Netflix Bloodbath Explained (Part 2): Where’s the programming Zeitgeist?

In Friday’s post, I shared how the Netflix commentariat circled around three causes of Netflix’s subscriber slowdown:

  • Covid recovery means less hours viewed.
  • Competition from Disney+HBO Max and others.
  • Free, advertiser-supported AVOD services are attractive alternatives to the SVODs.

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I added a 4th, and more complex cause: De-globalization.

The Ukraine War signals the heightened risk to business models — like global streaming — that target consumers worldwide, but whose addressable markets (TAM’s) face increased limits.

I also argued from the experience of Discovery International‘s failed launch strategy, that a truly competitive global spend is unsustainable.

In today’s post, I’ll comment on another factor in last week’s rout: Netflix is not delivering enough hit programs.

Programs: Failing the Zeitgeist test

Last year, we hailed South Korea’s Squid Game as evidence that by spending billions each year on programs, global hits will leap out of surprising territories.

This year, investors are asking:

  • Where is the next Squid Game?
  • How long ago since your last unscripted hit, Tiger King?

For several years, Netflix captured the pop culture zeitgeist, particularly for scripted series, and often for documentaries and unscripted series.

Netflix routinely delivered shows that did more than meet pop culture at its peak – they changed it!

That’s no longer the case.

The pipeline does not seem to be delivering.

And that’s not a good thing in an increasingly competitive world where consumers can easily press a few buttons and cancel their subscriptions.

It doesn’t help that Netflix programs are launched, binge-watched and then mainly disappear below the fold.

By contrast, broadcast and cable networks created franchises that continued to attract viewers, week in and out, year after year, and sometimes across generations.

For originals, Netflix and the streamers seem to go back to the programming starting blocks every year.

Netflix’s $17 Bn spend could easily deliver another hit that recaptures the zeitgeist and changes this conversation.

But so could Pluto, or Hulu or any other of its increasngly competitive rivals.

Source; Nielsen

What does the data say?

The March 2022 Nielsen Gauge (above) reports that U.S. streamers earned the largest share of total TV usage ever, and did not suffer a post-Covid drop as many analysts had forecast.

The Gauge also captures the relative shares of the streamers, with Netflix (6.6% -up .2% from February) dominating hulu (3.3%) and Disney+ (1.8%), with HBO Max, Discovery+ and all the others lagging even further behind.

Takeaways for Producers

Wall Street’s harsh response to Netflix’s subscriber data does mark the end of the honeymoon for the streaming model.

Work for their programming execs will be much less of an enviable flight through the stardust and more of a hard, daily grind.

However, Netflix and its streaming competitors remain collectively huge buyers of programs, including documentaries and unscripted series.

They will order more content from the regions in order to bolster their `international  growth and to satisfy national regulators.

Netflix’s purchasing is likely to remain at this daunting scale, even as its mix of editorial preferences will evolve in response to the recent lack of hits, increased competition, and the pressure of negative investor sentiment.

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