Streaming Saturation: How a tough week for Netflix and CNN+ predicts shifting expectations for the next streaming era
Within one week, two streaming video brands on either side of the influence spectrum had to contend with the reality of a changing landscape.
On the legacy side, during its quarterly earnings report, Netflix reported its first subscriber loss (-200K globally) in over a decade. Granted, this was in large part due to the 700K subscriptions lost when the streamer suspended service in Russia, but Netflix also warned of impending losses of up to 2M.
On the emerging side, the newly-formed Warner Bros. Discovery announced that CNN+ would be shuttering one month after its March 29 launch. The news-centric service didn’t launch with live CNN coverage, and a “half-off lifetime” promotional pricing deal could only help the new service gain a reported 10K daily active users in its first few weeks.
Both of these announcements so close together have given analysts a slew of doomsday scenarios to indulge in:
- Is Netflix going to implode?
- Can any new service find success?
- Are SVODs (Subscription video-on-demand) going AWOL?
The answers to all three are:
- Cute wordplay, but not in the long term
However, we’ve seen the meteoric rise of streaming services over the past decade as they have overtaken traditional cable. It’s hard to comprehend how much headroom is left. Truth is there is still some room for growth. Mintel consumer research showed that nearly three fourths 73% of US adults subscribe to a streaming service. Within five years, the rise of cord cutting and the cultural proliferation of streaming are likely going to get that number to rise above 90%.
With saturation, though, comes new expectations for what success is going to look like in the era of streaming where streaming is the standard and not the shiny new toy. Here are a few metrics that will be used to assess viability in this new era of streaming:
Legacy players such as Netflix were able to coast for a long time on offering a premium streaming product that did not need the support of advertisers to help with its success. However, as its prices have gone up and competition has increased, tolerance for high prices has gone down. Sure, 59% of streaming service users agree that it’s worth spending more money for an ad-free experience. However, that’s heavily driven by the most affluent users.
In order to break into households that can’t afford that extra service, Netflix and Disney+ have announced plans to roll out ad-supported versions of their products within the next couple years. When this happens, all major streaming services will have some sort of ad-supported product, leading to greater competition not just from consumers, but from advertisers as well. Streaming services will tout sponsoring partners as a symbol of clout, as brands look to find their audience across the streaming ecosystem.
A successful streaming service’s audience does not need to be the largest in the market, but they need to be loyal active users. In addition to being measured by daily active users, conversations on social media will become all the more important to defining a streamer’s success. Content that elicits a reaction is content that can keep people coming back.
Streaming brands will work on elevating this conversation through their owned social channels. As brands expand into different interests, we’ll likely see emerging and legacy streaming services alike tapping into the Netflix model that tailors social content to many different audiences through a variety of posts and channels. Social media followers and engagement will help tell the story of a brand’s connection to its users even if subscriber counts start to stagnate.
Streaming users are already starting to feel the weight of their spending across many different services, which could lead to an actual decrease in consumption if nothing changes. Mintel consumer research shows that 1 in 4 adults who plan on spending less time consuming media will do so because they’re cutting back on paid subscriptions. This type of behavior will make streaming consolidation and partnerships significantly more emblematic of a product’s long-term success.
With the creation of Warner Bros. Discovery, HBO Max and Discovery+ will likely combine into one service in the near future, bringing with it programming intended for CNN+ along with any potential live news integration that might have been in the streamer’s future. The three brands might not make the most sense together on paper, but they do offer content for a wide variety of interests that could be valuable for people looking to cut back on the number of bills they’re paying.
Third-party consolidation can also help with customers’ convenience, and we’ll see a true test of that when Verizon’s +Play aggregation platform debuts later in 2022. The combination of brands such as Netflix and Hulu in one seamless experience can showcase how streaming brands working together can convey strength, not signal defeat.