Netflix crisis: Platform pivots to live content and AI amid falling viewership

Netflix, once the disruptor of traditional television, is now embracing a hybrid model that incorporates elements of conventional broadcasting, including live sports and artificial intelligence, in a bid to reverse declining viewership trends. The streaming giant is experiencing a significant drop in viewership for its second seasons, with an average decline exceeding 50% upon premiere.

This "curse of the second season" is attributed to long delays between seasons, sometimes exceeding three years, exacerbated by production challenges since the pandemic. This issue is not unique to Netflix but affects major streamers, causing investor concern and contributing to a stock value drop of over 40% in the past year.

In response, Netflix announced a radical restructuring plan. The new model emphasizes live sports broadcasts, collaborations with influencers, and the creation of programs using generative AI. However, these announcements have not fully convinced the markets. Second-quarter financial results barely met expectations, and third-quarter revenue forecasts fell short of analyst predictions, leading to a sharp decline in the company's stock.

The introduction of advertising has fundamentally altered the streaming landscape. Platforms now must not only attract new subscribers but also maintain viewer attention, as each minute of viewing translates into advertising revenue. This focus on engagement pushes platforms away from the on-demand model towards live programming, similar to traditional TV. YouTube's success with a hybrid model, generating more revenue than Netflix, serves as a blueprint.

Other major players, like Disney, are also facing challenges, with its stock value dropping significantly. Analysts are advising Disney to exit streaming and concentrate solely on content production. The shift back towards older models is further evidenced by the intense bidding for World Cup broadcasting rights, where platforms are offering substantial sums for transmission rights in the U.S.