Status: 04/22/2022 08:51 a.m
Netflix wants to rethink its business model after its stock crashed. And the Silicon Valley-based streaming service isn’t the only one having troubles.
The big headline in the US media industry yesterday didn’t come from Silicon Valley, but from Manhattan. The CNN+ service, which was conceived as a pure streaming channel just three weeks ago, is already shutting down again.
CNN+ has only gained a meager 150,000 subscribers since its launch. The service wanted to provide space for longer interviews and provide more background. While the ripcord has been pulled at the parent company Warner Brothers Discovery in Manhattan, the undisputed number 1 in the subscription-based streaming business in Silicon Valley is still facing rough times.
Netflix expects to lose another two million customers in the next three months. CBS media and tech reporter Dan Petterson says, “Inflation is eating away at people’s discretionary income. Many just can’t afford all the services.”
Too many vendors on the market
The range of streaming providers here in the USA is large – too large. Hulu, Amazon, Apple, HBO Max, Peacock – just to name a few – are vying for consumers’ media budgets. And Netflix is the most expensive of all providers. The largest subscription package costs the equivalent of just under 20 euros per month. According to experts, Netflix has now reached its saturation point, especially in the USA and Canada. The service has a good 75 million subscribers there.
The high inflation is one thing, the other is extremely tough competition, says analyst Matthew Belloni at CNBC. In order to get to the big films, the $200 million production, the money would have to be advanced. A “buy-out” would take place. “As a result, streaming providers may end up paying more than a traditional studio, where the revenue is only split at the end when the film hits theaters.”
Are there commercial breaks when streaming?
Netflix now wants to take countermeasures and break with an old, self-imposed taboo. It wants to offer an additional advertising-financed subscription model for which you pay less, but series and films are then interrupted by advertising. Analyst Belloni warns, however, that Netflix has kept its data a big secret for the past ten years. The company knows what its viewers are consuming and produces tailored content. “But it only shares user data if it helps the offer. If they rely on advertising in the future, they have to be more transparent with their data.”
In order to cope with the decline in subscriptions, Netflix boss and co-founder Reed Hastings now also wants to take action against the naysayers who use friends’ passwords. Hastings says, “We’re talking about 100 million households here. They like our service. We just have to get money for it somehow.”
Higher costs for German customers
The subscription prices in Germany are also likely to change in the coming weeks. The packages are likely to be more expensive – probably by two to three euros. Then they would be at US level. Most media pundits believe Netflix may need to adjust its course. However, with its 221 million customers all over the world, it is still the lone leader.
For comparison: The fiercest rival Disney Plus has 129 million subscribers. The media business, says analyst Josh Brown, is no picnic. It’s Hollywood, and there’s hard fighting going on.