Streaming: Netflix stumbles while CNN+ belly flops
A tough week for the streaming industry has more observers questioning its future, said Josef Adalian in New York magazine. First, Netflix revealed its subscriber growth has stalled “far sooner than it—or Wall Street—ever expected.” Then CNN announced it was shutting down its new streaming service, CNN+, after less than a month. There were plenty of skeptics who expected CNN+ to struggle. But fewer analysts predicted that Netflix, “the tech company that ate Hollywood,” would hit a wall like this. Netflix used to say its primary competition was sleep and reading. But it’s become clear that rivals like HBO Max, Apple, Amazon, and Disney are increasingly “beating it out for the best ideas.” Netflix has also been resistant to change. It finally conceded on allowing advertising on its platform, and it will crack down on password sharing. Even Netflix’s “binge model,” its practice of releasing all episodes of a show at once, hasn’t evolved with viewers’ preferences. People still “love the idea of appointment TV, and as Netflix struggles to make hits, a weekly-release model extends the shelf life of a show and helps build word of mouth.” Time for a refresh.
With consumers “abandoning traditional cable television,” CNN executives once saw streaming as “a necessary foray into subscription-based digital news,” said John Koblin in The New
York Times. CNN’s former corporate parent, AT&T, even approved a $1 billion budget over four years. But just two weeks into its launch, “fewer than 10,000 viewers were watching at any given time,” and downloads of the $5.99 per month app were already waning. Executives at Warner Bros. Discovery, which assumed control of CNN after its spin-off from AT&T in April, have had experience with “niche platforms that were costly and ended in failure.” Some of CNN+’s content is likely now to be folded into Warner Bros. Discovery’s “big-tent streaming service,” HBO Max.
Streaming is still in a “land-grab phase,” and Netflix must compete with competitors who are willing to lose money, said Nicholas Jasinski in Barron’s. “Legacy media firms will accept several years of unprofitable growth” as they search for the holy grail. For all the players, though, Wall Street may be starting to run out of patience, said Christopher Grimes and Anna Nicolaou in the Financial Times. Investors used to “cheer the lavish spending on streaming,” counting on a global market of a billion households willing to subscribe. “Now some analysts say the actual market may be far smaller.” Ultimately, “no matter how great the programming, it is unlikely that the streaming industry will ever generate the kinds of profits that TV and film groups made in the pre-streaming era.”