tech
Wall Street still loves streaming, but are its affections well placed?
While streaming continues to drive media stocks, especially around quarterly earnings, it's not clear when it will start driving profits for smaller players.
TL;DR
- Investor focus has moved from subscriber growth to profitability in the streaming industry.
- Streaming services are raising prices, limiting password sharing, and introducing ad-supported options to boost revenue.
- Netflix is considered the leader in streaming profitability due to its scale, with an operating margin of 29.5% in 2025.
- Traditional media companies are finding it challenging to match the profitability of linear TV with their streaming services.
- The ad-supported tier is becoming increasingly important, with Netflix reporting significant ad revenue growth.
- Consumers are beginning to balk at the rising costs and the number of subscriptions required to access all content.
- The profitability of streaming for smaller players remains a significant question mark.