Streaming wars evolving between Netflix, Disney, media giants

Yahoo Finance Senior Reporter Alexandra Canal discusses the ongoing streaming wars between media giants such as Netflix, Disney, and others.

Video transcript

RACHELLE AKUFFO: Well, the streaming wars wage on, but the battle may be evolving. With advertising taking center stage, could we see new growth strategies emerging? "Yahoo Finance" reporter Alexandra Canal is here with more. Allie, what are you seeing?

ALEXANDRA CANAL: Hi, Rachelle. We are in a critical moment of the streaming wars. That's why you're seeing a lot of new revenue initiatives like ad-supported tiers, like Netflix's crackdown on password sharing, which just hit the US yesterday, along with a lot of restructuring efforts, as all of these companies really are racing towards profitability.

So I wanted to figure out what is the next big growth engine in the streaming wars. Is it gaming? Is it repurposed theaters? What's ultimately going to win these battles? And through my conversation, it's clear that this war is evolving. It's different than what we've had in the past. I spoke with Mark Boidman. He's the global head of media at Salomon Partners. And he told me that right now, the streaming wars is not each service against each other, but these services collectively against traditional media. That old school media that we've been so used to.

In his view, we will not have cable in the next 10 years. And that leaves a lot of those audiences, in addition to a lot of those ad dollars on the table. The Pay TV ad market, it's a $60 billion plus opportunity. So the big question is, what do these streaming giants can collect as much as they can from that $60 billion bucket? And that's really what's going to create the value for shareholders and increase that stock price.

So we're seeing right now this big gap between the advertising tier for a lot of these streaming companies and the premium streaming tier. And that's because they want to drive those subscribers to ad-supported. The more subscribers they get there, the better the impressions will be. And that's obviously attracted to ad buyers. Another big theme to watch is bundling. That's all connected to this story. That's why we're seeing HBO combo with Discovery content.

We have Disney Plus and Hulu being offered together as one service, Paramount and Showtime. That creates a better viewing experience for subscribers, but also a more attractive play for these advertising giants. So that's a big thing to watch now. Advertising really the next big growth opportunity here as all of these players are really fighting for survival and relevancy. And I do think it sets us up for more M&A, media M&A, in particular, coming in 2024.

RACHELLE AKUFFO: So I'm going to have to go back and try and figure out all the best bundles so I can get the most bang for my buck.