Streaming peak reached? Netflix subscribers decline – CNN+ off

Pandemic and war affect the number of subscriptions to streaming services
Is the streaming market saturated?
Competition and new business models

In the first quarter of 2022, Netflix lost more subscribers for the first time in 10 years than the streaming provider was able to win new customers: a bottom line drop of 200,000 paid subscriptions was reflected in the first quarterly report. In the current quarter, the company even estimates the loss at two million subscribers. As a result, Netflix shares fell by 35 percent within one day.
After the sudden increase in subscribers by 37 million users in 2020 due to the pandemic, it was to be expected that the number of customers would decline at some point as the corona measures were relaxed. In addition, with the war in Ukraine and the cessation of business in Russia, around 700,000 subscriptions were lost. The loss of subscribers at Netflix cannot only be explained by the fact that subscriptions were lost as a result of the war in Ukraine. Netflix also fell well short of its own target of 2.5 million new subscribers.

Netflix’s shareholder letter of April 19 reads that streaming is still gaining ground over linear TV, but the high household penetration (including use of a Netflix account across multiple households) and growing competition are slowing down growth. Netflix wants to start with sharing passwords: So far, Netflix has more or less ignored customers who have shared their passwords with other users. According to the company, more than 100 million households are free riders. Netflix now wants to change this: The plan is to monetize the joint use of a Netflix account by several households in order to keep the operating margin at around 20 percent.
The possibly saturated market and the growing pressure from the competition are also causing other top dogs to realign their streaming strategy, including Warner.

False start at CNN+

The streaming service CNN+ will be shut down again on April 30, after just a month. After the CNN parent company WarnerMedia merged with Discovery to form Warner Bros. Discovery at the beginning of April, the new management announced the decision. Chris Licht, the CEO-designate of CNN (official launch date May 2, 2022), said in a statement it wasn’t because of the quality of the streaming service, “but our customers and CNN are best served with a simpler streaming offering.” . What is meant by this is that the Discovery bosses are pursuing a different, possibly joint, streaming strategy, but this could not be coordinated with CNN from a purely legal point of view before the merger.
The new management had previously informed the shocked employees. CNN Business describes the mood at the meeting as “town hall style” somewhere between freaking out and sadness. Each employee should continue to be paid for 90 days in order to examine the possibility of continued employment within the group, and severance payments for employees who leave the company should be paid for at least six months. CNN+’s previous streaming subscribers were promised a prorated fee refund.
According to CNN Business, criticism of the former management of WarnerMedia, which stuck to the GoLive of CNN+ despite the imminent merger with Discovery, was particularly evident at the meeting. The exact lineup of new streaming offerings in the merged company is not yet known, but work is underway to combine HBO Max and Discovery+ with other offerings from WarnerMedia, according to CNBC.
Warner Bros. Discovery is now under pressure to save $3 billion from billions in debt, largely related to the merger.

Future of streaming providers

“It is clear that we are now in the post-peak stream phase where life is returning [nach der Pandemie, Anm. d.Red.] “Returning to normal,” comments Charlotte Newton of GlobalData. According to her analysis, Netflix will lose its dominant position in the streaming market in the coming years.
According to the study, streaming services are becoming a luxury in the current situation with rising living and energy costs and high inflation: While many consumers had several streaming subscriptions during the last two years of the pandemic, in future it will be the content that decides which offer the users choose. The decision to take CNN+ off the market and possibly integrate it into another streaming service from the group also speaks in favor of this prognosis.
The individual providers must increasingly realign themselves in order to achieve growth in the almost overcrowded streaming market. According to media reports, Netflix is ​​considering launching a cheaper, advertising-financed subscription model. At the same time, the company runs the risk of changing the user experience so massively that subscribers switch to other providers, according to Francesca Gregory from GlobalData. Netflix’s unique selling proposition is in jeopardy.

Editorial office finanzen.net

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