Just ask Netflix. The once untouchable, high-flying king of the streaming sector has found itself on the ropes and embracing changes it resisted for years: cracking down on password sharing, running ads, curtailing the growth of its content spending.
Meanwhile, the streamer’s historic subscriber loss and stock correction in April were a wake-up call for the entire media industry, a jarring affirmation that the perpetual growth they had been chasing with their streaming platforms was never going to be sustainable.
Investors also curbed their enthusiasm on Disney and its streaming platform Disney+, after stock dropped as they entered the ad-supported market—a common industry trend as costs continue to rise due to inflation.
It was a wake-up call, too, for Wall Street, as investors who had hyped Netflix on the strength of its subscriber totals faced the uncomfortable reality that they had been looking at streaming through the wrong lens for years. Now, a new wisdom is taking hold in the maturing streaming space: At some point, this business will have to be a profitable one.
As such, 2022 was also the year that worsening economic conditions began to push the peak TV era toward a definitive close, that SVOD and AVOD became more intertwined than ever as Netflix and Disney+ entered the ad market and that a significant slowdown in domestic subscriber additions shook the industry. This year has reshaped the direct-to-consumer business in major ways, and the ripple effects are still being felt.
According to the outlet, investors and top streamers will continue to fluctuate amid a volatile market, inflation, and persistent box office woes.
Movieguide® previously reported:
Netflix plans to launch an ad-supported subscription option with Microsoft in early 2023 so the company can reach a broader customer base.
“We’ve left a big customer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising,'” Netflix Co-CEO and Chief Content Officer Ted Sarandos said during a panel at the Cannes Lions Festival.
This announcement comes after major subscriber losses over the last two quarters. In the second quarter, Netflix lost nearly 1 million subscribers.
While this was only half the expected loss, CEO Reed Hastings explains that “our excitement is tempered by the less bad results.”
Sarandos explains, “We adding an ad tier; we’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say, ‘Hey, I want a lower price and I’ll watch ads.’“
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