Streaming's 'Crowded Marketplace' Doomed CNN+, Says Parks' Erickson

Warner Bros. Discovery’s decision it will shut down CNN+ Saturday, only a month after launch, is the latest example of a traditional media brand moving into the competitive over-the-top subscription video space. “It’s another streaming service in a very crowded marketplace,” said Erickson of CNN+, which launched just before AT&T’s divestiture of its WarnerMedia business (see 2204210061) this month. Erickson cited a public “already fed up with adding lots and lots of streaming subscriptions to their monthly budget.”

Reports vary on the number of subscribers CNN+ had since launching March 29, but Erickson said the SVOD service strayed from the brand’s strength: “timely, impactful journalism.” With no live feed of the CNN news channel, the service “leverages the CNN brand without delivering the actual material CNN is known for,” he said. Warner Bros. Discovery didn't respond to questions.

News continues to have “broad appeal,” Erickson said, saying it’s the second most popular livestreamed content behind sports. Consumers already have a lot of choices how they can watch live news via free, ad-supported streaming services, he noted, citing Google TV’s agreement with ViacomCBS for free channels on Pluto TV, Amazon Fire’s IMDb and Roku’s The Roku Channel, plus free news programs on Samsung, LG and Vizio smart TV platforms. “If you are going to do an SVOD service around news, it stands the best chance of succeeding if it’s live, and it needs to be unique,” Erickson said: “If it’s just current events and general news, then that is done quite a bit.”

Subscription growth overall is slowing, Erickson said. As of Q1, half of U.S. households have four or more streaming subscriptions, and 82% have at least one, he said, calling the category “mature” and “well-penetrated.” At the same time, segments of the population remain uptapped -- including a large swath of rural America that doesn’t have bandwidth sufficient for streaming, he noted.

Streaming will continue to rise in the U.S., but it will be more of a gradual incline than the spike of the past five or six years, Erickson said. “We won’t see a sharp reflexive response going from five to two, or even one, service, but we’ll see people getting discriminating,” he said. Consumers may spend $40-$50 a month on streaming subscriptions, some even as much as $80, "but they’ll be very intentional about it.”

Cost, once the impetus for streamers to cut the cord, no longer has the significant advantage it once did as programming costs have forced SVOD providers to hike subscription prices. But the cost argument misses the point, Erickson said. Consumers perceive that the value they’re getting is higher, he said, making an analogy to car-hailing services and taxis. Consumers are happy to pay a “very high pain point” for a ride-hailing service before calling a taxi because of the value of being able to follow where an Uber car is on an app map and to plan a trip around their time, not the transportation company’s schedule, he said.

Similarly, someone who had been paying $100 a month on a cable or satellite TV bill, may now, with increases, be paying $80 monthly on streaming. “That $100 might have been filled with 60-70% of content you didn’t want to watch,” Erickson said. Customers with an “$80 bucket of streaming” aren’t paying for channels they don’t want, he said. “You chose to sign onto that content portfolio, so the value of what you’re receiving for that $80 is much higher,” he said.