07 May Streaming Services Face an Economic Reckoning After Covid-19 [Bloomberg]
By Tara Lachapelle
May 2, 2020 | As Hollywood sets sit empty because of the Covid-19 pandemic, streaming-video apps that were just getting off the ground are now running out of fresh movies and TV episodes. But this is only a hiccup compared to the vexing problem that awaits the industry when it finally emerges from the crisis. Is it possible to make money in the business of streaming?
The meteoric rise of Netflix Inc. has warped the U.S. media industry, forcing companies such as Walt Disney Co. and AT&T Inc. that have long enjoyed fat profits to embrace a business model that is fundamentally broken: Spend billions of dollars to create an endless supply of content, then sell monthly access to this deluxe all-you-can-eat buffet for little more than the cost of dinner at McDonald’s. Oh, and subscribers can basically cancel whenever they want.
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