Wall Street puts streaming in focus. Its future is unclear

There’s a love affair on Wall Street between investors and streaming.

The romance started about a decade ago when consumers began cutting the cord with cable TV bundles en masse in favor of direct-to-consumer streaming apps. However, where investors were once enamored with subscriber growth, rewarding companies that were able to expand their consumer reach, their attentions have now shifted toward profitability.

To meet this new expectation, streaming companies have raised the prices of their services, cracked down on password sharing and delved into the ad-supported space. It’s also sparked the likes of Paramount Skydance to seek out the acquisition of Warner Bros. Discovery for its extensive library of content and top-tier streaming service, HBO Max, in order to compete.

While streaming continues to drive media stocks, especially around quarterly earnings, it’s not clear when — or if — it will start driving profits for the smaller players.

“Is streaming a good business?” Robert Fishman, senior research analyst at MoffettNathanson, posed in a March research note to investors. “We raised and debated this critical question over the years leading us to determine the answer is yes, albeit only for those services with sufficient scale.”

For legacy media companies, streaming has yet to fully supplant the profits and advertising revenue of linear TV. Of course, both of those metrics have been in decline for companies like WBD, Paramount and its peers.

In response, streamers have largely raised subscription prices for consumers, begging the question of where the ceiling is for streaming costs. Between higher fees and the sheer number of services needed in order to have access to all content, consumers are starting to balk.

Still, with these continuous linear TV declines, investors cling to streaming as a bright spot, especially for companies that have made it profitable. Disney has been among the steadiest of legacy media companies when it comes to a profitable streaming business, but Paramount and WBD have seen profitable quarters and Comcast’s Peacock is narrowing losses.

“With streaming no one’s reporting sub numbers anymore, because now it’s all about profitability,” Doug Creutz, senior research analyst at Cowen, told CNBC. “And that’s the metric by which these these businesses are being judged. It’s, you know, can you get to 10% operating profit? Can you get 15%? Can you get 20%? Can you get 25%? Can you get to where Netflix is?”

Netflix reported operating margin of 29.5% in 2025. Meanwhile, Disney, for example, guided investors to an operating margin for its direct-to-consumer business of 10% in fiscal 2026.