Streaming turned profits in 2024. Wall Street’s biggest worry is whether momentum can last.

But investors quickly realized that it’s difficult to monetize users, justify the high cost of content, keep subscribers engaged, and turn a profit. One of the biggest reasons: streaming’s low price point. With the exception of cable replacement services like YouTube TV and Hulu + Live TV, prices can range anywhere from $4.99 a month to $22.99.

That low cost means more subscribers are needed to generate significant returns.

In response to investors’ growing profit fears, companies adjusted their strategies and were eventually able to attract more subscribers through controversial password-sharing crackdowns and multi-tier subscription offerings, in addition to more strategic content acquisitions and the return of key original programming.

Companies also shifted how aggressively they spend their money. Instead of ballooning content budgets and releasing as many shows as possible, streamers pulled back to focus on more quality over quantity projects.

“Everything was kind of messy for a few years,” Macquarie’s Nollen said. “Streamers are finally getting the revenue and cost lines to balance out. But it’s questionable how profitable these services can be.”

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One obstacle to achieving consistent profits is combating increased churn in the face of higher prices. (Netflix became the latest platform to boost subscription costs in the US, bumping the prices of its various tiers earlier this week.)

“The bigger risk is really retaining the customer base and figuring out whether we get to a threshold where there are too many platforms,” Morningstar’s Dolgin said. Also, “there’s a limit” to how much more streamers can raise prices. Simultaneously, there’s a limit to how many more subscribers streamers can add.

“Somewhere, you need to get that right in order to keep profits growing at a good pace,” he said.

To combat fickle subscribers, competing platforms are now bundling their services together. As WBD CEO David Zaslav told investors last year, “There’s more strength together.”

“I have a difficult time envisioning a scenario where any one of these players takes Netflix’s mantle,” Dolgin said. “So [bundling with one another] is how they close the gap. They don’t do it individually. They could potentially do it as a collective.”

And if recent news of mass layoffs and restructurings are any indication (Case in point: CNN’s digital revamp), the road to catching up to Netflix — and just basic survival in the streaming-first era — might be a bumpy one.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].

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