Is Netflix cancelled? Today’s headlines – “subscriber growth stalls”, “dramatic slowdown”, ‘Netflix past its peak’, “streamer badly misses targets” – suggest things aren’t exactly peachy.
The company’s quarterly results showed Harry and Meghan’s employer reporting a dramatic slowdown in subscribers in the first three months of 2021, adding four million new customers which – despite being roughly the population of Kuwait – was two million less that it hoped and a quarter of the eight million newbies signing up at the end of 2020. The streaming service is only expecting one million more in the current quarter, which is less than the population of East Timor and its slowest growth on record.
It is, of course, just possible the headline writers may have over-reacted a tad. “Last year was the most fertile abnormal set of conditions you could have had for a streaming service,” points out Tom Harrington, TV analyst at Enders Analysis. “More people came on board as there was nothing else to do. Churn – people dropping their subscription – is usually between 5-7 per cent but that went way down. People who were on the fence about Netflix came forward, so in effect the new subscribers they would normally expect this year came on board early. Having said that, it doesn’t mean there aren’t risks Netflix faces.”
But what are those risks, or problems, exactly?
1. Netflix can’t defy the laws of physics
During lockdown, TV companies struggled to get shows on air as production shut down then opened up slowly with time consuming and expensive Covid protocols. The soaps stuttered to a halt, drama deflated more slowly but somehow Netflix kept on chucking out the shows. Bridgerton. The Crown. Queen’s Gambit. All the other stuff. But the reason, according to an anonymous studio executive who insists on being known only as the Entertainment Strategy Guy online, is the binge release model that Netflix lives on.
To make one episode of TV can take up to three months – four weeks in pre-production, two weeks to shoot, four weeks to edit, some time on post-production, get it over to the broadcaster, bang it out, job done. You can be working on later episodes while the first goes out. With the binge, not so much. Netflix drops 10 episodes at a time, so it goes on air when the final episode is finished. This adds anything up to 20 weeks to the timeline. Then Netflix has to add different languages for nearly every single territory – in some cases, this means Netflix takes anything up to nine months after shooting has finished to get a show on air.
All its lockdown shows had finished shooting way before Covid hit. Stranger Things, on the other hand, had just started production when Covid hit and was supposed to air in December. Now it’s looking like August at the earliest. The streaming service is in the mess UK TV was over the autumn and winter. New shows on Netflix this month include the Unforgotten, Friday Night Dinner, Parks and Recreation and The Office (US). How much would you pay?
2. Netflix has a fight on its hands
Americans had between four and five streamer subscriptions in December and they’re starting to drop them. Amazon is bundling Starz, Showtime and HBO. HBO Max (not due in the UK for a few years yet) is bundling ITV, Comedy Central, Turner Classic Movies and CNN. Netflix is offering Netflix. In 2013 Netflix chief content officer Ted Sarandos said; “the goal is to become HBO faster than HBO can become us.” They’re both in the ring now.
3. Netflix isn’t as much fun anymore
Remember House of Cards? Narcos? Ozark? Cripes, am I right? Seen The Politcian? Ratched? Space Force? Not so much…
4. Netflix could be the MySpace of streaming services
Disruption is really cool. You show up in an industry, find a niche that’s too shoddy for the incumbents, knock together something quickly and cheaply, attract consumers, then dance on your competitors’ graves. What’s not to like? It worked with steel, cameras, encyclopaedias and porn. Blew the music industry apart.
But Hollywood… even the Mafia wants to work for Hollywood. You know the job Wyatt Earp, the legendary Wild West lawman, ended up with? Consultant on Hollywood westerns. You know who almost never pays tax but is never the subject of punitive legislation? Movie studios. Which is why you take a share of gross not net. And Netflix is trying to disrupt Hollywood.
“Netflix launched online with TV shows and films from all the studios which they got at rock bottom prices because studios couldn’t see the value in the Internet,” explains Ed Waller, editor of industry analyst website C21 Media. “As soon as Netflix had a business, the studios took all their programming back and launched their own streamers against it. Think of the library Disney has. Think of the movies and shows that Warners has. It’ll take decades to build up that kind of archive.”
5. Netflix doesn’t have Star Wars
Nor does it have Marvel, DC, Harry Potter, Game of Thrones or Star Trek. It has just signed a first look deal with Sony that gives it access to Jumanji, which is a start.
“TV at the upper end is moving in the direction of cinema,” explains Harrington. “There are so many shows people can’t watch them all. Netflix has 200 million subs which means time, say, three people they can push shows to 600 million. But the new Star Wars show… people will seek that out. Disney is launching Star Wars spin offs. Amazon has Lord of the Rings. Netflix needs IP.”
6. Netflix deals might not be the smartest
How many subscribers are drawn to the service because it has struck lucrative deals with the Obamas and the Sussexes? Or Ryan Murphy, for that matter?
7. Netflix isn’t doing weekly drops
You get a Netflix subscription. You binge The Crown and Stranger Things in a month. You drop the Netflix subscription until the next season. Disney Plus, Apple TV+ and even BritBox are dropping shows weekly so you have to wait around for the next episode. It’s almost as if the old TV schedulers knew what they were doing…
8. Netflix is Napster and the music industry at the same time
Netflix changed the rules. You have all the stuff you want now, instead of tuning in to ITV during the pandemic and watching Vera reruns. But the rules of everything always means we’re living in a world of all killer, no filler. The company is $15 billion in debt and has a programme budget of $19 billion. If it spends it right, its fine. But it created the streaming monster and, with such a shallow pool of IP, it can’t afford to slip up.
9. Netflix needs hits forever
The streaming wars aren’t shock and awe. They’re relentless mediaeval military marathons fought across years using mercenary troops that will switch sides for a better deal. Each side is fighting for inches of ground day-after-day, year after year. Netflix rivals have more money and bigger libraries apart from Amazon which, honestly, is getting by on free postage right now. You can’t have too many duff quarters because if someone’s watching your rival for a month they’re going to wonder why they’re paying for you.
So make us love you, streamers. Try harder. Spend more. Because if we’re bored you die.