Canceling Netflix

By Douglas A. McIntyre Published Aug 6, 10:30AM EDT

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Warner Bros. Discovery, the newly formed entertainment giant, released extremely poor earnings. It has to look for growth businesses, and quickly. One place it continues to place emphasis on is streaming, which, until recently, appeared to be the solution to all media industry problems. As Warner Bros. Discovery launches even more new streaming services, the company most likely to be harmed is streaming leader Netflix. There are too many streaming services for Americans to subscribe to all of them.

After explaining that the media assets contributed from AT&T to the new Warner Bros. Discovery company were damaged goods, CEO David Zaslav listed a number of plans to get his businesses out of the ditch. One was a two tiered streaming strategy. One service would require paid subscribers and the other would be supported by advertising.
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Netflix, on the roped because of its own challenges, will also introduce an ad supported service. It is too early to tell if the business will undermine demand for the older service for which people are required to pay. Netflix could undermine its own earnings engine.

Netflix challenges go well beyond the hobbled Warner Bros. Discovery streaming plans. Disney is also struggling with its rapidly growing Disney+. However, it remains one of the largest streaming services and a major competitor. It has to take market share from Netflix to grow.

Amazon Prime Video is Netflix’s biggest problem. It is as large as Netflix, and its parent has a much healthier balance sheet. Prime is also part of a suite of services that help’s Amazon’s e-commerce business. That is reason enough for its to underwrite Prime Video’s growth.

Finally, Apple has begun its own streaming service. Apple TV+ has been slow out of the gate and has a small library of content. But, Apple TV+ is part of the consumer electronics company plan to increase services revenue and hardware sales. Apple may have the best balance sheet in the world. Its ability to support a streaming service is nearly limitless.

Netflix is in trouble. The new services from Warner Bros. Discovery will make that even worse.
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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.