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Streaming Wars: 5 Things to Watch in 2022

Disney, Netflix, Comcast, and others will continue to fight for streaming customers in the new year.

For streaming platforms, it will nearly be all about content in 2022.

In 2021, movie studios accelerated their move to streaming services as a distribution outlet for their movies as opposed to a traditional theatrical release. That trend may reverse a little in 2022, but a ton of original content -- including many movies that would have once gone to theaters first -- are being released on streaming platforms either at the same time as they debut in theaters or without a theatrical release at all.

In 2021, about 78% of all U.S. households subscribed to streaming services Netflix (NFLX) - Get Netflix, Inc. Report, Amazon (AMZN) - Get, Inc. Report Prime, and/or Walt Disney's (DIS) - Get Walt Disney Company Report Hulu, the latest data from consumer research firm Leichtman Research Group shows. And out of these 74% pay for more than one service.

Streaming will continue to grow in 2022 with a number of big players throwing billions of dollars into capturing subscribers. Here's a look at five things investors should keep an eye on in the new year:

Netflix Will Likely Offer Video Games Next Year

Streaming giant Netflix  had a bonafide winner in Korean hit show "Squid Game" in 2021. The show is coming back for another season, creator, writer, and director Hwang Dong-Hyuk confirmed.

Netflix told investors in October that Squid Game "is its biggest TV show ever." The dystopian series clocked a viewership of 142 million households in the first four weeks since it began streaming on Sept. 17.

The success of "Squid Game" could bring in nearly $900 million for Netflix, more than 40 times its cost of production, Bloomberg News first reported in October.

Even as Netflix hunts for the next Squid Game-like hit for its service it'll hope videogames will be enough to keep viewers hooked. Netflix reported a total to 214 million paid subscribers at the end of the September quarter, but it's not solely relying on movies and TV in 2022.

In 2021, Netflix bought videogame creator Night School Studio, which made mystery graphic adventure game "Oxenfree," in September and has started testing five mobile gaming titles in select European markets.

"We’ve begun testing our games offering in select countries. It remains very early days for this initiative and, like other content categories we’ve expanded into, we plan to try different types of games, learn from our members and improve our game library," the company said in its third-quarter earnings call.

The company has not officially announced a release date for its gaming platform yet, but it's expected in 2022.

The games will be included as part of a Netflix membership with no ads and no in-app purchases. In July, the company hired former Electronic Arts  (EA) - Get Electronic Arts Inc. Report and Facebook  (FB) - Get Meta Platforms Inc. Class A Report executive Mike Verdu to lead the effort.

Disney+ Losses Expected to Peak in 2022

In the past fiscal year, entertainment giant Walt Disney's streaming service Disney+ subscribers have grown 60% to 118 million. The company is hoping to beef up its content slate next year as it recovers from the pandemic.

"We are nearly doubling the amount of original content from our marquee brands, Disney, Marvel, Pixar, Star Wars and National Geographic coming to Disney+ in fiscal year 2022, with the majority of our highly anticipated titles arriving July through September," said Chief Executive Bob Chapek during the company's earnings call last month.

But Chief Financial Officer Christine McCarthy warned that Disney + will not be at its "anticipated steady-state cadence of content releases," in 2022.

Disney has more than 340 local original titles in various stages of development and production across the board, the company said.

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"We are increasing our overall long-term content expense for Disney+, and we believe we are well positioned to achieve the subscriber target of 230 million to 260 million by fiscal 2024 that we laid out at last year's investor day. And we also remain confident in our expectation that Disney+ will achieve profitability in fiscal 2024," said McCarthy.

Losses for Disney+ are expected to peak next year as better-than-expected revenue and lower content expenses due to production delays contributed to lower-than-forecast losses in 2021.

Peacock to Expand Outside the U.S. Next Year

Comcast's  (CMCSA) - Get Comcast Corporation Class A Report 18-month old streaming platform Peacock will make a push for a wider audience base outside the U.S. in 2022.

In October, Peacock went live in Europe with media and entertainment company Sky and a deal with Sky Showtime is in the works for mid-2022, the company said.

Peacock will also stream the 2022 Beijing Winter Olympic Games starting in February.

"We're very excited about next year with everything that we've got coming across NBCUniversal from the Olympics and the Super Bowl to a spectacular movie slate, to a very strong advertising business, ratings at our linear networks improving," NBCUniversal Chief Executive Jeff Shell said,

Shell said because of the pandemic, Peacock is running behind on its original production schedule. "So, we're going to start to see a ramp-up in originals on Peacock, which is very necessary to continue to grow, to have successful and robust original programming and we're excited about a lot of the things that we're making for the service," Shell said.

And there will also be movies. 

"We've seen across all streaming platforms that movies move the dial," said Shell in an earnings call in September. 

All Universal Filmed Entertainment Group’s theatrical releases starting next year including "Jurassic World: Dominion," “Minions: The Rise of Gru,” “Puss in Boots: The Last Wish” and a new original film from “Get Out’s” Jordan Peele will play on Peacock during its pay-one partner TV window, which is 120 days after a title’s theatrical release. 

Each movie will be available on Peacock for an initial exclusive four-month window.

The first movie in Peacock's Pay One rights will hit Peacock in the first quarter, and then the platform will have a steady supply of movies, Shell added.

Amazon Moves Into Live Sports

Tech giant Amazon's digital streaming service Prime Video won the right to carry NFL football games for 10 years, starting in 2023, in March.

The league described the deal as its “first-ever all-digital package.”

Amazon Prime Video has acquired the rights to be the exclusive home of "Thursday Night Football" across hundreds of compatible digital devices.

This unprecedented "Thursday Night Football" package gives tens of millions of new and existing Prime members exclusive access to must-watch live football on Prime Video,” said Mike Hopkins, SVP of Prime Video and Amazon Studios, in a statement.

"Thursday Night Football" will air exclusively on Prime Video except in the home team markets where it will air on a local channel.

Warner Bros Discovery Merger Expected in Mid-2022

The Discovery-WarnerMedia merger worth $43 billion, which unofficially began on Feb. 13, on Wednesday received an unconditional antitrust clearance from the European Commission, Deadline reported.

Discovery is hoping to close the deal in mid-2022, the Deadline report added.

But the deal, which combines WarnerMedia’s various assets such as HBO Max, CNN, TNT, TBS  with Discovery’s collection of unscripted programming, could potentially face resistance at home.

Over 30 Democratic lawmakers including Elizabeth Warren and Pramila Jayapal, have reportedly written to the Department of Justice pushing for an investigation into the proposed merger citing “significant antitrust concerns," The Hill reported a few weeks ago.

"Enforcing the antitrust laws to stop mergers that enhance this type of monopsony power is critical to promoting free and fair labor markets and economic opportunity for workers,” the lawmakers wrote as reported by The Hill.

The merger between the two companies was first announced in May by AT&T  (T) - Get AT&T Inc. Report and Discovery. 

“A more consolidated, less competitive marketplace may only reduce the competitive pressure on media companies to provide consumers with more diverse and inclusive programming,” the letter stated.