Streaming giant Netflix recently published their figures for the first three months of 2022, and far from the gains they had anticipated, the service suffered a loss of 200,000 subscribers. Investor panic was not alleviated by the announcements that followed: The company expects another 2 million customers to call it quits by July, and so, partially to make up for lost revenue, they’ll be rolling out a cheaper, ad-supported model. The result was a single-day stock drop; a 35% shares slump and a projected loss of $54 billion in value. Netflix squares some of the blame for their consumer losses on the war in Ukraine, having pulled their service from Russia, and rampant password sharing to unpaying freeloaders.
If you were to ask around as to why public opinion has shifted so thoroughly on Netflix, the most common complaint you’ll find is exasperation over their practice of constantly canceling shows, often without giving creators ample time to end their work satisfactorily. Some 74 Netflix originals have been cut short, leaving fans weary of getting attached to another lest catharsis be wrangled from them for a 75th time.
A Dip in Quality Programming
Commentators also cite a drop in the quality of original programming. This is entirely subjective, but it is worth remembering that part of what put Netflix on the map was the excellent spate of intelligent dramas and bingeable comedies like House of Cards and The Unbreakable Kimmy Schmidt, not to mention long running pop-culture juggernauts like Orange Is The New Black, with which they staked their claim. Netflix seems aware of which shows are keeping subscribers tuned in and boosting engagement online (the new season of Stranger Things comes with a $30 million price tag per episode), but the days when Netflix was associated with consistently quality entertainment seem to have passed, as the platform’s image has apparently grown estranged from public endorsement.
The Search Continues…
It doesn’t help that though they may have exactly what you’re in the mood for, many users are having trouble finding much of anything. Complaints paint a picture of an irrelevant algorithm, which pushes programs Netflix has invested heavily in above what you are likely to enjoy more. The time-swallowing scroll to find something worth watching is a more pronounced issue then ever before, exacerbated by the arrival of several new streaming competitors, launched by media giants who’ve pulled their films and shows from Netflix’s inventory to be disseminated to their particular niche on Disney +, HBO Max, Peacock, Hulu, Prime Video, etc.
Several of these competitors are tantalizing not only for their extensive back catalogues, but also because conglomerates like Disney have something Netflix has been desperate to produce: Recognizable IP (or intellectual property). Netflix has no legacy title like Star Wars, Marvel, the Pixar films, etc. to be endlessly milked for spin-offs, reboots and what have you. In the current market, audiences are hungry for more of the same, and Netflix is having to compete with their own original programming. As an example, HBO Max added 3 million subscribers the very same quarter that Netflix’s performance tanked.
All of these problems have given consumers cause to be on edge, and numerous recent developments which may not have landed quite so drastically before, are serving as the breaking point. Cracking down on password sharing and VPN-use (especially in foreign markets) annoyed plenty who believe Netflix should focus on improving their product rather than cutting corners or “being greedy” (Netflix estimates that some 100 million households watch the service for free using shared passwords). There were much publicized socio-political faux pas damaging the company’s public image, including their support of Dave Chappelle following criticism from the trans community, which many perceived as condoning transphobia, and their spats with unions.
But by far what’s ticked off the most people is that they’re being asked to put up with the above-mentioned irritations, and to pay more in the same breath. The recent U.S. price hike (from $9 to $10 per month for the basic, and from $14 to $15.50 for a standard plan) comes on the heals of a pandemic when, globally, people are looking for ways to cut back on spending. Though, despite what most seem to think, this price change is not a flagrantly greedy business decision, but a largely inevitable consequence.
Netflix created an untenable business model the moment it began spending like gangbusters without charging equivalent prices for their service. In a method that’s becoming increasingly prevalent, as innovation and meeting market demands outpace questions like “Will this even be profitable?”, a heavily backed company busts through the door with a product that’s too good to be true, and therefore too good to refuse.
Customers migrate to this unsustainable platform, driving growth and investment even as debt piles up, since the service still is not charging what they need to recoup their spending. Now the public demands this sort of service (without ads, with an enormous selection, and new content, for cheap). Competitors are forced to ape the less profitable model or risk losing their audience entirely. Conglomerates like Disney, with their innumerable and bottomless revenue driving ventures, happily take the hit to their expenses. They can charge premium prices for new releases without reproach. They can buy just about whatever they want to, cutting down competition and strengthening their library all at once. They will make their money back. But Netflix is not Disney. They will need to have something to show for their billions in debt and billions more in market value, one day, or else fall apart.
We may be seeing the natural leveling out of Covid-gains, or a long gestating backlash that’ll be hard to shake, but one thing is certain: Netflix has some work to do if they have a mind to reclaim the streaming crown.