I don't think you're wrong, but to over-simplify what you're saying: "Netflix took my $100/mo cable bill and $40/mo Blockbuster habit and turned it into a $10/mo fee. Now I'm not getting all that entertainment for the now $15.50/mo fee."
Again, you're right: before the other players came to streaming, Netflix had an amazing value proposition. Why? Because "the other players" didn't realize that streaming would displace cable, DVD purchases, and Blockbuster rentals so they licensed their content to Netflix a lot cheaper than they would have if they'd realized that. Yes, there was a golden era of Netflix before "the other players" realized that streaming was the future. Over the long run, it's logical to think that they weren't going to just want less money while you got the same quality content.
I would disagree that it's mediocre content across the streaming services. I do think Netflix has invested too much in mediocre content and that's biting them (as the article notes). However, we have so much amazing content being produced.
I also think that "across services that easily cost $100+ a month" is a bit unfair too. $15.50 Netflix, $8 Disney+, $6 Hulu, $15 HBO Max, $5 Apple TV+, Paramount+ $5. That's $55. "Oh, I don't want ads so it's $13 for Hulu and $10 for Paramount+." Fair, but it's not like cable TV was cheaper, it had practically zero content compared to these streaming services, and more than 25% of its time was ads.
I think a lot of people don't really remember how there was almost nothing to watch back then. I think people's memory of the earlier days of Netflix streaming is colored by the fact that they went from "there's nothing on TV" to "OMG, Netflix has so much to stream! This is amazing!" Part of the issue is that we've gotten really accustomed to having so much to watch available. Even if Netflix were giving us just as much quality as they were when they were a "good value", people's perception of what is a good value has changed.
Netflix is still way better than cable in most ways (live sports being a big exception). It's also way cheaper. But it's also not unique anymore. When Netflix launched (and for many years after), we were all thrilled that we could watch 20-25% of the content we wanted via this one service. That was amazing. However, I think our expectations have changed: we think we should have access to all the content we want - and for cheap.
For ages, people complained "why do I have to pay for a cable package that includes X which I don't watch! I should be able to select services a-la-carte!" Now that we're offering services a-la-carte, it's becoming clear that the real complaint was that people just wanted to pay less money for the same content.
I think that Netflix launched and was such a huge jump from the old experience of cable TV and people expected that $10-15 to keep jumping from 20% to 40% to 70% to 90% of what they wanted to watch for one low price. I do think Netflix has had missteps along the way including pouring money into a lot of stuff that ends up being background noise rather than great television. However, with others entering streaming, they were going to keep their own shows for their services more often than not and there would be more competition for high-quality content. Disney explicitly went after Star Wars and Marvel to build a content portfolio they could leverage and bought Fox and its huge library of TV and movie productions (both the historical library and ongoing) as well as Hulu (pending them buying out Comcast's 33% which they're entitled to do).
I guess I wonder: if you could go back in time (knowing what you know now) and take control of Reed Hastings, what would you do differently (with the caveat that you do need to create a business that will make money)? My suggestions would be things like: don't keep throwing money at low-quality content that people "watch" but don't really watch. Just because you can measure streaming hours of a program doesn't mean that people like it. I might suggest buying a content company, but that seems like it would be a hard thing to do. It'd give them owner-economics over a large back catalogue, but even in 2016 Netflix was a $40-70B company. Who could you buy without giving away half (or almost all) of your company? 2016 you're talking $40B for Viacom without CBS. Disney would be $150B+. In 2016, AT&T made its deal for Time Warner for $85B. Disney bought Fox for $71B in 2017 - minus the US stations and Sky. If you go before 2016, Netflix is a $25-30B company in 2014 and a $5B company in 2012. They don't have the money. Do you try to negotiate even longer-term third-party content deals for streaming in 2007-2010 before third-parties realize that you're going to be cannibalizing their business? Get Time Warner to give you their catalogue for a 20-year run - giving you a very long time before they can compete with HBO streaming? Do the same to others?
To me, the big misstep seems to be that Netflix invested too much in low-quality filler that shows up as "viewing hours", but isn't quality viewing hours that keep customers loving your product. It's more like settling hours. Beyond that, I think a lot of it is just that people want access to everything for less money and realistically that wasn't going to happen. But maybe you have other ways they could have gone - without saying "keep spending more money, keep losing it, die a hero."
I think all your points are spot on. One thing to add is that we are in the golden age of content (it takes some volume to discover on good shows), and it is probably coming to end as cheap money goes away. At no point in history has so much money been spent on content creation.
At 17B/year Netflix alone spends ~$48/year for every single person in the US. Prime spends 13B, Apple 6B, Disney 33B, Warner (HBO, etc...) 18B. Or put another way ~$250/person in the US/year on content.
Even if accounting for world wide distribution, these numbers are just not sustainable from an investment standpoint.
Disney also has the benefit of being able to makes billions in movie theater that pays for content before if ever gets to streaming. On the other hand, how many people watched Loki and WandaVision to have context for Dr. Strange? It’s the famous “flywheel” that Disney has been talking about since the 60s.
I’m not sure if there’s something Netflix could have done honestly. They had a technology moat with video streaming tech at a time when everyone else focused on cable but video streaming and streaming apps became a commodity over ten years or so.
To expect them to also become a great studio company when they started out with the tech moat would be a bit of Silicon Valley hubris. It works for a few like Amazon but even Amazon is facing similar issues where online shopping tech is now commoditized and rivals have better depth in retail itself.
I think the issue of low-quality filler being the issue is debatable. House of Cards or Orange is the New Black hasn't stopped the platform from sinking to where it is now. But as long as people are watching something, they're subscribed to the platform. The real problem is a lack of shows with nine seasons and plenty of shows that got canceled two seasons in. Viewers will take a chance on a new show, binge watch the two seasons, then end up blankly staring at the Now Playing screen and this hollow feeling of Netflixlessness - that listless feeling you get when your life was previously consumed by a show that you've now caught up to, so you have nothing to watch.
The worst thing the service can do is force viewers back to that New Playing screen, and just hope they find something before giving up, disgusted at your library's lack of content. Netflix never did conquer the Now Playing page. If I don't have a show that someone else has promoted to me, I'm not opening the Netflix app, that page is where dreams of just watching some TV go to die. Not for lack of trying, mind you, they've run a large number of experiments on that page, it's just a difficult problem when you don't have the content your users really want. It's thoroughly unsatisfying a UX, especially if you can't find something before your attention span gets bored of trying to find something to watch, and you switch away entirely. To Fortnight or TikTok, as the article suggests.
Spin-off shows don't generally do well on network TV, but things are different for streaming, and mediocre content set in the same universe as existing shows, for easy transference of viewing keeps users on your platform. Even if viewers are rewatching The Office for the Nth time. Because that show has nine seasons, Netflix might as well just be The Office streaming program and it would keep subscribers just fine. You're right that they're "settling" hours, but not everyone is a TV show snob. Netflix was never going to afford to be at ABC/Paramount/Disney level but it's trying to play there and make shows that rivaled their quality - and cost - that killed them.
> To me, the big misstep seems to be that Netflix invested too much in low-quality filler that shows up as "viewing hours"
Reflecting on that: I’ve started to reduce my consumption all together. Bought Blu-ray’s of one or two shows I was interested in and that have been around long enough to buy at a reasonable price for all season (though I won’t bother with that anymore after relocating to a different region).
But the biggest change: turning away from the TV in the evening hours. Back to educating myself or gaming.
Again, you're right: before the other players came to streaming, Netflix had an amazing value proposition. Why? Because "the other players" didn't realize that streaming would displace cable, DVD purchases, and Blockbuster rentals so they licensed their content to Netflix a lot cheaper than they would have if they'd realized that. Yes, there was a golden era of Netflix before "the other players" realized that streaming was the future. Over the long run, it's logical to think that they weren't going to just want less money while you got the same quality content.
I would disagree that it's mediocre content across the streaming services. I do think Netflix has invested too much in mediocre content and that's biting them (as the article notes). However, we have so much amazing content being produced.
I also think that "across services that easily cost $100+ a month" is a bit unfair too. $15.50 Netflix, $8 Disney+, $6 Hulu, $15 HBO Max, $5 Apple TV+, Paramount+ $5. That's $55. "Oh, I don't want ads so it's $13 for Hulu and $10 for Paramount+." Fair, but it's not like cable TV was cheaper, it had practically zero content compared to these streaming services, and more than 25% of its time was ads.
I think a lot of people don't really remember how there was almost nothing to watch back then. I think people's memory of the earlier days of Netflix streaming is colored by the fact that they went from "there's nothing on TV" to "OMG, Netflix has so much to stream! This is amazing!" Part of the issue is that we've gotten really accustomed to having so much to watch available. Even if Netflix were giving us just as much quality as they were when they were a "good value", people's perception of what is a good value has changed.
Netflix is still way better than cable in most ways (live sports being a big exception). It's also way cheaper. But it's also not unique anymore. When Netflix launched (and for many years after), we were all thrilled that we could watch 20-25% of the content we wanted via this one service. That was amazing. However, I think our expectations have changed: we think we should have access to all the content we want - and for cheap.
For ages, people complained "why do I have to pay for a cable package that includes X which I don't watch! I should be able to select services a-la-carte!" Now that we're offering services a-la-carte, it's becoming clear that the real complaint was that people just wanted to pay less money for the same content.
I think that Netflix launched and was such a huge jump from the old experience of cable TV and people expected that $10-15 to keep jumping from 20% to 40% to 70% to 90% of what they wanted to watch for one low price. I do think Netflix has had missteps along the way including pouring money into a lot of stuff that ends up being background noise rather than great television. However, with others entering streaming, they were going to keep their own shows for their services more often than not and there would be more competition for high-quality content. Disney explicitly went after Star Wars and Marvel to build a content portfolio they could leverage and bought Fox and its huge library of TV and movie productions (both the historical library and ongoing) as well as Hulu (pending them buying out Comcast's 33% which they're entitled to do).
I guess I wonder: if you could go back in time (knowing what you know now) and take control of Reed Hastings, what would you do differently (with the caveat that you do need to create a business that will make money)? My suggestions would be things like: don't keep throwing money at low-quality content that people "watch" but don't really watch. Just because you can measure streaming hours of a program doesn't mean that people like it. I might suggest buying a content company, but that seems like it would be a hard thing to do. It'd give them owner-economics over a large back catalogue, but even in 2016 Netflix was a $40-70B company. Who could you buy without giving away half (or almost all) of your company? 2016 you're talking $40B for Viacom without CBS. Disney would be $150B+. In 2016, AT&T made its deal for Time Warner for $85B. Disney bought Fox for $71B in 2017 - minus the US stations and Sky. If you go before 2016, Netflix is a $25-30B company in 2014 and a $5B company in 2012. They don't have the money. Do you try to negotiate even longer-term third-party content deals for streaming in 2007-2010 before third-parties realize that you're going to be cannibalizing their business? Get Time Warner to give you their catalogue for a 20-year run - giving you a very long time before they can compete with HBO streaming? Do the same to others?
To me, the big misstep seems to be that Netflix invested too much in low-quality filler that shows up as "viewing hours", but isn't quality viewing hours that keep customers loving your product. It's more like settling hours. Beyond that, I think a lot of it is just that people want access to everything for less money and realistically that wasn't going to happen. But maybe you have other ways they could have gone - without saying "keep spending more money, keep losing it, die a hero."