This week, Netflix CEO Reed Hastings made the bold claim that traditional television will be dead in just “five to 10 years.”
During an investor call on Tuesday, Hastings said “everyone is flocking to” streaming services, which will “definitely” put an end to the traditional form of television known as “linear television.”
His outlandish prediction followed the announcement that Netflix had lost 970,000 subscribers in the second quarter of this year.
This is nearly five times the amount lost in the first three months of the year and a massive drop from the 8.3 million new subscribers added in the fourth quarter of 2021.
Following Hastings’ comments, M spoke to experts to see if they agreed with his claim that the end of traditional television was really near.
Netflix Co-CEO Reed Hastings said linear TV will “definitely” end in the next 5-10 years
Netflix added 8.3 million new subscribers in the fourth quarter of 2021. But for the two consecutive quarters, it lost subscribers, not gained them
NETFLIX’S FAST SUBSCRIBERS
Q2 2022: 970,000 lost
Q1 2022: 200,000 lost
Q4 2021: 8.3 million won
Q3 2021: 4.4 million won
Q2 2021: 1.5 million won
While experts agree that streaming is a strain on linear television, they explained that there will likely still be a place for live channels beyond Hastings projection.
Speaking to M, Mike Proulx, VP and Research Director at Forrester, explained, “Most ‘TV’ will eventually be streaming TV consumed through streaming services. The future of television is streaming.
“But to announce that linear TV will be ‘dead’ in five years is aggressive.
“Streaming is more likely to overtake linear television as the dominant mode of television consumption within the next 10 years.”
Ben Barringer, equity research analyst at Quilter Cheviot, added: “Most television networks will evolve to a digital streaming format, much like news has.
“Equity markets often exaggerate the speed of demise of legacy industries, but the majority of TV networks should consider a streaming offering in the future.
“However, traditional television will have a niche future for things like local news and some specific shows that work better in a live format.”
One of the main advantages of several linear television channels, including ITV and Channel 4 in the UK, is that they are free to air and are ad-supported.
That’s not the case with Netflix, which charges between £6.99 and £15.99 per month for its platform.
The BBC, meanwhile, isn’t free and is paid for by the TV license, which costs £159 a year (£13.25 a month on average) – almost double the price of Netflix’s cheapest tier.
Streaming options are certainly becoming more important as consumers enjoy the ability to watch their favorite shows whenever they want (file photo).
UK PRICES FROM NETFLIX
– Basic: £6.99 (one screen at a time)
– Standard: £10.99 (two screens simultaneously, HD available)
– Premium: £15.99 (four screens simultaneously, Ultra HD available)
More info: netflix.com
Plus, at £6.99 a month, Netflix’s basic package is still cheaper than some of its closest streaming competitors – Disney+ and Amazon Prime (both £7.99 a month).
But the BBC’s offer is broader – it broadcasts 10 UK TV channels, 50 radio stations and 10 apps. Netflix has its one app.
Converting the BBC to a subscription service could be an option if the government abolishes license fees in 2027.
Netflix is certainly working on ways to make more money – earlier this week it announced it was testing charging users an extra £2.50 a month to share their account with people outside their home.
Netflix wants to crack down on users who share their passwords to give friends and family members access to their accounts, depriving the platform of new logins.
Hastings also announced earlier this year that the platform is expected to launch ads for the first time in early 2023.
Netflix plans to create a new, cheaper tier that will force customers to watch ads — but it won’t be free.
In order to generate revenue, online services need to strike a balance between the user’s money and the money made from hosting ads.
For example, YouTube is free because it forces people to watch ads before and during videos, although it also offers an ad-free “premium” option for £11.99 a month.
However, Netflix’s new ad-supported option won’t be free, meaning customers will have to endure ads while also paying a monthly subscription price.
“The launch of Netflix’s lower-cost, ad-supported version of the service is expected to be the much-needed catalyst for growth that the streaming giant has lacked in recent years,” said Jesse Cohen, senior analyst at Investing.com.
“We believe that going forward, advertisers looking for a way to reach younger viewers who have abandoned traditional television are likely to devote a larger portion of their marketing budget to advertising on Netflix.”
Netflix expected to launch new, cheaper subscription plan with ads in early 2023 (file photo)
Netflix, the world’s largest streaming service with 220 million global subscribers, is facing increasing competition from companies like Disney+, Amazon Prime and Hulu.
Disney+ has a variety of extremely popular and extensive content libraries, including Star Wars, Marvel and Disney films as well as The Simpsons and exclusive series.
“Netflix once disrupted the entertainment space but is now being disrupted by competing streaming platforms that have scaled aggressively,” Proulx said.
“While this is bad for Netflix, it’s good for consumers, who now have more options and choices when it comes to streaming content.”
Hastings also said Tuesday that Netflix is ”very well positioned for next year” and that the core drivers of the business “continue to improve.”
Netflix had expected to lose 2 million subscribers in the second quarter, so Tuesday’s results weren’t nearly as bad as feared.
Hastings pointed out that hit Stranger Things was responsible for retaining subscribers during the quarter.
The fourth season of the sci-fi show produced exclusively for Netflix started at the end of May.
“What continues to differentiate one streaming service from another is compelling proprietary content offered at a fair price,” Proulx said.
“Undoubtedly, the global success of Stranger Things season 4 has helped lessen the severity of Netflix’s projected losses.”
WHAT VIDEO STREAMING OPTIONS ARE AVAILABLE FOR UK CUSTOMERS?
Netflix
Price: From £6.99 per month
Hit Shows:
Amazon Prime
Price: £7.99 per month OR £79 per year
Hit Shows:
- Tom Clancy’s Jack Ryan
- The young
AppleTV+
Price: £4.99 per month
Hit Shows:
- Teddy Lasso
- For all mankind
Disney+
Price: £7.99 per month OR £79.90 per year
Hit Shows:
- The Mandalorian
- The simpsons
TV NOW
Price: From €9.99 per month
Hit Shows:
- game of Thrones
- Chernobyl
hayu
Price: £4.99 per month
Hit Shows:
- Keeping up with the Kardashians
- Made in Chelsea
BritBox
Price: £5.99 per month
Hit Shows:
- Spitting image
- Midsomer Murders
Prices valid from July 2022