As Netflix is looking to recover from a major drop in subscribers and stock value, a new Axios report has spelled trouble for CNN+. According to sources who spoke to Axios, Warner Bros. Discovery has suspended all external marketing spend for CNN+ and has laid off CNN’s longtime chief financial officer.
Axios reported Tuesday that CNN+ had 150,000 subscribers. The launch reportedly frustrated Discovery executives, who are working on completing its merger with CNN parent company Warner Bros. If CNN held off launching CNN+ until after the merger, it would have been easier to pivot the company’s efforts towards something better aligned with Discovery’s goals, according to Axios.
While CNN+ is dealing with what some are considering a botched launch, Netflix is trying to combat a drop in popularity that is threatening its once-dominant position in the streaming industry. Pandemic-driven lockdowns that drove binge watching have lifted in most of the world, and companies like Apple and Walt Disney have begun to chip away at Netflix’s subscriber base with their own streaming services.
According to Netflix’s quarterly earnings report released Tuesday, the company’s customer base fell by 200,000 subscribers during 2022 Q1, causing Netflix’s shares to lose more than a third of their value on Wall Street. The subscriber loss was Netflix’s first in more than a decade.
“Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally,” Netflix wrote in a letter to its shareholders. “However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.”
The drop in subscribers and value has forced Netflix to consider changes it has long resisted, like minimizing password sharing and creating a low-cost subscription supported by advertising. Netflix estimated about 100 million households worldwide are watching for free by using the account of a friend or another family member, including 30 million in the U.S. and Canada.
“We’ve just got to get paid at some degree for them,” Netflix CEO Reed Hastings said.
