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What Netflix’s Subscriber Troubles Could Mean For Other Streaming Platforms

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In the age of the streaming wars, the news that Netflix suffered its first subscriber loss in a decade prompted questions about what’s next for the company and the other players in the market.

HuffPost looked at Netflix’s response and talked to experts in the industry to answer some of those queries.

Why did Netflix lose subscribers?

Netflix, which is still the top player in the industry — at least for now — with almost 222 million subscribers, attributed the drop in subscribers in part to Russia’s war in Ukraine, as the company suspended its service in Russia and gradually shut down all Russian paid subscriptions.

How is the company fighting back?

In an effort to cut its losses, the company announced it will roll out a lower-priced, ad-supported version of its service, a move that has long been resisted by CEO Reed Hastings, and will also crack down on password sharing, as the company estimates 100 million households worldwide have been free riders on the service.

“Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription,” Hastings said in a first-quarter earnings interview. “But as much I’m a fan of that, I’m a bigger fan of consumer choice. And allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense.”

Hastings said the company is hoping to add the plan over the next two years.

What is the challenge for Netflix going forward?

George Geis, a professor at the UCLA Anderson School of Management, said people in the industry used to say Netflix was a guaranteed winner.

However, “Netflix has some challenges with respect to figure out how to add additional media to its traditional content streaming,” Geis told HuffPost. “And it’s not going to be easy.”

He added that Netflix will have to see if the steps it has already announced, along with a push into gaming, will be enough to turn the company around.

Another area the streaming service could expand into is live sports. Asked if the company is also looking at sports, Ted Sarandos, co-CEO of Netflix, said leadership is not sure adding that offering would contribute meaningfully to the company’s profit.

“I’m not saying we never would do sports, but we would have to see a path to growing a big revenue stream and a big profit stream with it,” Sarandos said during the earnings call.

The company is instead focused on “sports-adjacent programming,” like “Formula 1: Drive To Survive” and other sports documentaries.

Geis also said Netflix would have to overcome the churn that a lot of markets in the U.S. are seeing and get more disciplined on spending moving forward.

“Somehow it must get a must-see program on a regular basis, if it’s going to stop that churn, and somehow it must do that in a way that doesn’t allocate $20 billion a year to programming costs,” Geis said.

Still, Geis warned, Netflix is facing an existential threat.

“I think Netflix right now is in a battle for its life, particularly its valuable life,” he said. “It’s really a serious battle.”

What does this mean for other streaming services?

Asked if other companies with a streaming offering should be worried by Netflix’s news, Jim Milio, an executive producer who has worked in the film and TV industry for 40 years, said, “It depends on how diversified they are.”

“When you look at Netflix, it really just is a streamer,” Milio told HuffPost. “They didn’t diversify. They didn’t buy other companies. They don’t really have a lot of things to fall back on, aside from subscription base.”

That means companies like Disney, Amazon and Apple, which have other businesses besides their streaming platform, could be in a better position.

“I think the big lesson here is that streaming is not the be-all and end-all,” Geis said.

“Streaming is an intriguing market, but it’s not going to be the one that’s going to be able to sustain any companies,” he continued.

What’s next for the streaming industry?

As consumers, we have a plethora of options when it comes to streaming platforms. Milio doesn’t think all of them will survive.

“Some are going to fall, some are going to merge, some are going to be acquired. And some, like Quibi, are going to go out of business,” Milio said.

Quibi, a streaming service designed to offer short videos on smartphones, shut down six months after launching, even though it had raised $1.75 billion.

CNN+, a subscription service that launched at the end of March, confirmed Thursday that it would be shutting down on April 30. CNN’s former parent company, Warner Media, merged with Discovery just weeks after the launch of the service, which reportedly has about 150,000 subscribers. David Zaslaz, CEO of the newly formed Warner Bros. Discovery, has said he wants to have all the company’s brands under one streaming service and was annoyed that CNN+ launched shortly before the merger, according to Variety.

Fox News, which also launched a streaming service called “Fox Nation” in 2018, has yet to publish how many subscribers it has.

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