Many of the traditional companies that jumped into digital streaming to catch up to the likes of Netflix are now finding that the streaming wars haven’t done much to help their business. Like the kingdoms of old regularly found out, wars are costly, and drained coffers won’t do anything to help you stay in the fight.
On Tuesday, IndieWire published a memo from James Dolan, CEO of MSG Entertainment that owns AMC and AMC Networks. The memo was reportedly addressed to AMC Networks staff, where he warned of “significant cutbacks in operations” impacting every operating area of AMC, as well as “large-scale layoff[s].”
Dolan, who is the scion of Cablevision founder Charles Dolan and had once been CEO of that telecom company as well, told workers they would try to minimise the impact on employees, but said that these cuts would be happening very soon, and very rapidly.
According to Dolan’s memo, the big reason that the company needs to take such drastic steps is because of “pressure from growing subscriber losses” which have mostly come from folks cutting the cord on their old cable subscriptions. And despite their switch over to a streaming model, AMC hasn’t seen enough to cover the cost of moving from one model to the next. Though the traditional AMC Networks cable packages included the AMC and BBC America channels, the company’s streaming offerings included AMC+, Acorn TV, horror-focused Shudder, anime-centric HIDIVE and more.
“It was our belief that cord cutting losses would be offset by gains in streaming,” Dolan’s letter reads. “This has not been the case. We are primarily a content company and the mechanisms for the monetisation of content are in disarray.”
What does “monetisation in disarray” mean, exactly? AMC+ prices normally start at $US9 ($12) a month, or $US84 ($117) a year, and the subscription gives access to AMC content as well as Shudder, IFC Films, and Sundance Now, without ads. Multiple other streaming services like Disney+ are making their subscription plans more expensive while companies like Netflix have introduced a new subscription tier with ads. AMC has done neither.
The company’s stock price dropped by 56% in the past year and its Q3 income was down by nearly $US26.7 ($37) million compared to the same time in 2021. Yet in the same breath the company was lauding its 44% subscriber growth and 41% increase in streaming revenue to investors. It points to just how unprofitable streaming adventures have proved for many traditional networks, despite how there are more viewers for streaming than both broadcast and traditional cable. Warner Bros. Discovery recently complained about compounding losses with its streaming services when it announced it was combining the streaming apps HBO Max and Discovery+.
Gizmodo reached out to AMC Networks for comment but we did not immediately hear back. There seems to be quite a lot of turnover at the company. On Tuesday, AMC Networks announced that previous CEO Christina Spade was stepping down though the board was still in the process of finalising her replacement. She had only been in the position for less than three months before stepping down.
Google-owned YouTube just recently signed an agreement with AMC and other networks to include subscriptions through their platform, but it’s way too early to see what impact that partnership has on subscriber numbers.
Editor’s Note: Release dates within this article are based in the U.S., but will be updated with local Australian dates as soon as we know more.