Changing Times For Streamers, As Content Spending May Not Be Enough

What do Netflix's now dramatically lower expectations mean for the streaming business at large? Lower expectations.

This comes from somewhat alarming results: Netflix only expects growth of 2.5 million new global subscribers in the first quarter of this year -- a period that is typically one of its strongest, according to analysts. (By way of comparison, the fourth quarter pulled in 8.3 million subscribers).

All that was a sell and/or caution signal for analysts regarding the rest of TV and its associated streaming businesses, including hard-pressed legacy media companies looking to gain ground on Netflix.

It may underscore another reality: Content isn’t everything.

For example, Netflix offered its largest amount of original content in the fourth quarter of 2021 -- some 150 new shows. This was a period where its most-viewed TV show to date, ”Squid Game,” was launched. It spent more on content overall in the last months of 2021 than ever before.



And that still wasn’t enough. “That means the competitors are making inroads,” says Laura Martin, media/internet analyst of Needham, speaking on CNBC last week.

What needs to be done? Many more Netflix “alternatives,” say analysts. Perhaps adding live sports content, and/or -- brace yourselves -- an ad-supported option. Martin says this could be priced at $5 a month, down from, say, Netflix's new price for its standard option of $15.49 a month.

As many analysts and business followers know, Netflix has traditionally eschewed any association with an ad model, as well as sports TV content.

Martin says that in the end, all TV/entertainment distributors need to grow content more broadly to keep consumers interested.

For example, NBCUniversal’s Peacock and ViacomCBS’ Paramount+ each carry sports -- the NFL in particular -- highly viable content that also appears on their respective linear TV platforms, the NBC Television Network and the CBS Television Network.

Plus, some of these bigger platforms also carry traditional TV news content -- part of the live TV content category. During a highly charged politically focused environment, it can produce meaningful viewership -- and ad dollars.

The bottom line, says Martin: “Content spending is no longer enough.”

So think strike-outs and tackles, as well as running up the score for Netflix. And perhaps even some sports programming.

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