Could Subscriber Losses for Top Streamers Mean a New Strategy for 2023?

Art by Bastian Riccardi via Unsplash

Could Subscriber Losses for Top Streamers Mean a New Strategy for 2023?

By Movieguide® Staff

The industry’s top streamers, as well as new streamers like Warner Bros. Discovery, are rethinking their subscriber growth strategies after Netflix reported losses in subscribers last year.

JB Perrette, CEO and president of Warner Bros. Discovery Global Streaming and Interactive, said that many streamers are adopting a strategy that mirrors TV network contracts of old.

Variety reported:

When Netflix came on strong a decade ago and popularized the direct-to-consumer streaming model, Hollywood’s major studios saw a big chance to cut out the cable middleman and build their own channel platforms. As it turns out, attracting subscribers one by one is a much heavier lift than leveraging the value of must-have channels against cable operators.

…Part of the blueprint for the biggest players in the entertainment sector might include a return to an earlier strategy to guarantee income: bundling channels that entice consumers to make longer commitments. Also in the mix: using sports rights to preserve the linear cash cow, and partnering with telcos, TV-set makers and even retail outlets to help drive digital subscriptions.

As new players enter the streaming game they should take note that despite Netflix’s massive catalog of original content, audiences still have standards for what they watch.

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.

This announcement comes after major subscriber losses over the last two quarters. In the second quarter, Netflix lost nearly 1 million subscribers.

However, the company has struggled to keep subscribers as they create and promote immoral content, as Movieguide® previously reported.

A recent report shows Netflix fell well short of its expected number of new subscribers as the company continues to face the consequences of pushing immoral content like CUTIES, 365 DAYS and DARK DESIRES.

Morgan Stanley’s Benjamin Swinburne said that the transition from Cable to Streaming is not straightforward.

“Consumers are spending more money than ever on home entertainment services. That’s been a success. The question is, why have profits collapsed?” Swinburne told Variety.

“This is a very painful transition, from one model to the other and from one technology to the other. It’s going to be a multiyear shakeout of the major players,” he added. “The reality is that everyone outside of Netflix is pretty early in the streaming game. They’ve gone into it guns blazing to build businesses. Pivoting from heavy investment mode to maximizing profits is not easy for any company, especially those with legacy infrastructure costs.”

“A lot of consumer behavior is trending the way we’re going. We’re à la carte — Pick your own bundle and get the connectivity that you want,” Erin McPherson, chief content officer for Verizon Consumer Group, told Variety. “We’re going to rebundle in a more consumer-friendly manner than the traditional bundle.”

As a result, many of the top analysts expect a reduction in the amount of series and original movies released on streamers.

Not only could this help boost subscriber numbers with curated content, it could also mean a resurgence in the theatrical experience.

“There was too much content being produced and not enough of it was good,” Perrette said. “I think everyone is resetting their expectations. For streaming content, it’s not just about driving subscriber growth, but finding how you can make money with this content at various points in time.”

According to Movieguide®, profit starts with promoting moral, uplifting content instead of excessive immorality.

Movieguide® previously reported of Netflix’s losses:

As the most prominent streaming company in the game, Netflix never backed down from taking risks and promoting the content of all kinds to its over 220 million users.

However, promoting explicit sexual content like BIG MOUTH or CUTIES led to many outraged subscribers and even some lawsuits against the streaming giant.

After Netflix shares plummeted to their lowest point since 2018, it is clear that some subscribers are fed up with the company’s insistence on catering to immoral projects.

While CEO Reed Hastings blamed increased competition among streamers, Disney+ and Amazon Prime leading the way, it is not a stretch to assume that Netflix’s past flippancy with mature content could also contribute to its first subscriber loss in over ten years.