Following Netflix's "Black Tuesday" announcement on April 19 that it had lost streaming customers for the first time in more than a decade, a consensus quickly emerged among the many pundits scrutinizing the company's business that flawed content strategy was behind the sudden growth woes.
Perhaps overlooked was a factor that Netflix ticked off first in its quarterly shareholder letter -- the "uptake of connected TVs," which has slowed significantly worldwide due to the global supply chain problem.
Roku also tried to highlight the issue in November, when CFO Steve Louden told investors that U.S. smart TV pricing had gone up 42% and sales had correspondingly declined 31%. "Supply chain disruptions that I mentioned are impacting a lot of industries," he said.
It was overlooked by this publication -- and perhaps many others -- when the Consumer Technology Association released figures in February predicting that smart TV shipments would fall 13% in 2022 to just under 40.4 million units. This was after declining nearly 6% last year to just over 46.6 million TVs.
Smart TVs are the way that 70% of U.S. consumers access connected TV, according to figures released earlier this week by Samsung. Fewer smart TV shipments means less consumers adopting streaming and subscribing to services like Netflix.
"Because of supply chain concerns, manufactures have had to focus more of their priorities on large full featured TVs, where the margins are best. Until costs decrease, many consumers may hold off upgrading the value televisions in their living rooms,” CTA said.
The supply chain problem, of course, far exceeds the U.S. market. By many accounts, the chip shortage is easing, but its effects on the bottom line of streaming adoption worldwide are perhaps just now being experienced.
Consumer electronics industry tracker Trendforce expects global TV shipments to reach around 217 million units this year, up 3.4% over 2021. But that projected shipment count is only flat with 2017 levels.
