Meanwhile, Netflix has shelled out an eight-figure sum to make shows with the Duke and Duchess of Sussex. Questions remain about how much the pair will appeal to Netflix viewers.
A better bet seems to be the $100 million ‘golden handcuffs’ deal with Bridgerton executive producer Shonda Rhimes, given the Regency-era show popularity.
Still Rhimes’ other release this year, Inventing Annait was light. Instead, critics praised a rival con artist story: The Dropout, which is available on Disney+.
The rise of rival streaming services like Disney+ is part of the problem. Its slate is small compared to Netflix’s vast library, but it has few flaws. Industry research firm Ampere Analysis expects the company behind the Marvel Universe to become the preeminent streamer by 2024, with 295 million subscribers compared to Netflix’s 279 million.
Apple TV+ also poses a bigger commercial threat after taking a creative step with what are considered two of the best dramas in recent years: Pachinko and Severance.
While the iPhone maker is keeping its progress a closely guarded secret, Digital TV Research expects its subscriber count to hit 36 million by 2026, just three years after launch.
Streamers with more modest ambitions can eat away at their rivals’ market share without worrying about becoming a dominant force. But such moves are just as threatening to Netflix, whose debt-driven model is all about being the leader of the pack.
What worries Hastings is that Netflix’s decline follows a rise in popularity. The pandemic was good for the streamer. Existing subscribers were watching a lot more when they were stuck at home, gawking at Tiger King, getting drunk on The Crown or crushing Emily in Paris, and more older viewers broadened their television horizons from traditional broadcasting by trying out a streaming service. About 16 million people created accounts at the height of the pandemic, a growth that nearly doubled the number of new signups at the end of 2019.
People joked that they had “completed Netflix.” With such a vast library, the streamer had always been more of a filler than a killer. But strip away the prestige series, flashy true-crime documentaries, and shows people have always wanted but never found time to watch, and what’s left now?
A lot of similar content is the answer. In October, for example, Netflix launched Baking Impossible, a series in which contestants build things out of cakes, including a miniature golf course and a robot. Five months later, he launched Is It Cake?, a series produced from the same mold. It has been received as lazy and uninspired compared to what Disney+ and Apple offered.
The chaos of confinement hardly helped the company, with temperature checks and strict social distancing guidelines making filming difficult. Managing Covid risks added up to 30% to budgets during the crisis, producers said at the time.
“I know soap operas are coming back and they’re social distancing, but that doesn’t work with high-end series. Watching big crowd scenes, big stunt scenes, these all take very methodical thinking and planning,” Ben Holt , from Netflix. UK Physical Production Manager, all Financial Times in 2020.
“Wearing PPE all the time doesn’t work unless you’re filming a medical drama.”
In an indication of the level of competition for content, Apple last month became the first streaming service to win best picture at the Oscars, for CODA. This was a bitter pill for Netflix to swallow.
The company has openly pursued the best picture award for years, spending millions on campaigns for The Irishman, Roma and Mank. But it turns out that even a Martin Scorsese epic or beautiful black-and-white filmmaking can’t make Academy voters choose Netflix.
Throwing money at the opposite end of the market hasn’t paid off either, judging by the action-comedy flop Red Notice, which gobbled up a $200 million budget.
Meanwhile, industry figures have even questioned whether Apple’s success at the Academy Awards was a fair reflection of the strength of the streaming industry.
Tim Richards, CEO of Vue theaters, said the achievement was a symptom of theaters closing during the pandemic rather than streamers’ superior commissioning strategy.
Choice in the face of the Oscars, Baftas and other global awards ceremonies was “significantly more limited” this year due to cinema closures, he said, adding: “That’s why he saw a disproportionate number of subscription movies for awards.”
While Netflix is able to present the products, as highlighted the final season of the acclaimed series Better Call Saul this week – There is a feeling in the industry that the commissioners have lost their touch.
A TV executive questioned whether the broadcaster had become a slave to its algorithm that produces data on which shows are most popular with its subscribers, but fails to identify upcoming hits in the same way a commissioner does.
Squid Game, for example, became a stealth hit last year despite a lack of marketing. The popularity of the Korean show took the streamer by surprise, evident from that. tell subscribers that the success was “mind blowing”.
“They commission in any way and there is less rigor,” adds the executive.
“In the glory days of the American networks or Alan Yentob in his prime at the BBC, they reflected the personalities of the commissioner and his interests. There is no sense of that in the broadcasters. There is a sense that the algorithm has taken over “.
Stock price problems
The warning signs for Netflix have been growing for some time.
Investors wiped around $25bn (£18bn) off its market value last April as shares fell 11% in response to slowing subscriber growth. And in January, the streaming giant recorded its slowest annual growth since 2015 and predicted his worst start to the new year in 13 years due to a “Covid overload”.
The latest wobble saw it dump another $49bn on New York’s Nasdaq market, after Hastings lamented how Covid’s “huge push to streaming had clouded the picture until recently.”
That has prompted Netflix to try to shift its measure of success away from subscribers and toward revenue growth, which rose 9% to $7.8 billion year-over-year in the first quarter following its decision to raise prices. An increase of close to 10% is also expected in the next three months.
Netflix has raised prices in the UK three times in as many years. Last month the entry level and premium offer increased from £1 to £6.99 and £2 to £15.99 respectively. Hastings is betting that, despite a series of price increases, viewers will still see the service as good value for money compared to a meal out, even as the cost-of-living crisis bites.
The relevance of this argument was up for debate even before Netflix’s most recent results came in. The number of UK households that have at least one paid subscription to the likes of Netflix, Disney+ and Prime Video fell by 215,000 in the first quarter.
Netflix’s share of new subscribers has fallen sharply over the past two years, according to data from Kantar. At the end of 2020, 17% of British households that joined a service opted for Netflix. A year later, it had fallen to 5pc.
Rising prices may simply drive viewers into the hands of Sky, which has been bundling streaming services into its deals and offering a TV package with Netflix for £26 a month.