Several years into Hollywood giants’ streaming pushes, they still find themselves confronted with that famous Jerry Maguire line from Wall Street: “Show me the money!” In the case of streaming, “the money” means profits. 

With Netflix having been crowned by some observers as the king of streaming, Hollywood CEOs have focused on making their streaming business units profitable after an initial focus on subscriber growth. 

The full year of 2023 provided some positives for sector watchers. One entertainment titan ended up eking out a small profit for its streaming unit, while two others narrowed their losses in their divisions with their core streaming businesses, with one of those promising to start turning black ink this year. And another sector biggie made clear that 2023 marked its year of peak losses in streaming.

But Hollywood conglomerates’ streaming results still make for a sharp contrast with Netflix’s continued growth in its annual bottom line. And entertainment biggies remain in the stage of proving that they can make money in streaming and, importantly, get to sustainable profitability.

That is particularly important for investors as Hollywood has seen the bottom line of its cable TV networks businesses, once the key growth drivers and profit centers of entertainment conglomerates, hit by cord-cutting and the growth of streaming. Research firm Ampere Analytics recently forecast that streaming revenue would overtake pay TV subscription revenue in the U.S. for the first time in the third quarter of 2024, helped by the addition of ad tiers by various streamers. “Streaming will continue to race ahead as traditional pay TV declines – with the value of pay TV in 2028 expected to fall to half the value it saw at its peak in 2017,” its report predicted.

But which companies can follow up revenue growth with streaming profits and who can get them to scale? This kind of streaming promised land has not been reached by Hollywood powerhouses, the Street agrees. 

No surprise that Hollywood CEOs have been looking to tout their streaming progress and successes. An analysis must keep in mind that the divisions that contain Hollywood companies’ streaming businesses are not directly comparable. After all, some of them don’t include all streaming services of a company or include additional operations. Warner Bros. Discovery’s “Direct-to-Consumer,” or DTC, unit, for example, consists of its streaming and premium pay-TV services, meaning HBO is part of it. Meanwhile, the Walt Disney Co.’s “Direct-to-Consumer” division does not include ESPN+. And Comcast’s NBUniversal breaks out revenue and profit for its streamer Peacock, which is part of its broader Media unit. 

Meanwhile, Netflix has long been a streaming-focused company that last year ended its DVD rental offering. But it has also started pushing into businesses beyond streaming, such as gaming and merchandise. 

So while a direct comparison of all these businesses is not an apples-to-apples affair, it is educative and allows to see longer-term trends beyond quarterly updates. Keep in mind that Disney’s fiscal year runs through the fall, while The Hollywood Reporter calculated DTC results for the calendar year 2023 to focus on a comparable period. 

With all that out of the way, here is a closer look at Hollywood giants’ streaming business units in 2023. 

*****

Netflix

The only way has been up for the global streaming giant as of late. It kept growing its full-year revenue, “primarily due to the 8 percent growth in average paying memberships, partially offset by a 1 percent decrease in average monthly revenue per paying membership.”

Indeed, Netflix added 29.5 million members in 2023, up from 8.9 million in 2022, boosted by its password-sharing crackdown and the late 2022 launch of a cheaper advertising-supported subscriber tier, ending 2023 with around 260 million worldwide users. “Revenues earned from sources other than monthly membership fees were not material,” the streamer highlighted. But “in 2024, we see big opportunities,” it noted. Those include the chance to “tap into a significant new long-term revenue and profit pool by scaling our ads business.”

With its full-year operating expenses only rising 3 percent in 2023, compared with a 7 percent revenue increase, Netflix’s operating margin climbed from 18 percent to 21 percent, and its profit jumped 25 percent.

“If we continue to execute well and drive continuous improvement — with a better slate, easier discovery and more fandom — while establishing ourselves in new areas like advertising and games, we believe we have a lot more room to grow,” the streamer touted in its fourth-quarter letter to shareholders. 

Netflix’s first-ever “What We Watched” report, covering the first half of 2023, touted The Night Agent as its top show with more than 812 million hours of total watch time, followed by season 2 of comedy-drama Ginny & Georgia (665 million hours of view time), and Korean drama The Glory (622 million hours). Action-thriller The Mother, starring Jennifer Lopez, came out on top of the film list with more than 249 million hours. 

NBCUniversal

NBCUniversal says it has now passed peak losses in streaming. Its parent Comcast followed Netflix’s latest financial update, reporting that it grew its subscribers to streamer Peacock by more than 50 percent to 31 million as of the end of 2023. While that percentage growth came in above peers, it also came off a smaller user base. 

Peacock posted the biggest full-year loss among entertainment giants’ streaming businesses, but started its turn toward profitability. After previously vowing that 2023 would mark the year of “peak losses” in streaming, it posted a $2.7 billion loss related to Peacock for the year, up from a $2.5 billion loss in 2022, but slightly better than previously targeted. Peacock revenue jumped by two-thirds in the latest year, and its losses narrowed to $565 million in the third quarter from a year-ago loss of $614 million, marking a turning point after a time of growing quarterly losses. The fourth-quarter loss again showed progress, narrowing from $978 million in 2022 to $825 million in the final period of 2023. “For 2024, we expect to show meaningful improvement in losses versus 2023,” Comcast president Michael Cavanagh told a recent earnings conference call. Universal’s Five Nights at Freddy’s was “the highest-grossing horror film of 2023 and also set a record on Peacock as the most watched title of all time in the first five days of its release,” he also was happy to tout. 

Management’s take on its streaming progress is bullish. “Only three years in, we’re achieving a level of scale with paying subs that’s about 60 percent of the level of the streamers that have been out there for many years domestically, ex-Netflix. And we’re holding a very strong average revenue per user (ARPU) at $10 per sub,” Cavanagh said. “Leveling off a little bit of the growth rate of programming spend as we get to this level is clearly part of the improvement in Peacock losses standalone that will be a factor as we see continued strong growth on the revenue side, given the higher level of subs” and expected further growth. But he also emphasized that Comcast’s strategy is “to manage Peacock and our linear TV businesses as one.” That is different from other players’ focus on making streaming units as profitable as possible. “I’m less focused on what standalone Peacock losses are doing than I am on doing what’s right for the long term for the totality of the media business, which is linear and streaming,” Cavanagh said. “I think we’ve navigated a very good path for us.”