Understanding the Collapse of CNN+ and Ailing Netflix
Two major incidents happened in the growing world of streaming this past month. CNN, a long-standing bastion of cable television news programming, recently launched a streaming service called CNN+, dedicated to expanded content that would otherwise be reserved for the network. It’s conceptually similar to Fox Nation, which is a spin-off service from Fox News. Unlike Fox Nation, CNN+ lasted a mere month, undercutting Quibi’s infamous short term by a few months, due to the obscenely low ratings the service attracted. While traditional television behemoths struggle with streaming, Netflix, one of the largest names in streaming, announced for the first time in years that they had lost subscribers, causing their stock price to collapse.
In an attempt to calm their investors, Netflix revealed that they are exploring a lower-cost ad-supported plan and are downscaling their in-house animation efforts. Understandably, both of these news disappointed subscribers and enthusiasts alike. Netflix’s animation output has long been appreciated by enthusiasts of the medium. Additionally, the ad-supported plans are a direct contradiction to Netflix’s original ethos of being the opposite of cable. It has become clearer to some that the future of streaming has quickly become another manifestation of cable television. Various services hosting heaps of content with each offering different plans, some of which include advertisements, sounds eerily similar to cable.
While this shift towards ad-supported streaming is disappointing, it is by no means unprecedented. Ad revenue does rake in billions of dollars and could help mitigate the amount of debt Netflix has accrued over the years. Offering more flexibility to consumers is also a wise business decision. However, it does position the value of Netflix as a platform under scrutiny. Currently, Netflix has the highest monthly payment plan of all major subscription platforms, up to $20 per month for 4K video streaming. HBO Max is the closest to this price range, but it offers 4K video streaming at $15 per month. The rapidly growing Disney+ probably has the best value of the bunch with its modest $8 per month rate, in addition to offering an annual payment plan for $80 per month.
Disney+ is not too far behind Netflix’s massive subscriber base and other competitors like HBO Max are performing well. Netflix will soon no longer be the king of streaming and it will force the company to reprogram their business strategy if they wish to continue growing. Their ambitions in the gaming industry, downscaling their animation department, and considerations for an ad-supported model all indicate that Netflix is actively at work in this regard. However, these changes have drawn ire from consumers and could potentially worsen the exodus to other competing platforms. So what should Netflix do to maintain their dominance in the industry?
For one, downscaling one of the content departments out of cost-cutting measures seems to be counter-intuitive. I’m certain a fair number of subscribers enjoy the animated content produced by Netflix and are likely disappointed by the cancelations of many animated projects in development. If the business strategy warrants diversified content, why diminish the diversity of said content? The marginalization of animated projects in this industry continues to confuse me as someone who enjoys entertainment. While I understand the hypocrisy of Netflix introducing an ad-supported plan, perhaps that plan could have been used to help finance those animated projects if they were causing debt to swell.
Speaking of debt, why is Netflix spending north of $250 million for the upcoming season of Stranger Things? If Netflix wants to adhere to frugality, perhaps they should be more conservative with their budgets for their biggest shows. I doubt a smaller $150 million budget would adversely impact the quality of the season. Netflix’s expansion into gaming also confuses me. I would understand if Netflix launched a publishing label that would license out IP to various developers, similar to what Lucasfilm and Marvel are doing. However, purchasing some (albeit talented) indie developers doesn’t seem to be making waves in the gaming industry. I feel like the lack of understanding of what people want from Netflix, quality entertainment, is what seems to be driving the exodus in the first place.
While Netflix does have plenty of engaging content, other services seem to be much more compelling in that department. HBO Max in particular is a service I commend because of the amount of great films in their selection. HBO Max simply has less filler than Netflix, which makes endless scrolling to find something good to watch less of an issue. As for CNN+’s demise, I think a lot of that stems from the sheer redundancy of having a platform basically positioning itself as “More CNN”. Why not have CNN produced documentaries and shows available on HBO Max? Fox Nation performs well because Fox News is dominant in the right-wing media landscape, but CNN+ doesn’t really stand out when Peacock already has MSNBC content, which caters to a similar demographic.
Once the new conglomerate Warner Bros Discovery merges both HBO Max and Discovery+ into one gigantic package, they should try to resuscitate the CNN+ content that went the way of the dodo. There could be a demographic interested in that material, but the saturation in the streaming market made CNN+ a difficult sell. It makes more sense to make CNN another entertainment hub in HBO Max rather than trying to make it stand on its own when it doesn’t have the brand power that Fox News (unfortunately) has. These two developments illuminate something obvious about the streaming landscape that hasn’t been discuss very thoroughly. Maintaining a streaming service is immensely difficult. It needs an identity, a purpose, and a target demographic. If it lacks any of those three things, then that service’s days are numbered.
Fortunately for Netflix, a small decrease in subscriber revenue is not the end of the world for them. The collapse of CNN+ also doesn’t irrevocably render CNN obsolete either (although it does not look good for the brand at large). What should be taken from these two developments is that major media titans can still miscalculate what the market wants. Nothing is stable and nothing can be taken for granted. That moment of realization will eventually come for all media conglomerates, but none of them will reach the sustainability and endurance of Tubi.