The Netflix Stagnation is a Wake-Up Call for Netflix, Not Streaming

What does The Netflix Stagnation mean for the world of streaming, and how can the OG platform revive its fate?

Last week’s news that Netflix lost subscribers for the first quarter in ten years led to its stock dropping more than 25%, as well as a flurry of media coverage about how the streaming giant’s fates may spell bad news for the broader industry.

Streaming as a category certainly has a problem with fragmentation and crowding, and individual services’ subscriber numbers are likely to be more volatile as new entries appear and consumers are forced to make a choice of which services they’ll use to cobble together their buffet of options.

That said, I think the Netflix subscriber loss isn’t as simple as blaming on easing of COVID restrictions or the increase in new competitors. Rather, I think Netflix has several long-brewing problems it needs to address as the market continues to fill with both deep-pocketed and creative entries. Here are my thoughts on how the OG can regain its footing.

Netflix needs to refocus on quality over quantity

In the ongoing quest to appeal to as wide a subscriber base as possible, Netflix has churned out dozens of original movies, series, and specials over the past few years. Along with that has been a noticeable decline in quality in terms of the budget and production values of shows, with many of them feeling rushed, flimsy, uninspired, or even AI-generated.

The volume of shows also hurts the user experience, as a never-ending parade of new shows replaces the previous week’s announcements, reducing the UI to a glut of poorly-branded, confusingly-marketed graphics that look like the aisles of a 90’s-era video rental store.

Rather than pursuing fewer (much fewer) options and giving them the space to develop into modern water-cooler fare such as Stranger Things and Bridgerton, Netflix seems to be leaning into the fact that their shows are disposable, transient background noise for audiences to have on in the background or to flip around on incessantly.

Competitors like HBO MAX and Disney – arguably the two hottest commodities in streaming right now — are leading in large part because they prioritize premium content over volume, and it shows. While Apple TV+ hasn’t had nearly as much luck breaking through (other than with Ted Lasso and more recently, Severance), it’s taking the same tact as the current leaders.

Netflix needs to elevate its product innovation

Other than adding a “Top 10” list — over two years ago — Netflix has barely touched its UI, let alone its core product, taking a decidedly conservative approach, likely under the guise of “if it ain’t broke” when it comes to continually rising subscribers.

Some smaller attempts — such as a few medium-quality iOS games, and a daily live trivia show — are admirable, but they seem like after-thoughts to the never-ending sludge of new shows and docuseries overwhelming the tired UI.

I’m not suggesting Netflix should risk its “public utility” status as a 220-million-subscriber platform and start experimenting with off-the-wall product ideas to shake itself up. But there are a number of unique opportunities that are either sitting dormant or being toyed with by competitors that Netflix could better spend its content cash on:

  • An alternate “live TV” mode, where you can switch from browsing to more of a traditional TV experience where shows and movies are playing in a linear format similar to live TV. Peacock does something similar.
  • Much more sophisticated browsing and discovery functionality enabling people to search and locate content by “job to do” (sick day viewing; family vacation rainy day viewing; what to watch during work lunch, etc.) and by many more niche faceting than simply genre. Imagine if Netflix had “channels” aimed squarely at its competitors, with unique UI elements and curated content focused squarely at families, network TV viewers, prestige watchers, and the like.
  • A much bigger play into live shows. While the platform tried a daily show literally over five years ago (before all but one of its competitors existed), Netflix has avoided any kind of significant investment in live since then. While Hulu does “next day” and platforms like Peacock offer live news (Paramount+ in fact as a LIVE button in the app’s main menu).
  • Similarly, a play into live experiences – not necessarily sports (as Apple TV+ and Amazon Prime are doing) – but other niche live content more akin to the brand such as baking, food, and similar types of lifestyle content.

Netflix should reinvest in rewatchables, or “back catalogs”, of the dozens of nostalgic shows not on streaming.

Next to widely popular original content, shows with nostalgic, rewatchable “put it on the background” and/or “watch it again and again” qualities are an important part of a streamer’s catalog. Much has been made of Netflix losing The Office to the launch of Peacock, and how the streamer itself outbid Hulu for the rights to Seinfeld. While network-owned streamers are likely to keep their popular rewatchable shows in-house as much as possible, Netflix needs to counter this by investing some of its content spending on either big wins like Seinfeld, or by mining the huge “gaps” in shows that aren’t or have never been on streaming anywhere. With its big marketing bugdets and algorithms, Netflix could even turn cheap long-lost favorites into retro hits.

While a Netflix stagnation is today’s reality, I think the breathless media coverage needs to take a wider perspective. While media watchers wonder if and when the platform will add commercials as a means to offering a lower-cost tier aimed at growing its subscriber base, I think a smarter play would be to invest in some creative innovation to build loyalty with current customers and make it an impossible-to-miss destination for new ones.

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