Move over Quibi, the entertainment industry has a new poster child for epic streaming fails.
Warner Bros. Discovery announced on Thursday that it will be minus CNN+ next week, shuttering 2022’s most confusing SVOD play a mere 32 days after its launch. The quick curtain proves David Zaslav is eager to sunset anything that fails to deliver on his goal of turning his newly combined business into “the best media company in the world.” CNN+ will become another weird footnote under the WarnerMedia leadership tenure of Jason Kilar.
Far from Atlanta, you can hear the champagne-cork popping and laughter emanating from the Fox Nation offices. More importantly, it heralds the arrival of a new era in the streaming wars.
While the conflicts rage on, it is no longer an arms race. As the Netflix Q1 earnings debacle made clear, spending billions to build vast content machines is not a current business strategy (if it ever was). Streaming is still king, but expect it to start looking like… well, every other content platform. The day after the Netflix earnings report, the Wall Street Journal reported that “people familiar with the company’s strategy” said the company would make fewer titles, revamp production deals, and emphasize return over reach. “A key internal metric,” WSJ writer Joe Flint noted, “[is] the ratio of a program’s viewership to its budget.”
Let’s call CNN+ the last of Streaming 1.0, when you could expand existing brands and I.P. via a plus symbol and a paywall and call it a business model. WarnerMedia did this well by maxing out the good HBO name into HBO Max, delivering Warner Bros. theatrical films day-and-date last year along with buzzy new hits like the Max Original “The Flight Attendant” and “Winning Time.”
CNN+ offered a bizarre twist on that formula. CNN proper was already struggling against its cable news rivals in linear TV ratings: Don Lemon, Jake Tapper, and Anderson Cooper just don’t attract the dedicated viewers of Fox News Channel’s Tucker Carlson, Sean Hannity, and Lauren Ingraham. With CNN often running third in cable news, creating a brand extension seems counterintuitive at best.
CNN+ has an estimated 150,000 subscribers, which executives spun as being “on track.” By all accounts, the streaming-exclusive content was consumed even less than the shows on linear CNN — a reasonable outcome with only 150,000 potential viewers at any given time. Why would viewers flock to an eccentric spinoff like “Jake Tapper’s Book Club” when “The Lead with Jake Tapper” regularly struggles to break 1 million viewers?
Pay-SVOD service CNN+ might have fared better if it offered a live feed of the cable network, where ratings balloon around major breaking news. Exclusivity arrangements with cable providers, which bring CNN more than $1 billion in annual revenue, made that impossible.
CNN Worldwide CEO Chris Licht — who recently replaced the ousted Jeff Zucker and whom Zaslav opted to shield from the corporate bloodletting that followed the merger — understands the value of CNN. In announcing the shuttering of CNN+, he said that the company will “focus our investment on CNN’s core news-gathering operations and in further building CNN Digital.” The free version, he means.
CNN+ was intended to cost $5.99 per month, although it opened — and effectively closed — with a promotional sale boasting a lifetime price of $2.99 for early adopters. The original expectation called for CNN+ to be profitable “in relatively short order,” CNN+ chief Andrew Morse, who is soon to be leaving Warner Bros. Discovery, (vaguely) told the Washington Post. It was never going to happen, so Zaslav decided to stop throwing good money after bad.
And a lot of bad money spent on CNN+. Aside from the cost of hiring hundreds of new people and producing eight daily newscasts and a dozen weekly shows, WarnerMedia spent big on a high-profile presence at SXSW last month with free food and drink, musical performances, and appearances by talent like Audie Cornish and Alison Roman. Turns out, CNN+ only lasted 22 days longer than SXSW ’22 did.
In a strange postscript, Thursday also brought Q1 earnings from the now-former WarnerMedia parent AT&T. It reported first-quarter operating income of $1.3 billion, a 33 percent drop from $2 billion last year. Where did that $700 million go? AT&T pointed to investments in HBO Max and the launch of CNN+ as the main culprits. (CNN+ existed for all of three days in Q1.)
We’re not digging a grave for the entire industry; we’re simply mourning the too-short life of CNN+ (and the highly inflated fall 2021 Netflix stock price, R.I.P.). Recent studies showed that consumers will subscribe to multiple streaming services, though we may be at a point of reconsideration. Back in 2020, the Leichtman Research Group found 55 percent of U.S. households subscribe to multiple streaming services, up from 20 percent five years earlier. However, research firm Kantar this week released data showing that fewer U.K. households subscribed to at least one streamer in the first quarter of this year.
The Kantar study referred to Netflix and Amazon as “hygiene” subscriptions for Brits. They’re the ones that people are most reluctant to give up when they’re trying to cut costs, which is also one of the main reasons cited for the dip in subscriptions. It all points to an urgent need to reflect on what, exactly, people want in streaming. The failed CNN+ experiment suggests it’s not more news; Netflix’s decline suggests it must abandon being everything for everyone in exchange for making fewer series that draw throngs of passionate admirers. Otherwise, it might find itself as dispensable as “Jake Tapper’s Book Club.”
Additional reporting by Tony Maglio.