How the Streaming Wars Left a Lasting Impact on Hollywood’s Acquisition Frenzy

Though the recent streaming wars were fought with the silent weapons of M&A advisory services and strategic finance consulting, the dust has yet to settle on Hollywood’s landscape.  Traditional media companies scrambled to enter the digital space, scooping up existing content and streaming platforms. In some cases, big studios acquired smaller production companies, while in others, two major entities merged. In the place of many media players, a handful of mega-conglomerates arose with increased financial strength, broader intellectual property portfolios, and expansive distribution networks. Today, these merged entities tower above the competition, possessing vast resources and a global reach. This trend presents consumers with an ever-growing array of streaming services and Hollywood with a consolidation of power and resources, but the transition is still underway.

The genesis of Hollywood’s M&A frenzy and the streaming wars

“The shift from traditional cable TV to digital streaming platforms fundamentally changed how audiences consume entertainment,” explains Philip Alberstat, experienced media producer and managing director at Embarc Advisors. “When viewers began favoring on-demand content accessible on their devices, traditional media companies needed to adapt quickly. Streaming platforms realized that exclusive, compelling content drove subscriber growth, and the need for unique intellectual properties, talented creators, and production capabilities spiked.” The ability to offer a competitive streaming service required a substantial library of content — something that could take decades to develop organically. As a result, media conglomerates turned to mergers and acquisitions to scale up their content libraries and distribution capabilities.

The launch of several high-profile streaming services marked the escalation of the “streaming wars.” Disney’s acquisition of 21st Century Fox for $71.3 billion in 2019 was a landmark event, significantly bolstering Disney’s content library ahead of the Disney+ launch. AT&T’s acquisition of Time Warner rebranded as WarnerMedia, and its subsequent launch of HBO Max also underscored the strategic importance of acquiring a vast and diverse content portfolio. “Hollywood studios strategically employ mergers and acquisitions to expand content libraries, enhance production capabilities, and improve technological infrastructure,” observes Alberstat. 

“M&As also allow studios to acquire exclusive rights to popular franchises, characters, and stories to leverage these valuable intellectual properties in creating films, series, and spin-offs that attract a dedicated viewer base.“ As the streaming wars intensified during the pandemic, so did Hollywood’s M&A activity, driven by the need for content, technology, and global reach. For many media companies, mergers and acquisitions have become crucial to surviving and thriving in an era where scale, content diversity, and direct-to-consumer relationships are critical determinants of success.

The impact of mergers and acquisitions on Hollywood and the streaming industry

Hollywood and the streaming industry have been significantly shaped by the flurry of mergers and acquisitions. These strategic moves are not merely financial transactions but pivotal events that can redefine the industry’s future, impacting everything from content creation to distribution and consumption. “Acquisitions consolidate market power among a few major players,” notes Alberstat. “As major studios acquire smaller production companies and other entertainment entities, they expand their libraries and reduce the number of competitors in the market, leading to fewer choices and higher subscription prices for consumers. In the early days of the streaming wars, streaming services subsidized their growth with unsustainable pricing, amassing huge losses to gain market share, but those days are over. Now, they are chasing profits over subscriber growth.”

The competitive pressure pushes streaming services to constantly innovate, improve user experience, and invest heavily in original content to attract and retain subscribers. For example, Netflix’s aggressive investment in original productions was a direct response to increasing competition from new entrants like Apple TV+ and HBO Max, the latter benefitting from WarnerMedia’s extensive content library post-merger with AT&T. “With more resources at their disposal, studios invest in higher-quality production values and more diverse content offerings,” Alberstat remarks, “because their subscribers now have higher expectations for original, compelling, and culturally varied content. Although consumers may not enjoy the cost, the trend will persist because high-quality video content through streaming apps continues to draw viewers.” Exclusivity has become a key competitive edge, with streaming services pulling their content from rivals to offer it exclusively on their platforms. This trend towards exclusivity limits viewer access to diverse content, compelling audiences to subscribe to multiple services to catch all their favorite shows and movies.

What’s next in the streaming wars?

As the dust settles on each M&A, the contours of Hollywood and the streaming industry are redrawn. While these movements undeniably bring economies of scale, enhanced content offerings, and technological advancements, they also pose challenges. “Streamflation will persist as streamers continue to increase prices and crack down on password sharing,” predicts Alberstat. “Platforms will further diversify pricing structures, introducing entry-level plans that include more advertisements.” In response to profit pressure, Alberstat also expects to see more streamers removing licensed content from their libraries to avoid residual payments and licensing fees.

While keeping binge-able series like “Suits” and “Friends” exclusive helps streaming services maintain a unique selling proposition, licensing will offer an opportunity to leverage content assets for additional revenue, strategic growth, and market penetration. “Eventually, four or five large streaming groups will emerge provided they can pass various regulatory hurdles,” Alberstat concludes. “Ironically, streaming will look more and more like cable TV with prices rising and ads returning. Ultimately, we will see bundling of streaming services that look extremely similar to the cable bundles we once had.”

Philip Alberstat