What you need to know:
- By the time of its closure, CNN+ had sunk more than $300 million and employed hundreds of staff.
- The fall of CNN+ affirms what we already know about the subscription and streaming business.
In my April 2 column, I wrote about CNN+, the new subscription-based streaming service launched by CNN in late March. The launch of CNN+ sparked tons of debate in the media circles, prompting reams of think pieces analysing the impact of CNN+ and if at all it would attract any subscribers.
In a shocking turn of events, the network announced last week that it would shut down CNN+, barely a month after its launch. What was once touted as the “most important launch for CNN since Ted Turner launched the network in 1980” is now being described as ‘the most spectacular media failure” in recent history.
To help you understand how ‘spectacular’ this is, consider the following: by the time of its closure, CNN+ had sunk more than $300 million and employed hundreds of staff.
Reports say the decision to close down CNN+ came shortly after CNN’s corporate parent Warner Media merged with another media company – Discovery – to form WarnerBros.Discovery. It is reported that the new boss, media mogul David Zaslav, took the decision when he saw the dismal numbers; CNN+ had fewer than 10,000 viewers watching at any given moment.
Add to that the fact that CNN’s new owner – Discovery – has an internal ‘all-in-one’ philosophy that requires that all content be put under one streaming service. Having CNN+ as a stand-alone entity with such poor views and that much investment was simply not making sense to the new owners of CNN.
The corporate zigzagging aside, the fall of CNN+ affirms what we already know about the subscription and streaming business.
Complicated streaming business
First, is that the subscription and streaming business is increasingly becoming complicated and difficult to predict. This week, Netflix announced that it had lost 200,000 subscribers and expects a further two million loss in subscribers in the next three months.
The crackdown on sharing of Netflix passwords among households will complicate the streaming business even more in the coming months. It appears that while it is true that high-quality content is the capstone of a successful streaming business, it is now becoming apparent that streaming entities need more than good content; they need foolproof subscriber retention strategies to reduce churn rate.
The second insight is what we are already seeing from research; that the subscription business is a winner-takes-all system, where many are more likely to pay for only one subscription and not more unless it is absolutely necessary.
This, therefore, means that the streaming service with the most compelling content and most competitive fees is more likely to be successful.
In the case of CNN+, it would have been impossible to match up to the more than 222 million global Netflix subscribers. Probably why WarnerBros.Discovery executives pulled the plug on this. It made more business sense to have all CNN+ content on their already existing streaming services.
That said, I’ll end this piece same way I ended my previous column, with the wise words of Nelson Mandela, “I never lose. I either win or learn.”
The writer is the director, Innovation Centre, at Aga Khan University; [email protected]