparent that not only all was right with the world but these companies would be ushering in a golden age of prosperity.
Then reality crashed home.
Truthfully, very few traditional media firms have the IP and scope to compete with Amazon, Netflix and Disney globally. Some, including AMC Networks, have accepted reality and are positioning their streaming services as complementary niche services to the streaming majors. Fox assessed the situation and got out of the SVOD game completely and sold its Hulu stake to Disney, opting instead to distribute its shows via free streaming service Tubi.
ViacomCBS’ Paramount+ and Comcast’s Peacock Premium are seeking to be global players in the general entertainment space but are struggling given a lack of compelling originals and big-name movies.
Arguably, a combined Paramount+, Peacock Premium and HBO Max hybrid service would have the content mix to be a real global player, but as evidenced by the rise of individual services, companies would rather go it alone and offer services with few premium originals (but do offer niche sports to draw in subscribers).
Traditional media companies know streaming services are necessary for their futures, the alternative being fading to irreverence or shifting to mainly being a producer for more successful SVODs.
Financially, streaming services have to make up for the substantial — and still growing — income media firms take from charging cable, satellite, fiber optic and VMVPD firms for carrying their networks. For those with a large number of networks, it will be a long time until domestic streaming revenues can catch up.
Such realism was missing during the massive stock surges seen in Q1. Despite the recent slumps seen for several companies, their stock is still worth more than it was at the start of 2021. This suggests investors haven’t quite given up on the streaming hype yet, however unlikely it will be for traditional media players to keep their revenue streams intact in the long run.