- What can Netflix do to save itself?
Do they even need saving?
For those of you who somehow didn't hear
what happened last week with Netflix?
Well, they lost subscribers.
For the first time in over a decade
if I understand correctly.
Now they were expecting subscriber growth to slow down,
but they were not expecting to lose 200,000 subscribers
in the first quarter of this year,
that's January through March.
Now there are a few caveats to go with that.
For instance, they lost 700,000 subscribers in Russia
for obvious reasons, but they also lost 600,000
paying subscribers in the US and Canada in that same time.
And overall, yeah, they lost 200,000,
and they're are expecting to lose
another 2 million subscribers
in the second quarter of this year.
So is this a big deal?
You're darn right, it's a big deal.
This is sending shock waves
through the whole streaming world.
And now the question is what can or should
or will Netflix do going forward?
Well, I've got four things
that they ought to be considering.
So let's dive in.
(upbeat music)
Don't forget to like, and subscribe
if you enjoy this video and wanna see more, just like it.
Thank you so much for joining me today.
All right, so let's dive into this issue
of what Netflix can do to help itself going forward.
First of all, we should back up and ask,
is Netflix really in crisis mode?
I mean, they still have, well over 200 million subscribers.
Is this really that big a deal for a company so big?
Well, yeah, it kind of is
because it's really all about the trends.
So while they are definitely still the biggest kid
on the block, as far as streaming services go,
yeah losing subscribers for the first time in a decade
is gonna send off some alarm bells.
And it's gonna tell you
that you are heading in the wrong direction,
and you better change course as soon as you can.
So, like I said, I've got four ideas
for what Netflix can do to help itself.
And I'm gonna give them to you in ascending order
of how impactful they would be
on your experience watching Netflix.
The first one would be,
they need to make better recommendations.
Look, maybe it's just me, but when I log into Netflix
and they show me, recommended titles
or whatever the categories are,
it really looks to me like they're pushing shows
that they want me to watch.
They're not pushing shows that they think I want to watch.
Now, this is only true to a certain extent.
If I log into your Netflix,
yeah, the recommendations will look a little bit different
between yours and mine, but they really don't go far enough
in my opinion, as far as making their recommendations
based on your watch history, not on yeah,
what they want to make happen.
Number two is Netflix needs to go for quality over quantity.
And in this, they need to take a cue from their competitors
from HBO Max, and Hulu, and Prime Video, Apple TV Plus.
All of those services provide really, really
high quality content, not necessarily tons and tons of it.
Now I get why they did this.
Okay, they were able to see the writing on the wall
a few years ago, they saw all these streaming competitors
coming up over the horizon,
and they knew that the likes of HBO Max and Disney Plus,
they were going to take their toys
out of the Netflix sandbox and play with them on their own.
One of the most recent examples of this is when
Disney finally clawed back their Marvel properties, right?
We had those Marvel on Netflix shows like "Daredevil"
and "Jessica Jones" and yeah, Disney took them back.
They're not on Netflix anymore.
So whatever valuable intellectual property
Netflix was able to get belonged to others.
And so they said to themselves, well, shoot
we're gonna lose all that.
We'd better get some of our own.
And so they just started cooking spaghetti
and thrown it at the wall as fast as they could
hoping that something would stick.
Sometimes things did most of the time it didn't.
But it really was a lot of spaghetti.
Over at the Motley Fool,
they noted that Netflix this year is planning
to spend 18 billion on content
which is the equivalent to the budgets
of the 60 most expensive movies ever made in one year.
And again, they, this spaghetti at the wall
hoping that something will stick,
hoping that they come up with the next
great intellectual property,
something like "Star Wars" or Marvel comics,
or "The Lord of the Rings" or whatever.
Now you can't manufacture a piece
of mega intellectual property on command,
but you're sure not gonna do it by creating,
hundreds and hundreds of mediocre titles.
It's gonna have to be something really good.
And yeah, it is possible
that something like that could work out.
I mean, look at those pieces of mega IP,
something like "Star Wars".
"Star Wars" wasn't "Star Wars" until it was released
and became "Star Wars", right?
Now there's some who will argue that
the atomization of our culture right now
means that you can't have a big piece of IP like that.
Well, maybe, but then just look at the MCU.
Yeah, it can be done.
So yeah, they need to focus on quality over quantity.
Instead of 18 billion on a bunch of mediocre shows,
they could cut that in half and still have plenty to spend
on content that would be more broadly appealing,
and get more people talking to each other about it.
Speaking of which, and now we're getting
into the stuff that has made Netflix
Netflix for a long time.
It's time to ditch the binge model.
One of Netflix's greatest strengths,
the binge model has also been one of its greatest weaknesses
because there's frankly no way to build up
an intellectual property when you're releasing
a whole bunch of content all at once.
Now, you may prefer that model
and that's fine for you personally.
But when you're building a brand,
when you're building intellectual property
it's tough to do that without word of mouth.
And word of mouth can't build,
if people don't have a chance
to talk to each other about it.
And it's not just the water cooler conversation,
or you talking with your friends and family
about what you're watching,
it's also the the internet secondary content machine,
things like, hey this channel,
your favorite bloggers, the critics out there
they don't have a chance really to talk about Netflix titles
in the same way as they can other titles on other services
because you take something like "Stranger Things".
Well, "Stranger Things" is going to be released all at once
in that binge model.
And let's say, you're a blogger
and you're gonna write about "Stranger Things".
Well, how do you write about one episode?
You don't know where your audience is in that.
You don't know if they binge it
or if they're taking it a little bit slower, right?
So it's tougher for you to engage
with your audience if you are a blogger
or a critic or content creator in that way.
So Netflix may have a great property,
but they don't have a great way for it to build up over time
and to get some cultural momentum going.
Now that's not to say they don't have quality content.
Of course, I already mentioned "Stranger Things".
They've got "Bridgeton" was a recent mega hit,
but once those shows are out there,
yeah people might talk about them for a week or two,
but then they won't.
Remember "Squid Game", that was massively popular.
And one was the last time you remember
somebody talking about it.
And now we get to our last one.
And this one is for me the most controversial,
but that is advertise.
Netflix is gonna need to advertise.
Now let me be clear, I do not like this idea at all.
I hate coming commercials.
I hate watching commercials.
I've always loved that Netflix kept things simple and said,
no, we don't run ads, and here's the price you're gonna pay
for our service.
But the thing is, it does make sense for some subscribers.
If Netflix is gonna charge 1550 for the HD,
that middle of the road package,
it makes sense for them to say,
hey instead of 15 bucks, here's a $10 tier for those.
We want to pay a little bit less
and don't mind watching a few commercials.
There are plenty of you out there
who don't mind those commercials, and that's great,
you should have that option.
So it makes sense for a lot of viewers,
but it also makes a lot of sense for Netflix itself
because frankly Netflix with its 200 plus
million subscriber base is going to be able to command
a premium for at ad space.
Again, I don't love it,
but yeah, it's probably gotta happen.
And Netflix has been dropping hints to that effect
for the last little while.
So is Netflix in trouble?
Well, I don't know that might be putting it
a bit harshly right?
Netflix is still Netflix.
They're still the biggest kid on the block,
and they're not going anywhere.
But this is a massive wake up call for Netflix.
And the big wake up call for its competitors as well.
If Netflix has reached its saturation point,
what does that tell you for those who came later?
Are they ever going to get
to that 200 million subscriber mark?
Are they gonna get beyond that?
Time will tell, but everybody's taken a hard look at this
and asking, yeah, what does this mean for streaming
in the long term?
I guess we'll see.
Now I'd love to get your take on this.
So head down to the comments
and let me know what you think of all this.
Would you like an ad supported tier?
Do you want them to get rid of the binge model?
Let me know how you feel.
And don't forget to join me every Friday at 2:00 PM Eastern
right here on this channel for the live streams
where we can hash these topics out live.
I'd love to see you there.
Thanks everybody for joining.
I'll see you next time.