Why CNN+ collapsed just one month after it launched

Via Unsplash

CNN+, a streaming service launched by Discovery Warner, has closed almost as soon as it was launched. The rapid closure comes against a background of conflicting corporate strategies, tightening competition for entertainment subscription revenues and again raises questions about the long-term sustainability of subscription-only business models.

What happened
  • Streaming service CNN+ will shut down on April 30, just one month after launching on March 29th. Positioned as a response to the US trend for cord cutting CNN+ was targeting people ditching cable channels. But in its short run, the service struggled to attract even 10,000 viewers a day.
  • Ahead of the launch, CNN reportedly hired “hundreds of people” and spent “hundreds of millions of dollars”. With 150,000 paying subscribers on the bargain introductory rate of $3/month, subscriber income of less than $6 million a year would have been nowhere near enough.
  • Analysts have widely said the decision to close CNN+ was the right thing to do. Joshua Benton, writing for Nieman Lab, said the biggest mistake was going ahead with the launch in the first place. He said:

Almost nothing about CNN+’s performance after launch — or how its new corporate masters would view that performance — was hard to predict.

What went wrong?

The new channel launched with a fundamental problem. Contractually, CNN wasn’t allowed to stream any of the live news content that it supplies to cable channels. This meant the streaming service was cut off from the core competency that CNN news channel had built its reputation on.

  • But whatever the programming mix of CNN+, it was doomed by the merger of Discovery and Warner Bros. The stated ambition of the new venture was to compete at scale with Netflix. That meant going broad, with news as part of a bigger bundle rather than the narrow, standalone proposition of CNN+.
  • Nieman Lab’s Benton said the mismatch between the streaming news product and the merged company’s streaming strategy has been clear for almost a year. And yet CNN+ was announced, developed, marketed, and launched over that same period.
  • The new CEO of CNN, Chris Licht, is reported to have compared CNN’s efforts to launch CNN+ to a contractor building a house without speaking to the intended owner. According to The New York Times, he said the new owner came in and said:

What a beautiful house! But I need an apartment.

Peak subscriptions

The closure of CNN+ came against a backdrop of market turbulence for established streaming services.

  • In the same week, Netflix shares fell more than 35% after the streamer lost over 200,000 subscribers. The Guardian was reporting that the company expects to lose 2 million more over the next quarter.
  • Pressure on streaming services is growing as subscribers rethink their spending commitments in the face of the cost of living crunch and increased competition. Ipek Ozkardeskaya, senior analyst at Swissquote Bank, an online broker told the Guardian:

People are asking ‘Is this worth it? As prices rise, the worth threshold is being pulled higher and that’s pushing people to the exit.

A comment piece in Quartz – which has just dropped its paywall – said that the race is on to become ‘the one consumers won’t dare cut’. Netflix won when that meant having the best video library and app. Now, it means bundling different subscriptions together and CNN+ just didn’t fit Discovery Warner’s plans in that area.

You may also like

Comments are closed.