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The week kicked off with an op-ed by Professional Publishers Association (PPA) CEO Sajeeda Merali. Referencing a recent report by Enders Analysis, Merali declared it pertinent for publishers to move beyond trying to drive scale.
It is something of a puzzler. “You can’t just go: ‘Why this is happening is because X.’ It’s a bunch of things,” Tom Harrington, head of TV at research outfit Enders Analysis, tells me. “Some of the shows might just be bad. Some of it might just be they came out at a time when there was another, better show on somewhere else, or [elsewhere] on Netflix.”
And to be fair to Netflix, this is not just an issue with which it contends. All of its rivals have to deal with what Harrington calls the “natural attrition” of falling viewer numbers as a series progresses. “Every TV show, bar a few, loses viewers – that’s the gravity of TV,” he says.
In Q2, Netflix grew revenue 13% YoY (£12.6 billion), while narrowing its whole-year forecast between $51.0 and $51.4 billion. This was accompanied by an 11% lift in operating income ($4.2 billion). Advertising revenue continues to be on track to double this year to $3 billion.
Recent attention around Netflix’s engagement challenges helps to highlight that the streamer faces the same headwinds faced by all providers of long-form video, amplified by a net viewing loss from the push towards advertising.
As a counter to this, Netflix has a number of initiatives now to diversify its offering and increase engagement: some seem likely to stick and augment while others seem peripheral and value-skewing.
In the UK, for example, the BBC partnered with the YouTube collective Sidemen to simultaneously broadcast the Ecuador vs. Germany match on their YouTube channels. This initiative illustrates the importance that traditional broadcasters place on their digital partners.
But "at this stage, it looks more like a test than a real structural change," says Ben Woods, a specialist in "creator economy" issues at Enders Analysis, the UK's leading media and telecom research and consulting firm.
According to him, these alliances complement existing agreements rather than replacing them. "It's simply an extension to allow rights holders to reach a younger audience."
Claire Holubowskyj, senior research analyst at Enders Analysis made the point that Reddit’s business is less vulnerable to AI disintermediation than platforms built around identity-based targeting.
“Reddit’s use of interest-based rather than identity-based targeting flattens the differences in value between frequent and non-frequent users compared to other platforms,” she said. “While the ad impressions that ChatGPT disintermediates will be more valuable for Reddit than for identity-based advertisers, Reddit’s interest-based product is well-placed to capitalize on any high-intent non-logged-in traffic funnelled through by ChatGPT.”
The challenger networks had accumulated an aggregated £9.3 billion debt, according to estimates by Enders Analysis, hit by higher financing costs.
“I’m sure that Vodafone will see some opportunities here,” said Karen Egan, head of telecoms at Enders Analysis. “But there will be nervousness too.”
AI was the story of Cannes, both growing the market with new formats and cannibalising it. Not all AI increases to production are monetisable, creating disruption though the fundamentals of building engagement and resonance are unchanged.
Major platforms are still the main winners as supply ownership becomes key for differentiation. Agencies, adtechs, and commerce media are converging in function but diverging in approach as AI blurs the value chain.
Creative is at the centre of tensions between AI-led mass-market automation and human-centred bespoke connection. Platforms are defending SME audiences with end-to-end integration as agentic AI poses both opportunity and threat.
Service revenues improved sequentially but remained negative at -0.7%, with all major markets flat to improving.
Backbook price increases have become quite prolific, but there is a mixed picture on new-customer pricing and considerable ARPU pressure in most markets.
Regulatory push for better coverage in return for longer licences continues to gain momentum, with Portugal the latest to move in this direction.