Netflix Needs a New Shakeup
Lucas Shaw
Is Netflix in trouble? That's sort of the question underlying Shaw's post above. He's quick to note that it's Netflix, and history has proven time and time again that you can't count them out because they're good at figuring out what's next to keep going. But it seems pretty clear that it's time to shake things up again.
Netflix shows have historically delivered their biggest ratings in the first season. Unlike broadcast TV programs, which often peaked in the middle of their run thanks to word of mouth, Netflix shows have lost viewers over time.
Yet the sharp drop in viewers is a major source of concern for the company, which has been studying its data to figure out why this is happening, according to people familiar with the matter. The service is ending The Night Agent after its next season. It renewed two comedies, Running Point and The Four Seasons, even though both shows surrendered more than 50% of their audience from season one.
To me, there are a few obvious problems here. The first is that a lot of the content just isn't very good. Yes, this is subjective. And yes, this quality concern has long been the case with Netflix – to the point that they have multiple times come out and said that they would start focusing on quality, not just quantity. And yes, none of this has really mattered in the past as Netflix growth continued unabated. But that didn't mean it would never matter. With streaming options maturing and rising in price, the others are getting pretty good at narrowing in on their niches and focusing on quality. Netflix remains the sort of fall-back must-have option, but it's increasingly seen as filler content. It's sort of like basic cable versus the premium cable of old.
To make matters worse, YouTube is coming fast and furious to take this market. Thanks to their nature – UGC content amassing eyeballs to the point where everyone feels like their content must be there in some capacity – they're simply better at it than Netflix. They're infinitely better at scaling content and so it matters less if it's a ton of garbage – there are plenty of gems too. Because there's just everything! YouTube is really out-Netflixing Netflix.
In other words, Netflix is getting squeezed. Both from the top from better quality streamers like HBO Max, Disney+, and even Apple TV. And now from the bottom with YouTube – not to mention all the FAST services.
Buying HBO Max by way of buying Warner Bros would have obviously helped with this problem. But it didn't happen. So again, it's time to re-think the strategy here. Maybe they actually – actually – focus more on quality and start to cut the crap. But it's also bigger than that.
The second issue I believe is tied to what has historically been their strength, their calling card even: the binge model.
Obviously it has worked out well for them – to say the least! – but I'm not sure it's working any longer. I've long thought it might be time to re-think this model – not necessarily abandoning it, but tailoring it for certain releases. For example, maybe a first season is released binge-style to get people hooked, followed by a more "traditional" second season that builds week to week. Or maybe you do what other streamers have long done in releasing the first few episodes to get people hooked then switch to week to week. There are just so many options here.
The "second season problem" Netflix seems to have suggests that one solution may be to do a first season binge (or partial binge) follow fast by a second season. In other words, get two seasons in the can at once. But that would be an expensive proposition, of course. Still, if you have a good sense of what will work for the audience, you could do it for some shows. But again, that sort of goes back to quality. And the issue remains that Netflix may be increasingly misreading their room.
Tangential to this, I do think that because Netflix releases so many shows, there's a inherent fear that some will (necessarily) not get renewed. This leads to a natural reluctance to commit. Again, less would be more here.
I continue to think the bigger shift should be shaking up distribution entirely. Some content goes to streaming but some goes to theaters. Some is binge-able, some is episodic. Some goes from a streaming show to a movie and others go the other way. Again, there are so many options here. But Netflix needs to leverage more than simply binge streaming. They're starting to with the shift to live and yes, the thawing stance on theatrical. But they should go all-in on this shake-up.
The path to $1T isn't paved with streaming alone. Obviously.1
In the past, Netflix has been insistent that the binge model works because their data doesn't lie. But the data may deceive. It could lead to content that people may get something out of but ultimately don't care about. The one-night-stand of shows, as it were. Data aside, it was impossible to argue with their growth. But suddenly, it's not so impossible, it seems!
1 I mean, should they buy Disney before Apple can? Hollywood would throw up at the thought, of course. But their throwing up on the Warner Bros deal likely just made things worse for the industry in the long run... ↩
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