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Remember When Content Was King? 2022 Was the Year Streaming Dreams Died

This past year had such promise for the soaring streaming industry — until everything changed on April 19.

"The Crown" Season 5 on Netflix

“The Crown” Season 5 on Netflix

Keith Bernstein/Courtesy of Netflix

A year ago it was all good and then the impossible happened: Netflix lost subscribers.

The undisputed king of streaming expected to pick up 2.5 million global paid subscribers over the first three months of 2022. And why not? It added nearly 4 million subscribers from January-March 2021. Instead, Netflix not only lost 200,000 subs, but it also braced Wall Street for a loss of 2 million more from April to June. That grim prediction did not come to pass — the streamer shed just 970,000 subscribers in Q2, and got back to its growing ways this summer — but already the damage was done and streaming will never be the same.

At the end of 2021, shares of Netflix (NFLX) traded in the $600s; today, even after a steady climb over the second half of 2022, NFLX sells for about half that. Along the way, the once-almighty company was forced to completely revamp its business. Netflix laid off staff, it rushed out an ad-supporter tier (commercials? on Netflix?!), it cracked down on password sharing — in other words, it became shockingly mortal. And this was a “Netflix effect” felt throughout the entire streaming industry.

Until then, all streamers — and the studios eager to make their mark in the digital world — embraced the logic of “grow or die.” Executives in the space tripped over each other in their efforts to outspend and max-out subscriber tallies. But when Netflix-as-Mecca proved to be grounded in the same P&L realities as every other ordinary business, and virtually maxed out its potential reach in the U.S. and Canada — well, the emperor looked pretty naked. All big bets were off, advertising was back in vogue, and streamers who once laughed about cord-cutting now spent most of their time cost-cutting.

We’re ringing in the final weeks of 2022 with commercials on both Netflix and Disney+, with HBO Max positioned as an absolute shell of Jason Kilar’s 2021 vision (soon to be combined with Discovery+), with Warner Bros. Discovery racing toward FAST (free, ad-supported streaming television), and with NBC shows on Peacock instead of Hulu. The industry’s last major AVOD holdout, Apple TV+, will also have ads — sort of. Via Apple’s MLS offshoot, the world’s largest company by market cap will test the streaming-commercials market.

Bob Iger and Bob Chapek

Bob Iger and Bob Chapek

Getty Images

Disney added more than ads to Disney+ in recent weeks — it also saw the return of a beloved CEO to steer the Pirates of the Caribbean ship into calmer waters. Bob Iger’s fairly hostile take-back may not have been a total indictment of Bob Chapek’s ambitious (mis)handling of Disney+, including forecasting overly optimistic jumps in future subscriber estimates and the addition of R-rated Marvel programs to the company’s core streaming service (instead of, say, Hulu). When Disney lost $1.5 billion in streaming this past quarter alone, the board became painfully aware that Chapek was writing checks they really didn’t want to see cashed.

There are some reasons for optimism beyond the hope that the next year surely as to be better than this one. Just last week, Wells Fargo upgraded Netflix stock to a “Buy” with a price target revised from $300 per share to $400. Granted, $400 would have been seen as a disaster in December 2021; by December 2022 standards, it’s quite ambitious.

There’s also evidence that if content isn’t exactly king at Netflix, it still holds court. Last week, “Wednesday” became Netflix’s second-ever English-language TV series to cross 1 billion hours viewed within its first 28 days (it really only needed 19), which is the time period the streamer uses for historical comparisons. The other one, “Stranger Things 4,” also happened in 2022. (Korean-language series “Squid Game” from 2021 remains Netflix’s biggest series of all time — for now.)

Streaming, like 2022 somehow, ain’t dead yet. But I think we can agree: 2023 cannot come soon enough.

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