close
close

Netflix seemingly changes everything it does; What will it be like afterwards? — TVREV

In the few weeks since Netflix announced what appeared to be a tiny drop in its subscriber base, the first such drop in a decade, the company has seemingly broken every one of the “bids” passed down by founder/co-CEO Reed Hastings throughout the year the company’s wildly successful run at the forefront of streaming video.

Change is happening everywhere in the company, including things that leaders have long called bad ideas. What will Netflix look like in a few years? Perhaps more importantly, what do the changes mean for its customers and content partners? What happens when Netflix looks and acts more like everyone else?

The “commandments” are just long-standing corporate approaches to its business operations, which often directly contradict long-standing Hollywood practice. But here is a short list of what has changed or will change in the near future:

  • Add ads. Possibly the biggest broken bid of all, offering an ad-supported tier the company says it will roll out by the end of the year. The company can tap into oceans of viewer data to better target ads, but will wrap those ads around a massive library of shows built to play without To sue. A cheaper tier will expand Netflix’s overall addressable market, but as Hastings long said, it also offers a worse viewing experience. Mid-roll commercials also change script construction by including mini cliffhangers that keep fans coming back after the commercial break. Also, will the notoriously secretive Netflix need to disclose far more viewing data than ever to meet advertiser expectations?

  • Stop password sharing. After years of minimizing the impact of password sharing, the company finally admitted that it had 100 million password freeloaders, almost half of its entire base (this belated admission sparked a shareholder lawsuit). A crackdown is imminent, executives say, but can it generate more revenue without upsetting subscribers unhappy that grandma or her former roommate now has to pay to play?

  • end the binge. Binge watching was a crucial social component of ad-free Netflix. It’s also reshaping the production pipeline, as Netflix can’t release a show until all episodes are produced, subtitled, and dubbed in multiple languages ​​for its global audience. Now Netflix is ​​feeding fans a few shows, one episode per week, like most of its competitors. Will this tactic keep fans coming back for more, or just annoy them when they lose track of a show in the midst of everyone else?

  • Redundancies. Being shown the door at Netflix is ​​practically a rite of passage in the entertainment industry, almost a badge of honor in the company’s Darwinian HR process of ongoing staff evaluation. But a round of 25 layoffs by writers/marketers surrounding the release of first-quarter results was followed by a second round of 150 more cuts that change the calculus. The company’s own statement says that people were mostly fired despite their skills and contributions. If job insecurity continues to rise, does Netflix risk a brain drain?

  • cut spending. Netflix’s long-vaunted momentum of success — spend on programming/get more subscribers/spend the extra money on more programming — is busted. The company is canceling projects and programs and restricting go-aheads, spending and hiring. Will tighter budgets cost high-profile projects or top talent now that it can’t offer as much? Is it perceived as less cool and less stable?

  • culture in transition. The company’s uniquely well-documented corporate culture has been updated and employees have been warned that they may have to work on projects they disagree with. If employees don’t want that, Netflix might not be a good place for them. The new company language is likely in response to last year’s employee rebellion over anti-trans comments in a comedy special directed by Dave Chappelle. But the “deal-with-it” message can further impact talent attraction and retention.

  • Longer and more theatrical runs. Once reserved for a handful of award contenders (later Oscar winners). Roma, power of the dog) and potential mega-franchises (horror/action hits Bird Box, Army of the Dead), Theatrical releases usually lasted one to three weeks before they hit the small screen. Pure theatrical releases were also limited to a few hundred art house and independent theaters due to opposition from the big chains. Netflix’s corporate line has always been that they wanted to bring premium programming to paying subscribers as quickly as possible. That could change. Bloomberg reported that Netflix is ​​considering a 45-day exclusive theatrical run for Oscar winner Alejandro Gonzalez Inarritu bardo, and the continuation of knife out. Netflix spent $500 million on two knife out sequels, so it needs to maximize its returns. The Motion Picture Academy just released new rules this week that require an initial theatrical release for all competing features. But to break into the big chains, Netflix will have to agree to something like an industry-standard 45-day exclusivity window, as well as a significant marketing campaign, according to trading group head John Fithian. Is Netflix willing to shell out that much money and tell subscribers they’ll have to wait a month and a half for the best movies? Will Netflix need to do more than a handful of such theatrical releases to spread awareness of its best projects?

  • Growing churn and with absolutely the wrong group. Research firm Antenna reported that Netflix is ​​seeing significantly higher churn among formerly loyal subscribers. Among those who subscribed for at least three years, cancellations jumped from 5% to 13% in the first quarter of 2022. High churn has been the bane of Netflix’s many competitors, but has traditionally been far less for Big Red. Will longtime fans now lump a transformed Netflix with the competition?

Putting it all together, this is a stunning operational change on so many levels for the streaming industry’s most successful and innovative company. Hastings and his crew have had good reasons for all their bids for years. Their success repeatedly suggested that the Netflix path was the right one, damn the industry practices.

Now that Netflix is ​​in danger of losing its uniqueness now that it’s breaking so many of its own commandments? Will it be seen as just another streaming company that can easily hop in and out depending on the latest hot show? Can it still be what Netflix has been for so long?

Leave a Comment