Why Is It So Hard To Make Money In Streaming? (2024)

Streaming entertainment is a notoriously hard market to make money in. Despite having 260 million paying subscribers, Netflix only made $5.4 billion in profits last year. That works out to be around 21 dollars of profit per subscriber per year. And the current level of profits is heavily due to a string of price increases over the past several years.

Contrast that with cable TV where content providers like ESPN (owned by Disney) can earn around $10 per subscriber per MONTH in affiliate fees (fees that cable companies pay ESPN to include it in their bundles) plus even more in ad revenue. In 2022, ESPN alone generated $2.9 billion for its parent company Disney on just around 75 million subscribers (i.e. households) — that’s more than $41 of profit per subscriber. And let me emphasize again, that $41 profit is just for ESPN alone.

So the traditional cable bundle seems like it’s a lot more profitable than streaming. And because one man’s profit is another man’s expense, it’s not surprising that many consumers are opting out of traditional pay-tv (i.e. cord cutting) and subscribing to streaming instead.

But outside of live sports and news, the underlying content doesn’t seem all that different. There’s a lot of…