Investors were cheering Disney\u2019s results early on Thursday after the company raised prices for video streaming.<\/p>\n
To be sure, it still won\u2019t cost as much to subscribe to Disney+ as it does for Netflix or Warner Bros. Discovery\u2019s Max. It\u2019s tempting to write off the move as just the latest round of price increases in an era of rampant inflation.<\/p>\n
But, actually, Disney\u2019s move says a lot more about the state the streaming wars.<\/p>\n
In the beginning, the battle was for eyeballs and the metric was subscriber growth. For that, original and exclusive content was needed. Disney went big on new Star Wars material to get a foot in the door. Apple TV created Ted Lasso. Way back in 2020, before the Covid-19 pandemic started, actor Ricky Gervais joked at the Golden Globes that no one was going to theaters anymore because they\u2019re all at home watching Netflix.<\/p>\n
Now, all the streaming services are raising prices, introducing advertisements, and cracking down on password sharing.<\/p>\n
The drive to increase revenue from streaming isn\u2019t to cover higher costs\u2014if anything, costs have gone down amid a bitter Hollywood strike\u2014spending on content is down by $3 billion. The focus is on making streaming more profitable, rather than making more shows for viewers. <\/p>\n
And there\u2019s the rub\u2014after a spell of inflation across the board, it seems a big ask to get people to pay more to watch television, especially if it feels like it\u2019s not as good as it used to be. Each price increase is an opportunity to re-evaluate which services you want to keep, and which ones you can drop. <\/p>\n
Eventually, investors will have to look at more than just a streaming channel\u2019s current profitability. They\u2019ll also have to judge which ones will survive the beauty contest when consumers pull back.<\/p>\n
\u2014Brian Swint<\/em><\/p>\n *** Join Barron\u2019s deputy editor Alex Eule and associate editor for technology Eric J. Savitz today at noon when they discuss the outlook for tech companies and individual stocks. Sign up here.<\/em><\/p>\n Try your hand at this morning\u2019s Barron\u2019s crossword puzzle and sudoku games. For all games, including a digital jigsaw based on the week\u2019s cover story, click here.<\/em><\/p>\n \n Disney What\u2019s Next:<\/strong> Disney is focused on a future driven by films, parks, and streaming and is considering strategic options for its traditional television channels. It sees $27 billion in content spending this year, down from about $30 billion in fiscal 2022.<\/p>\n \u2014Eric J. Savitz and Liz Moyer<\/em><\/em><\/p>\n President Joe Biden signed an executive order restricting U.S. venture capital and private equity investment in high-tech Chinese industries such as quantum computing, semiconductors, and artificial intelligence. It would also require American firms to disclose more when they invest in a broad range of Chinese companies.<\/p>\n What\u2019s Next:<\/strong> Senior Biden administration officials told reporters on Wednesday that officials had been in direct conversations with members of the Group of Seven nations as well as China about the executive order. The European Union is also looking at certain investment restrictions.<\/p>\n \u2014Liz Moyer<\/em><\/em><\/p>\n Coach parent Tapestry was nearing a deal to buy Capri, the owner of Michael Kors and Jimmy Choo, which The Wall Street Journal reported could get announced early Thursday.<\/p>\n What\u2019s Next:<\/strong> A potential Tapestry and Coach tie-up would bring together some of the best-known fashion names in the U.S. at a time when European rivals have been busy snapping up big brands. Such deals tend to bring about cost savings and enhanced marketing power\u2013 which would further boost the companies after the latest data showed U.S. retail sales are rising as inflation eases.<\/p>\n \u2014Callum Keown and Rupert Steiner<\/em><\/em><\/p>\n Natural Catastrophes Cost $50 Billion in Insured Losses in First Half<\/h2>\n The insurance industry took on $50 billion in global insured losses in the first half of 2023, the second-highest amount since 2011 after a series of natural catastrophes. Stung by years of catastrophe-related losses, insurers are raising rates and limiting coverage.<\/p>\n What\u2019s Next:<\/strong> In Hawaii a massive wildfire killed at least six people and caused widespread destruction on Maui Wednesday. Homeland Security Sec. Alejandro Mayorkas said the Coast Guard is helping with search and rescue and federal disaster agencies are responding.<\/p>\n \u2014Lauren Foster and Liz Moyer<\/em><\/em><\/em><\/em><\/p>\n Detroit\u2019s Big Three auto makers are in talks with the United Auto Workers (UAW) ahead of a contract deadline in September. The union\u2019s demands could raise costs by a cumulative $80 billion over the life of the contract, which would run through September 2027.<\/p>\n General Motors,<\/span> What\u2019s Next:<\/strong> GM, Ford, and Stellantis made 2022 operating profit of roughly $3,500 a car, while wage increases could cost almost $1,500 a vehicle. The $80 billion figure could take roughly 45% off the operating profit Wall Street expects the auto makers to bring in over the four-year contract.<\/p>\n \u2014Al Root<\/em><\/em><\/em><\/em><\/em><\/em><\/p>\n***<\/h4>\n
Monthly Streaming Costs Hiked Amid Mixed Results<\/h2>\n
\n reported mixed quarterly results but jacked up prices for its streaming services and foreshadowed a Netflix-like crackdown on password sharing. The move, which raises prices as much as 27% for an ad-free Disney+, is part of a drive to make the business profitable.<\/p>\n\n
\n Netflix\u2019s<\/span>
\n standard ad-free tier is $15.59 a month, and
\n Warner Bros. Discovery\u2019s<\/span>
\n Max is $15.99.<\/p>\n<\/li>\n***<\/h4>\n
Biden Restricts Private Equity, Venture Investing in Chinese Tech<\/h2>\n
\n
\n Micron Technology
\n and set export restrictions on two minerals that are critical to making semiconductors and solar panels.<\/p>\n<\/li>\n***<\/h4>\n
Coach Goes Shopping for Versace Parent Capri<\/h2>\n
\n
***<\/h4>\n
\n
\n
\n said a series of widespread thunderstorms that lashed the U.S. this year accounted for 68% of insured natural catastrophe losses<\/strong>, or about $35 billion. An earthquake in Turkey and Syria in February was the single-costliest disaster.<\/p>\n<\/li>\n***<\/h4>\n
UAW and Detroit\u2019s Big Auto Makers Are Talking. Costs Could Rise.<\/h2>\n
\n
\n Ford Motor,<\/span><\/p>\n
\n and Chrysler maker
\n Stellantis
\n generated 2022 sales of almost $500 billion<\/strong>. They had a combined operating profit of almost $50 billion from selling more than 13 million cars.<\/p>\n<\/li>\n
\n United Parcel Service
\n got 6% to 7% pay increases for their new five-year agreement.<\/p>\n<\/li>\n
\n Tesla\u2019s<\/span>
\n price cuts.<\/p>\n<\/li>\n<\/ul>\n***<\/h4>\n