ColdFusion - Why CNN’s Streaming Service Was a Catastrophic Failure

Starting point is 00:00:00 Hi, welcome to another episode of Cold Fusion, where I cover anything in science, technology, business or history. On March 29th, 2022, CNN launched CNN Plus, a venture that was going to be the future of the company. It was a subscription-based digital platform with a $1 billion budget over four years, but the entire venture catastrophically collapsed in just three weeks. So what happened and what can we learn here? Let's take a look. You are watching Tull Fusion TV. Founded in 1980, CNN has traditionally been the network that viewers turned to in times of war, terrorism or major news. But after 40 years, things have started to change. CNN's core news business has been failing spectacularly.

Starting point is 00:00:52 In February of 2022, the company lost 70% of its prime time viewers in its key demographic. This comes at a time when trust in media is at its old-time low. dropping from 76% in 2016, down to 58% in 2021. Not only this, but there's been multiple scandals involving key CNN staff, from affairs to child abuse. The pressure was too much for CEO Jeff Zucker, and he was forced to resign earlier this year. So how was CNN going to turn all of this around?

Starting point is 00:01:24 The world was moving towards streaming platforms, so why not CNN? Besides, they're the biggest name in news. What could possibly go wrong? CNN is an icon of the cable and satellite age, but now cable is competing with streaming, and there isn't a streaming subscription service for TV news in the United States. So if you were creating a news product from scratch in 2022, how would you build it? That's one of the questions, one of the starting points for CNN Plus. The result was CNN Plus.

Starting point is 00:01:56 What followed was a multimillion dollar ad campaign. Millions more were spent on hiring staff to produce exclusive content. In total, $300 million was spent building up the service. For viewers, the subscription cost was $6 per month. The problems visibly began to be evident with the branding of CNN Plus. A lot of viewers thought the service was mostly going to be exclusive live news, but in reality, it was a bit of a mixed bag. Although the focus was news, CNN Plus's lineup included a cooking show,

Starting point is 00:02:29 a book club show with Jake Tapper, a show about past movie stars. another show about the singer Dione Warwick, and an Anderson Cooper program about the challenges of being a dad. Frankly, nobody cared about these things. But that was just the start of the trouble. Interestingly, according to the New York Times, it looks as if CNN Plus may have been thrown under the bus internally. You see, just before the launch of CNN Plus,

Starting point is 00:02:56 CNN, who was owned by Warner Media, was going through massive changes. Warner Brothers, and hence Warner Media, was undergoing a merge with the Discovery Company. And the thing is, both companies already had ventures in the streaming world. Discovery had the Discovery Plus streaming service, and Warner Media had HBO Max. Both of these streaming services were about to be bundled into one, leaving no room for poor CNN Plus. Discovery executives were all skeptical of CNN Plus from the beginning.

Starting point is 00:03:26 In fact, before its launch, the Discovery managers refused to have meetings with the CNN Plus officials, to even hear what the product was about. And this didn't happen just once. This happened three times. They just didn't care about it. Internal problems aside, the project was a complete flop. Executives expected 2 million subscribers in the first year, but CNN Plus only managed 10,000 consistent viewers

Starting point is 00:03:54 after the first two weeks, and that was even after lowering the price. When David Zaslav, the new CEO of the Warner Brothers Discovery Murm, saw the abysmal numbers for the first time, he was appalled. He made the decision to shut it down instantly. To him, CNN Plus was taking up a lot of resources and giving nothing in return. In total, after $300 million spent, the service was only around for three weeks, and the explosion left a trail of destruction in its wake.

Starting point is 00:04:26 Layoffs ensued, and the disaster upended the careers of many would-be hopefuls. This is going to be our last episode of the source on CNN Plus. It's just a few weeks after we launched. Cassie Hunt, who left a job at MSNBC for CNN Plus, stated that some of her staff left stable jobs and some moved across the country, and she noted that all of them took a huge risk. So why did nobody watch? Well, the focus groups and surveys may have told CNN managers that the idea was valid,

Starting point is 00:04:55 but watching content for free in a controlled setting is different from having to pay for it. CNN, although a large legacy brand, doesn't really mean all that much anymore. They aren't as important as they were in the 1980s and 90s. The market just didn't think that the programming on CNN Plus was enough value when compared to free TV, other internet content, or other streaming platforms for that matter. Apple TV, Peacock, Disney Plus, Paramount Plus, HBO, Netflix and Hulu all make for stiff competition. CNN Plus was just another $6 a month for politics and B-grade content. It was too. little, too late. CNN executives struggled to navigate a rapidly changing market, a market where

Starting point is 00:05:40 consumer habits are unstable, and this all just shows what happens when you get it wrong. So let's take a look at some lessons. As I said in my episode about the failure of Quibi, criticizing is easy, but building is hard. That being said, what are some lessons here? Here are four quick ones. The first lesson would have been, don't lean on brand recognition alone. There's no guarantee of that working, especially in a rapidly evolving market. The second lesson is obvious. Make better content that appeals to the target audience, although that's much easier said than done. Number three, build trust. If CNN Plus was to succeed, they would first have to get the fundamentals right. They would need to build brand trust among all Americans, not just 50% of them. For this to happen,

Starting point is 00:06:28 there would need to be as close to unbiased reporting as possible. Each story should show the complete picture and not substitute fact for opinion. For the What About is out there, this isn't just a CNN problem. The same goes for Fox News too, but the topic here is obviously CNN. And the fourth and final lesson, clearer internal communication may have also helped prevent this disaster. Discovery and Warner Media had their own plans for streaming services, so when it became clear that the merger was happening, the CNN Plus content should have been absorbed into the existing services instead of limping along as a standard line service. The lack of internal communication and friction prevented CNN Plus from being integrated well into the wider business plan of both parent companies. So all in all, the CNN brand

Starting point is 00:07:16 may have been hurt badly by this. I'd even bet that more people have heard of the CNN Plus disaster than CNN Plus itself. The whole saga leaves a question mark over CNN's digital presence, at a time when Americans are stopping to watch cable TV. So what do you guys think? Did you even even hear about CNN Plus. It really is a cutthroat environment in the streaming world. Even Netflix are starting to struggle, as we're going to see in the next episode. So before I go, just some quick housekeeping. I talked about this saga and much more in the latest episode of my podcast, which you can check out in the description below. I also just passed 5,000 followers on Spotify for my music, so thanks to everyone who's taken

Starting point is 00:07:59 a listen. Anyway, that's it from me. My name is DeGogo, and you've been watching Cold Fusion and I'll catch you again soon for the next episode. Cheers guys. Have a good time. Cold Fusion, it's new thinking.

ColdFusion - Why CNN’s Streaming Service Was a Catastrophic Failure

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