In an aerial view, the Netflix logo is displayed above the Netflix corporate offices in Los Angeles, California on October 7, 2025.
Mario Tama | getty images
There’s a love affair between investors and streaming on Wall Street.
The romance began about a decade ago when consumers began breaking away from massive cable TV bundles in favor of direct-to-consumer streaming apps. However, where investors were once attracted by customer growth, rewarding companies that were able to expand their consumer reach, their focus has now shifted toward profitability.
To meet this new expectation, streaming companies have raised the prices of their services, restricted password sharing, and moved into ad-supported territory. It also boosted likes Paramount Skydance To explore the acquisition of warner bros discovery For its own extensive library of content and top-tier streaming service, HBO Max, to compete.
While streaming is pushing media stocks forward, especially around quarterly earnings, it’s unclear when — or if — it will start boosting profits for smaller players.
“Is Streaming a Good Business?”. Robert Fishman, senior research analyst at MoffettNathanson, presented a research note to investors in March. “We raised and debated this important question for years, leading us to believe that the answer is yes, even if only for services that have sufficient scale.”
For legacy media companies, streaming has not yet fully replaced linear TV’s profits and advertising revenues. Of course, both of these metrics have been in decline for companies like WBD, Paramount, and its peers.
In response, streamers have raised subscription prices for mass consumers, raising the question of where the ceiling for streaming costs lies. Between the high fees and the sheer number of services required to access all the content, consumers are beginning to shy away.
Still, even with these continued linear TV declines, investors view streaming as a bright spot, especially for companies that have made it profitable. disney It has been one of the most stable media companies when it comes to a profitable streaming business, but Paramount and WBD have seen profitable quarters and Comcast’s Peacock is reducing losses.
“With streaming no one is reporting suboptimal numbers anymore, because it’s all about profitability now,” Doug Crutz, senior research analyst at Cowen, told CNBC. “And that’s the metric that these businesses are being evaluated on. It’s, you know, can you get 10% operating profit? Can you get 15%? Can you get 20%? Can you get 25%? Can you get to where Netflix Is?”
Netflix reported an operating margin of 29.5% in 2025. Meanwhile, Disney, for example, guided investors to an operating margin of 10% for its direct-to-consumer business in fiscal 2026.
Workers prepare a large sign advertising a Disney film as San Diego prepares to host thousands of visitors for Comic-Con International on July 22, 2025 in San Diego, California.
Mike Blake | reuters
“It’s a big question mark that all of these companies are facing,” Crutz said. “You had a linear business that was really profitable and that’s gone, and will the streaming business ever be that profitable?”
‘No streamer can come close to Netflix’
The leader is unopposed in this area.
Netflix was early in the streaming game, attracting many cord cutters with significantly cheaper online options than expensive cable packages. The streaming giant has since expanded its library through deals with Hollywood studios and by venturing into original content.
Being one of the first to move into this space meant a huge audience for Netflix. The company had announced this in January 325 million global paid subscribers were reached.
“As we think about global scale, the ability to spread content spend and other fixed streaming costs across a much larger subscriber base leads to a more meaningful streaming profit opportunity,” Fishman wrote. “On that front, no streamer comes close to Netflix.”
Netflix is the gold standard in the eyes of Wall Street. But competition for viewership is increasing and now includes YouTube, TikTok, other social media as well as live events and gaming – all of which are competing for consumers’ time.
And even industry leaders are not immune to the challenges of the streaming business.
In 2022, Netflix reported its first quarterly subscriber loss in more than a decade, sending its stock price lower. The media giant responded with several changes to its business model, most notably the addition of a cheaper, advertising-supported tier.
Netflix no longer reports quarterly subscriber numbers, and Disney has followed suit as the industry refocuses on profits. (Disney also stopped breaking out revenue and operating income for other parts of its entertainment business, including linear TV.)
But analysts agree that Netflix’s comparison to traditional media players isn’t exactly apples-to-apples. After all, Disney, Comcast, Warner Bros. and Paramount aren’t the only streamers. These companies still have linear TV businesses as well as strong dramatic divisions. And some have other, even more lucrative pieces of their empire, including merchandise sales, theme parks, hotels and cruise lines.
The Paramount booth is shown on the convention floor during the opening day of Comic-Con International on July 24, 2025 in San Diego, California, US.
Mike Blake | reuters
Recently Netflix has moved away from its content-only strategy to launch its own merchandising and live events businesses.
“They don’t have the legacy media to compensate for the decline,” said Alicia Reese, senior vice president of equity research at Wedbush. “They don’t have to worry about theatrics.”
This results in traditional media companies often being able to create a non-traditional technology company in the streaming sector.
how much is too much?
Both Netflix and traditional media companies have raised the prices of their streaming platforms in the last year in an effort to boost revenue and justify higher content spending.
While consumers are groaning at these price increases and being locked out of already borrowed accounts due to the password sharing crackdown, Wall Street applauds such measures.
“We think Netflix is positioned to drive substantial growth in global advertising, while its latest price increase could provide a meaningful boost to profitability this year,” Reese wrote in a research note published Friday.
Netflix will report its quarterly earnings on Thursday, just weeks after the announcement There’s been another price increase across its subscription tiers, which also includes its cheapest plan with ads.
“Although Netflix has consistently raised prices across the board, our analysis shows that U.S. revenue per streaming hour remains the lowest among its peers, suggesting further pricing runway,” Citizens analyst Matthew Condon wrote in a research note published last month.
Most streamers offer several plans, ranging from a cheaper ad-supported option to an ad-free standard service and then a higher priced and higher quality version.
To alleviate some of the price burden, streamers have also begun to offer bundles of their services at a discount, showing that they can find a range of subscribers.
The difference in price between ad-supported and ad-free tiers varies from streamer to streamer, but generally an ad-supported service ranges from $7.99 per month to $12.99 per month and a premium subscription ranges from $13.99 per month to $26.99 per month. These prices are often set based on how much content is available in a library and how much the streamer is paying to produce and license the content for their service.
“I think you’ll continue to see price increases, just like with Netflix,” Krutz said. “If prices keep rising we will find out how difficult services are.”
Streaming Subscription Plans
Netflix
- Standard with ads: $8.99/month
- Standard No Ads: $19.99/month
- Premium No Ads: $26.99/month
(Additional members cost $7.99/month for ads, $9.99/month for no ads)
disney
- Disney+/Hulu with ads: $12.99/month
- Disney+/Hulu ad-free: $19.99/month
- Disney/Hulu/ESPN Unlimited with Ads: $35.99/month
- Disney/Hulu/ESPN Unlimited without ads: $44.99/month
warner bros discovery
- HBO Max with ads: $10.99/month
- HBO Max Standard: $18.49/month
- HBO Max Premium: $22.99/month
of great quality
- Paramount+ with ads: $8.99/month
- Paramount+ Premium without ads: $13.99/month
comcast
- Peacock with Ads: $7.99/month
- Peacock Premium with Ads: $10.99/month
- Peacock Premium Plus Ad Free: $16.99/month
Apple
Amazon
- Prime Video Prime Shipping included in membership
- Ad-free at additional $4.99/month
Ads or no ads? This is the question.
Advertising has long been a part of the TV business model. Even when cable TV bundle prices soared before the advent of streaming, advertising provided relief.
However, for streaming, pressure for consumers to choose ad-supported plans has recently increased throughout the ecosystem.
Netflix, which has long opposed ads, introduced its own ad tier in November 2022 and eliminated its cheapest basic plan shortly after, pushing customers toward watching with ads.
Former Disney CEO Bob Iger said in a prior investor call that his company is trying Driving customers towards advertising-supported plans. And by the 2023 Upfront presentation, the industry’s annual pitch to advertisers, streaming took center stage.
The economics show: Netflix reported 2025 ad revenue of more than $1.5 billion, or about 3% of total full-year revenue. It is expected to double this year.
“We’re making good progress, and there’s a massive opportunity ahead of us,” Netflix co-CEO Greg Peters said during the company’s earnings call in January.
Netflix co-CEO Greg Peters speaks in a keynote on the future of entertainment at Mobile World Congress 2023.
Joan Cros | Nurfoto | getty images
In post-earnings notes following that report, analysts agreed that while Netflix’s advertising revenue growth was initially slow, more information about the company would help better understand how it is integrated into the business.
While traditional media peers came to the streaming game comparatively late, they were often faster than Netflix to set up advertising plans. Disney’s Hulu, Paramount+, and Peacock have offered these options since their inception. HBO Max begins its ad plan in 2021, while Disney+ joins Netflix in late 2022.
This could help accelerate the ramp to meaningful streaming profits.
However, in general, it has been difficult for media companies to gauge the advertising landscape. Linear TV advertising revenues have declined significantly in recent years. Tech companies like Google And of meta Facebook continues to capture a larger share of advertising dollars. And while streaming has been a major source of advertising revenue growth for media companies, it has yet to catch up with traditional TV.
