Speaking on a phone call with investors Tuesday, Hastings said “everyone is pouring” into streaming services that will “definitely” end the traditional form of television viewing known as “linear television.”
His outlandish prediction follows the announcement that Netflix lost 970,000 subscribers in the second quarter of this year.
This is almost five times the amount lost in the first three months year and a sharp drop from 8.3 million new subscribers added in the fourth quarter of 2021.
Following Hastings’ remarks, MailOnline spoke to experts to see if they agreed with his claims that the end of traditional television was indeed at hand.
Reed Hastings, co-CEO of Netflix, said that linear TV will “definitely” end in the next 5 to 10 years.
Netflix added 8.3 million new subscribers in the fourth quarter of 2021. But for two consecutive quarters, he was losing followers, not gaining them.
NETFLIX SUBSCRIBERS ARE DECREASING
Q2 2022: Lost 970,000
Q1 2022: Lost 200,000
Q4 2021: 8.3 million received
Q3 2021: Acquired 4.4 million
Q2 2021: Acquired 1.5 million
While experts agree that streaming is putting pressure on linear TV, they explained that there will likely still be room for live channels beyond the Hastings projection.
Speaking to MailOnline, Mike Proulx, vice president and director of research for Forrester, explained: “Most of ‘TV’ will end up being streaming TV consumed through streaming services. The future of television is streaming.
“But to say that in five years linear television will be “dead” is aggressive.
“It is more likely that within the next 10 years, streaming will surpass linear television as the dominant mode of TV consumption.”
Ben Barringer, Equity Analyst at Quilter Cheviot, added: “Most television will evolve into digital streaming, as news has.
“Stock markets often exaggerate the rate of decline of legacy industries, but most broadcasters should consider streaming in the future.
“However, traditional television will have a future for things like local news and some special shows that work better in a live format.”
One of the main advantages of several linear TV channels, including ITV and Channel 4 in the UK, is that they are free to air and funded by advertising.
This is not the case with Netflix, which charges between £6.99 and £15.99 a month for its platform.
The BBC, meanwhile, is not free and is paid for by a TV license that costs £159 a year (average £13.25 a month), nearly double the cost of the cheapest tier Netflix.
Streaming options are certainly becoming more prominent as consumers get to watch their favorite shows whenever they want (file photo).
Plus, at £6.99 a month, the basic Netflix package is still cheaper than some of its closest streaming competitors Disney+ and Amazon Prime (both £7.99 a month).
However, the BBC’s offerings are more extensive – it broadcasts 10 UK TV channels, 50 radio stations and 10 apps. Netflix has one app.
UK NETFLIX PRICES
– Base: £6.99 (one screen at a time)
– Standard: £10.99 (two screens at the same time, HD available)
– Premium: £15.99 (four screens simultaneously, Ultra HD available)
More information: netflix.com
Turning the BBC into a subscription service could be one option when license fee has been waived government in 2027
Netflix is certainly working on ways to make more money – earlier this week it showed it was testing charging users an additional £2.50 per month share your account with people outside your home.
Netflix wants to crack down on users who share their passwords in order to give friends and family members access to their accounts, depriving the platform of new signups.
Hastings also revealed earlier this year that the platform will introduce ads for the first time, likely by early 2023.
Netflix plans to create a new, cheaper tier that will get customers to watch ads, but it won’t be free.
In order to generate revenue, online services must find a balance between money from the user and money received from advertising.
For example, YouTube is free because it forces people to watch ads before and during the video, although it also offers an ad-free Premium option for £11.99 per month.
However, Netflix’s new ad-supported option won’t be free, meaning customers will have to put up with ads as well as paying a monthly subscription fee.
“The launch of a cheaper, ad-supported version of the Netflix service is expected to be a much-needed growth catalyst that the streaming giant has not seen in recent years,” said Jesse Cohen, senior analyst at Investing.com.
“We expect advertisers looking to reach younger viewers who have moved away from traditional television are likely to allocate the majority of their marketing budget to ads on Netflix going forward.”
The new ad-supported tier also likely won’t have access to Netflix’s entire content library, Netflix co-CEO Ted Sarandos said Tuesday.
“Today, the vast majority of what people watch on Netflix we can include in an ad-supported tier,” Sarandos said.
“There are some things that aren’t there – which we’re discussing with the studios – but if we launch the product today, ad-level members will have a great experience.”
Netflix to introduce new, cheaper ad-supported subscription plan, likely by early 2023 (file photo)
Netflix, the world’s largest streaming service with 220 million subscribers worldwide, is increasingly facing competition from the likes of Disney+, Amazon Prime and Hulu.
Disney+ has many hugely popular and extensive content libraries including Star Wars, Marvel and Disney movies, as well as The Simpsons and exclusive series.
“Netflix once destroyed the entertainment space, but now it is being destroyed by competing streaming platforms that are aggressively expanding,” Prue said.
“While this is bad for Netflix, it’s good for consumers who now have more choices and options for streaming content.”
Hastings also said on Tuesday that Netflix is ”very well set for next year” and that the underlying business drivers “continue to improve.”
Netflix expected to lose 2 million subscribers in the second quarter, so Tuesday’s results weren’t nearly as bad as they feared.
Hastings pointed out that the hit “Stranger Things” kept subscribers for a quarter.
The fourth season of the sci-fi show, produced exclusively for Netflix, began streaming at the end of May.
“What still differentiates one streaming service from another is compelling proprietary content offered at a fair price,” Prue said.
“Without a doubt, the overall success of the fourth season of Stranger Things helped lessen the severity of Netflix’s projected loss.”
WHAT VIDEO STREAMING OPTIONS ARE AVAILABLE FOR UK CUSTOMERS?
Price: from £6.99 per month
Price: £7.99 per month OR £79 per year
- Jack Ryan from Tom Clancy
Price: £4.99 per month
- Ted Lasso
- For all mankind
Price: £7.99 per month OR £79.90 per year
- The Mandalorian
- The Simpsons
Price: from £9.99 per month
- Game of Thrones
Price: £4.99 per month
- Keep up with the Kardashians
- Made in Chelsea
Price: £5.99 per month
- spitting image
- Midsomer murders
Prices are current as of July 2022.