If the past several years represented a hockey stick type growth spurt for subscription streaming services, 2022 showed us that the party was over as media companies struggled with defining their streaming strategies and cope with lower growth brought on by what many considered a saturated market. It also showed us that when it comes to getting their entertainment and news, consumers are watching their pennies and are increasingly turning their attention to advertising-supported VOD.
Case in point: Warner Bros.-Discovery and Netflix, two companies that dominated the streaming market—helped along by deep content libraries—spent 2022 playing catchup with fickle viewers. WBD’s failed launch of CNN+ last summer was perhaps the best illustration of a company that had not fully sussed out what its viewers were looking for. Among the reasons cited for its failure? Subscription fatigue.
“CNN+ could have avoided the shutdown outcome by better understanding the consumer pulse of subscription fatigue,” Sushil Prabhu, CEO and chairman of Dropp told Forbes. “The digital market’s incredible growth over the past three years is to blame — almost every month, a new digital content service launches online that offers consumers more choices than ever, and that’s before selecting music, video, news, podcast or gaming digital service options.”
The failure of CNN+ was characteristic of a tough year for the company, which merged with Discovery in the spring. By the early winter, WBD announced a series of layoffs at its divisions, including CNN, as well as the cancellation of several high-end film and TV projects in an attempt to deal with a $48 billion debt.
Netflix had its own set of problems when it started the year by reporting a loss of 200,000 subscribers in its first quarter, its first-ever decline in subscription growth since going public. In addition to concerns over the impact of inflation on consumers cutting back on their entertainment dollars, it also illustrated how internal conflict over programming choices was affecting the company’s bottom line.
“Netflix was a gut-driven, risk-taking, maverick culture,” a source told The Hollywood Reporter at the time. “Now it’s more prudent and frequently indecisive.”
Although its stock declined 47% in 2022, Netflix ended the year on a positive note, impressing Wall St. with improved revenues and subscription growth in its third quarter. And while the numbers are not yet in for its new lower-cost ad-supported streaming tier that was launched in November, analysts think the company is facing an improved outlook in 2023.
2022 was a bit of a mixed bag for Disney. Although Disney+ officially dethroned Netflix as the world’s top streamer in terms of subscriptions in 2022, it was, like its competitor, also dealing with internal strife that went very public late in the year when the company fired Bob Chapek, the CEO that led the company through the launch of its streaming service, and bringing back Bob Iger as temporary CEO. Among the most cited reasons for the turmoil was what some on Wall St. considered overspending and mismanagement of one of the industry’s fattest production budgets.
The shakeup led analyst David Bloom to post a series of questions on TV Tech sister brand NextTV that will need to be addressed in the coming months as Disney attempts to stem the bleeding represented by a nearly $1.5 billion loss on Disney+ in its latest quarter:
“Does Iger pull back on the promises to Wall Street both he and Chapek made of reaching break-even on streaming spending by 2024? Does he repeal Chapek’s projection of up to 260 million subscribers by then? Should the company sell more projects to other outlets, or make fewer shows for its streaming services? For that matter, is streaming still the future of the company? How much should the company be investing in streaming while it’s still milking ESPN, ABC, Freeform and theatrical movie releases, never mind its prodigious parks & resorts, consumer products and other divisions?” Bloom asked.
Disney’s woes were also compacted by the continued speculation over its ownership stake in Hulu. Although Comcast has indicated that it plans to sell its 33% stake in Hulu to Disney by 2024—giving Disney 100% control over the vMVPD—Disney’s inability to provide a clearer picture about Hulu’s role in the future of its streaming strategies is sowing doubt on Wall St. and lower morale at both companies.
And then there’s Amazon Prime, which perhaps suffered the least in 2022. With an ever increasing budget ($15 billion in 2022 alone), demonstrated by the debut of television’s biggest-budget series in history, “Rings of Power,” as well the continued success of “Thursday Night Football,” and a revamped UI, the company finished the year on a high note. And yet, its status as a non-traditional media production giant as well as its reluctance to release subscriber numbers has led many in the industry to underestimate its potential.
All in all, 2022 proved to be a mixed bag for streaming services, with major players searching for ways to improve their market positions amid a slowing economy and increasing competition.
