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“If it bleeds, it leads,” goes the old news media saying, and Netflix’s streaming services have certainly made headlines over the last few weeks with their apparent haemorrhaging of subscribers.
The sudden death of CNN+ just a month after launching potentially paints another gruesome picture of the streaming market - but all is perhaps not what it seems.
What, if anything, does this mean for the future of streaming both within and outside the mass-market universe of services like Netflix? Because the appetite for streaming services is not diminishing – it is simply maturing. Here’s our take on it.
Yes, it’s true that Netflix lost subscribers in the first quarter of 2022 for the first time in a decade, but this was driven to a large extent by its suspension of services in Russia in response to the invasion of Ukraine, which immediately wiped out hundreds of thousands off the subscriber count.
Netflix is also clamping down on account and password-sharing, which, whilst it will probably force an uplift in new subscriptions over time, will tend to turn many existing subscribers off in the short term.
Additionally, take a look at the bottom line. Netflix has actually grown its revenue by 10% to US$7.78 billion over the same period – not a small number by anybody’s reckoning, and a likely indication that even if total subscriber numbers have dropped, the average spend per subscriber has in fact increased.
And whilst all that was going on, streaming actually captured its largest-ever share of total TV usage in March in the US. According to stats from industry analyst Nielsen, it made up 29.7% of overall television viewing time, while broadcast viewing was down 1.1% from February to 24.9%.
Netflix woes notwithstanding, the momentum, it seems, is still very much with streaming.
But it’s not without its challenges.
Some of the factors at work here are simply seasonal and cyclical, and some are more fundamental and disruptive.
Of the former, summer’s coming – and for anyone who has been in the Pay TV industry for any length of time, it’s probably less drama and more karma; we’ve seen it all before. Summer comes, subscriptions drop off, autumn comes and they pick up again.
Of the latter, there is a global economic crisis that is seeing many of us reclassify streaming as a luxury, rather than an essential spend. Equally, Covid restrictions have come to an end, so home entertainment in the form of streaming is understandably being replaced by spending back out in the real world.
And within the streaming services market itself, competition – at least of the mass-market entertainment variety – has got a lot stiffer.
Not only have big-name players like Disney, Peacock and Paramount+ either come online for the first time or boosted their offering with bigger catalogues, but many third-party streaming rights have been snapped up by Hollywood (and others).
This has seen streaming services like Netflix moving from a dominant position with few ”big” catalogue competitors, to a non-dominant one with many alternatives - and there’s only so many subscriptions most of us can afford.
But it’s important to recognise that streaming isn’t just about the traditional providers. They are one kind of streaming service, and as the market starts to become saturated with them, with the major studios and TV broadcasters launching their services on top of Netflix, Prime, Apple, et al, it forces the market to think differently. And it’s not just necessity that is the mother of invention, it’s also opportunity.
A decade of these giants defining the market also moves the technology and economics on, and this now brings affordable streaming to a brand, club, community, and business level; the democratisation of entertainment, where the original content owners themselves can now own the customer relationship (and the direct revenue streams).
And this really plays well to the relatively unexploited market for owners’ content in live events in sports, music, festivals, exhibitions, theatre and more, with all the attendant brand sponsorship and commerciality the streaming opportunity brings.
Plus, there is a strong movement towards the creation of interest-based and thematic hubs that maximise the exposure of content owners’ streaming services to the audiences and subscribers most likely to be interested in them. These are communities that want to immerse themselves in a ”world” of thematic interest, as opposed to fleeting introductions through general entertainment services (take a look at StagePlayer+,for example, created using our own end-to-end streaming solution).
And if there were any doubt about how effectively “niche” streaming content of this kind can compete for audience attraction against big-name, traditional streaming content, consider that - as we explained in a recent post - research has shown subscribers are now more likely to choose an extra thematic or niche service on top of their existing streaming services, instead of adding another new general entertainment service.
What this all adds up to is that streaming is still growing, it still has impetus, and it offers opportunities way beyond the traditional providers to stoke and underpin a new round of growth.
We’re not going to see the demise of Netflix any time soon, happily, but with the right as-a-service tools, services, and support, streaming is now going places and reaching people Netflix and others of its ilk can’t.
In short, whatever happens with Netflix and company, this industry is streaming ahead.
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