2Q26 Media Preview: M&A everywhere, conviction nowhere

Research evidence excerpt

2Q26 Media Preview: M&A everywhere, conviction nowhere

likely to be a key focus during earnings calls,

but investor focus may be on execution plans to limit cannibalization rather than the upside

potential from this given the narrative bias at present highlighted earlier. In our opinion, these

initiatives are unlikely to be evenly available to the whole industry given differences in content

scale and mix and subscriber bases across services. In our opinion, this could be a bigger

opportunity for Netflix than for Disney simply given Netflix’s diversity of content, its significant

global footprint and the potential to funnel engagement more effectively towards premium

tiers. We also think this shift is likely to result in additional premium tiers at the other end of the

spectrum. Netflix appears to be considering a bundle of third-party streaming services with its

own service and, overtime, this could in theory extend to broadcast networks, which would

provide access to most major sports on TV globally. At a higher level, these shifts point to

content-based tiering becoming more widely adopted by streamers instead of present plans,

where pricing is determined more by the number of users and quality of streams. Ironically, this

evolution is in a way convergent with legacy pay TV, where tiering was mostly content-based, as

most cable networks were largely designed around specific consumer cohorts and

corresponding content genres. This is not surprising but does point to the fact that premium

streaming is now in a more mature phase of growth. What these shifts mean for revenue growth

and margin trajectory is tough to know given that the free tiers are likely to have lower ad CPMs

and free content on major streaming platforms will also increase inventory significantly which