OneThe beginning of the n era was defined by its major innovations, and sometimes, just a simple company name can do the talking: Ford Motor Company of more than a century ago, or Virgin of the 1980s. They are business ideas that sum up a moment of progress. Of course, slightly less prophetic, there are also shorter-lived promises made by DeLorean or Myspace.
Up until last week, we were all enjoying the “Netflix boom,” mostly for what the streaming giant stands for, rather than for what it really is. Netflix represents easy access to culture, to family sharing, and turns our backs on the shallow commercial of ads. And it’s quickly becoming a consumer sentiment, especially during a pandemic. In isolation, turning home takes solace in Crown, Strange things, Bridgerton, Money Heist, Lupine, Call my agent! or Squid fishing game. In fact, it’s been 10 years now in the UK, these box design demonstrations have brought on a national conversation that’s also sometimes interspersed with conversations around the rest of the world.
So when Netflix chief executive Reed Hastings last week admitted that 200,000 subscribers dropped out in the first quarter of the year, with more likely to follow, fans of the service were forced to must be reevaluated. As a result of the loss, the company’s stock price fell more than 35% last Wednesday, sliding another nearly 8% the next day. Then, billionaire investor Bill Ackman decided to sell his Netflix stock, despite incurring a huge loss, because everything suddenly looked so scary.
For many in the industry, the alarm call from Netflix was the sign they’ve been waiting, after a dizzying escalation, that “peak enrollment” has finally been reached. After all, didn’t music lovers realize how complicated their love affair with Spotify had become? The freedom to enjoy their favorite tunes, it turns out, is actually a threat to the livelihoods of the musicians who make them.
Among those who claim to have seen writing on the wall before Netflix’s announcement are two Swedish businessmen who are returning with a simpler deal. Måns Ulvestam and Karl Rosander, the founders of Acast, the podcast platform, have now created a new e-book and audiobook platform called Sesamy – where customers will pay only what they want, when they want, on any device. The Swedes believe that the public has seen through the premise of a subscription. In their view, it’s not just austerity that has kept Netflix members out of the game.
“We’re seeing the end of something that started with a paywall,” says Ulvestam. “It’s not sustainable because it’s no longer working for customers or for advertising.”
Just as gyms rely on users forgetting to pay their monthly membership, the subscription model, according to Sesamy’s creators, is almost a lie. “We think all of these content subscriptions, with their ‘easy boarding’ and very difficult cancellations, are almost a scam,” said Rosander.
But surely Netflix, where so many British viewers still come to enjoy their evenings, can’t face disaster? After all, even a show with bad reviews, such as Anatomy of a scandal is attracting a lot of viewers, while this weekend the new movie for teenagers Heart stops beating was greeted with important bouquets of flowers and hailed by some as the most important British television program since It’s a sin.
Much of Netflix’s rush to cry over the imaginary open grave is partly driven by the way the company’s success, which has steadily attracted new subscribers for more than a decade, has been seen as a good example. for example public service broadcasters such as Channel 4 and BBC. When culture secretary, Nadine Dorries, said earlier this month that she wanted Channel 4 to be free to compete with Netflix, many showrunners were quick to point out that the global streamer she so admires was having a hard time. great difficulty in establishing a viable business model. .
And Netflix itself has never liked the rivalry. The company’s line is that UK public service channels are “innovative partners”. To prove this, it points to an investment in hundreds of hours of content, including popular shows like Snake, Giri / Hajjand vampire. A program such as The end of the world F**kingfirst watched exclusively on Channel 4 and later shown by Netflix, gained renewed popularity when it returned to C4 for a second series.
For other Netflix skeptics, movie buffs, the news of the drop in subscriptions carries the sweet scent of revenge. Movie fans are still lamenting the way the streamer is challenging the financial balance of the cinema distribution model. When Netflix began producing its own series, the Cannes film festival tried to combat it by banning films that had not yet been shown in cinemas in France. Organizers have warned of an existential threat to the big screen experience.
But now Netflix has become a prominent part of the movie ecosystem, with Irish people seducing director Martin Scorsese into the world of streaming and both The power of the dog and Don’t look up earned an Oscar nomination last month.
Like many great movie heroes, Netflix has more humble origins. Long before it dominated the entertainment industry, it was a no-frills DVD delivery service, just as Virgin started out as a record label and Amazon used to only want to sell books. But in 2012, the same year it launched in the UK, Netflix started producing its own content, including the gripping political drama of Washington. Dealer. Ten years on, the company has 221.64 million subscribers in more than 190 countries.
However, any documentary about Netflix’s fortunes has yet to chart a significant downward path. First, part of its financial instability could be solved by the discontinuation of service in Russia following the invasion of Ukraine and the fact that most people in the West who wanted to join Netflix already had.
UK Netflix subscription levels are relatively good, but every form of media service has to think quickly about what oversubscription means. And this consideration has become more urgent when it is reported that the Competition and Markets Authority in the UK is currently setting an illegal “registration trap”.
So maybe this is all a category error? That’s what some analysts argue, anyway. We were wrong to assume that Netflix is a technology innovator simply because its phenomenal expansion has led many media empires to copy it, including Disney, Warner Brothers, NBC and Paramount, not to speak. nothing to Amazon and Apple. But Netflix isn’t really founded on technology: it’s just an entertainment provider turned production studio – and that’s always been a very precarious business. As the famous screenwriter William Goldman said, in showbiz “no one knows what will happen in advance”. It simply can’t be a hit, even if you spend $55 billion on TV shows and movies, as Netflix did between 2018 and 2021.
In response to the drop in subscriptions, Hastings and his team have suggested they’ll hold back on their spending, open their minds to running ads “for a year or two,” and push for more quality. somehow “raise it a notch”. (Of course, these three key strategies are also shared by many old-fashioned content providers.)
One Twitter wit, Jake Menez (@Jake Menez), was told that Netflix is currently considering launching a cheaper service backed by ads with the line: “That’s pretty neat. I would probably give it a flexible name like “television” or maybe “cable.”
For the average household, the company’s change in attitude towards sharing passwords freely will be an even bigger shock. Six years ago, Hastings said “we like people sharing Netflix”. Now, with an estimated 100 million people using each other’s accounts, executives aren’t so comfortable.
The truth is that not every quality consumer and entertainment market can’t expand continuously. If we all want a good supply of movies and TV shows, we have to make sure it’s priced fairly and the artists are well paid. Otherwise, as Rosander gently points out, TV culture risks a return to the Renaissance, where only the rich could afford the good stuff: “That’s why it’s all The paintings at that time were all of the duke’s wife.”