The logic of the stock market is sometimes confusing. Although Netflix lost almost a million subscribers in the months of April through June, the company’s stock jumped 8 percent after the figure was announced. The explanation: The streaming service had expected twice as much customer decline. With 221 million subscribers worldwide, Netflix is still number one, and has just set a new record: The fourth season of “Stranger Things” exceeded the one billion streaming hours mark.
Shareholders are likely to be less happy about the outlook. Netflix expects only one million new customers for the current quarter, the analysts had expected more. With each new competitor, it becomes more difficult for the company founded by Reed Hastings to keep the growth story going. An additional advertising-financed variant of the streaming service, which is to start in early 2023 “in a handful of markets”, should now remedy the situation.
The combination of paid subscription and advertising for streaming services is already a tradition in Germany. On Wednesday, the Vaunet association of private broadcasters held a press conference on the “market development of pay TV and paid video-on-demand”. The advertising-financed Netflix subscription was also a topic there.
“The customer must have a choice in how he consumes the content. We’ve been on this path for a long time,” said Henning Nieslony from RTL Germany and sees himself confirmed by the Netflix decision. “We’ve been doing this with Joyn for a long time,” said Nicole Agudo Berbel from the ProSiebenSat1 group. “Moreover, it’s not just Netflix, Amazon and Disney are also following this trend, which we as an industry have been following for a long time.”
Unlike Netflix, where the number of subscriptions is currently declining, the trend for pay-TV providers in Germany continues to point upwards, both in terms of subscription numbers, usage and sales, as Vaunet Managing Director Frank says Giersberg said and backed it up with fresh numbers.
If you take the sales of pay TV providers and paid streaming services together, the industry in Germany recorded an increase of 13.1 percent last year. For this year, the association is assuming slightly lower growth of 8.8 percent. But that’s enough for the industry to turn over five billion euros for the first time in 2022. The number of people using offers from Sky, Netflix, Disney , Amazon Prime Video, RTL , Joyn and others will increase to a total of 21.2 million – which corresponds to a doubling in the past five years.
There are different strategies in the industry: On the one hand, Sky relies on exclusive content and attractive in-house productions, on the other hand, it increasingly offers its customers access to other services via its own platform. “After Netflix, Amazon, Dazn, RTL were added, followed soon by AppleTV, Magenta Sport and Discovery,” said Elke Walthelm from Sky.
“Local, live and relevant” is how Nicole Agudo Berbel described ProSiebenSat1’s strategy. It is increasingly secondary whether it is live TV or video on demand. “TV and digital was yesterday, live and on demand is today”. The group invests over a billion euros in content every year, she emphasized.
With 3.2 million paying subscribers, RTL is “currently the leading German entertainment service,” said Henning Nieslony. In particular, the broadcasting group RTL wants to serve the viewers’ need for “independent journalism and positive entertainment”. In the future, it will be even more “a matter of variety of content, simplicity and the price”.
