Say Goodbye to the Dream of Endless Streaming Content | Analysis

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Getty Images, Christopher Smith/TheWrap

For years, streaming services presented consumers with the prospect of virtually unlimited choice, the idea that almost any movie or show ever made and endless original content could be theirs with the click of a button. Suddenly, though, as HBO Max made headlines for the dozens of shows and individual films that had quietly disappeared, that concept may be little more than a fantasy — and may also reflect a shift to newfound cost consciousness in the streaming industry.

Netflix in the past has touted “unlimited movies, TV shows and more,” Paramount+ promised a “mountain of entertainment,” and HBO Max upon its launch was described as “Where HBO Meets So Much More.” But as Netflix has lost subscribers and Warner Bros. Discovery looks to trim costs, the new buzzwords in streaming have become “curation” and “discoverability.” That means prioritizing higher quality content, less clutter to make it easier to find what you want to watch and not flooding your service with everything under the sun in the hopes that the right audience will both find it and stick around.

How each streamer reports the size of their libraries varies and can be tricky to pin down, explained Elizabeth Parks, president and CMO of Parks Associates. Some count available hours of content while others look at the overall number of titles, and some don’t disclose any data at all. Parks Associates estimates that as of first quarter of this year, HBO Max’s library had 10,000-plus hours of content. Disney+ meanwhile has more than 500 movies, 80 originals and more than 15,000 episodes available while Netflix is only rumored to have 2.2 million minutes, or roughly 36,000 hours, of content. But HBO Max may be able to compete in terms of the sheer quantity of content once it combines with Discovery+ some time next year.

And though HBO Max got all the attention when it recently removed 36 titles, 200 episodes of “Sesame Street” and at least six different original films, it’s not the only streamer thinking along these lines. Netflix made similar cuts to its animation slate and is likely to decrease the overall quantity of shows it produces while maintaining its content spend. And Amazon Prime Video recently revamped its user interface to make it easier to discover the content you’re looking for and amplify its own original programming.

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“Both the shifts in curation and in tax strategy reflect a maturation of the streaming business, as does a crackdown on password sharing,” David Offenberg, associate professor of entertainment finance at LMU’s College of Business Administration, told TheWrap. “They are moving from maximizing growth to maximizing the dollars arriving in their bank accounts, as all maturing businesses do.”

While the reasons for Warner Bros. Discovery trimming content from HBO Max are complicated, the driving force appears to be financial as the company looks to trim $3 billion in expenses. In addition to layoffs, the company canceled the already-shot $90 million “Batgirl” movie for HBO Max as well as other projects that had been in development before its $44 billion merger (by scuttling a project before its release, the company can reap some tax benefits — though not nearly enough to make up for the full cost of production).

But while some of the library content previously on HBO Max had passionate followings, most are single-season shows without big viewership. And while maintaining little-seen shows or movies on the streamer’s servers doesn’t cost a fortune, the added residuals and licensing fees associated with individual projects can add up.

“They’re high enough that David Zaslav is willing to do it,” one top agent told TheWrap about the cuts.

Warner Bros. could also make more money licensing these shows to other streaming services or by making individual movies available for digital rental and purchase, the agent added. And one individual at a production and financing company said that just about every streamer has its own algorithms and calculations to determine the best way monetize all of its content.

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“Content licensing rights are costly. Thus, the decision to remove content is based on an appraisal of the cost to license and audience interest. Despite a show’s popularity, it may not be financially viable,” Eric Sorensen, senior contributing analyst for Parks Associates, said.

He further explained that while content is the main reason people subscribe to a service, not having content that’s relevant to them is the main reason why they leave, and he expects that this could be the beginning of brands thinking about their content across platforms.

Even when it comes to massive tentpole hits like “Friends,” which HBO Max took over from Netflix in 2020, the production and financing insider said streamers must still weigh the costs of offering new content with the risk of losing viewers and subscribers by not having that content available. The exception is likely Disney, which has enough money and a tight enough grip on its archive to keep Disney+ flush with content, the individual said.

While subscribers still value a deep catalog of movies and shows, the emphasis is increasingly on the quality of that content — which has led streaming execs to be far more discerning about their offerings and correcting the sheer amount of overspend all too common in the streaming space for the last decade. That’s a change from even four or five years ago, the insider said, and not the sort of messaging that many consumers — or content creators — want to hear.

Zaslav himself hasn’t been shy about that mantra when it comes not just to streaming but to WBD’s entire content offerings, touting a desire to invest “smartly” in content even when that means premiering shows directly on HBO Max or licensing others, like “Ted Lasso” and “Abbott Elementary,” to competing platforms.

“It’s not about how much, it’s about how good. Owning the content that really resonates with people is much more important than just having lots of content,” Zaslav said on the company’s earnings call in August. “In other words, at a time when almost every piece of content ever made is available to consumers across any number of free and pay services, duration, quality and brands have never been more important. And that is what we do best. When the measure is who’s got the best stuff, no one has a better hand than we do.”

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Analysts expect the purge of less popular movies and shows to continue as streaming services grapple with the same problem consumers face: deciding where to focus amid a glut of choices. WBD’s move “likely sets the stage for further consolidation and aggregation of content,” Parks said. “Content is still king for consumers and discovery is critical for capturing the next set of viewers.”

That will be especially important to Warner Bros. Discovery as it seeks to combine HBO Max and Discovery+ by next year, which a rep for HBO Max said in a statement “will include the removal of some content from both platforms.” (The company still promises new programming, including a new CNN Originals hub and a curated collection from Chip and Joanna Gaines’ Magnolia Network.)

In addition, the production and financing insider suggested that streamers might consider exclusive streaming windows to drive excitement — a callback to the old days of VHS tapes when Disney would release classic animated films for a limited time and then return them to the “Disney Vault.”

“If a movie that is a couple of years old is not getting a lot of viewership anymore, then it makes sense to take it off the service and get the tax write-off sooner. It would make sense for their competitors to do the same, and I suspect that we’ll see more of this in the near future,” Offenberg said. “The movie business has always been built on the philosophy of having as many at-bats as possible to try to get a hit.”

Brandon Katz contributed to this report.

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