Lights, Camera, Capital: Analyzing financial tactics in the streaming entertainment landscape

Abstract

The US video streaming service industry, due to the nature of the service it provides and the everchanging trends in the space, has always been volatile. With numerous competitors present in the space, strategic companies such as Netflix, Hulu, Disney+ and Prime Video have become titans in the space. This paper analyses their decisions regarding investments, financing, dividends, and working capital, and the consequent impact on their financial performance. Aggressive pre-pandemic strategies adopted by these companies, such as rampant content acquisition and production led to significant subscriber growth. However, this led to mounting debt and building pressure to sustain the delivery of such hit content. Amidst this landscape, the onset of the pandemic introduced unprecedented variables to the streaming service industry. The global crisis not only disrupted content production but also altered consumer behaviours, leading to platforms being compelled to reassess their financial strategies. Post-pandemic, platforms shifted towards strategic content spending, diversified revenue streams, and tightened working capital management. While subscriber growth slowed, a focus on profitability emerged, reflected in the introduction of dividends and increased cost efficiency. This paper will delve into this dichotomy of the industry before and after this Covid Era.