The trouble with Netflix

Netflix was founded in 1997 as a DVD sales and rental company — now it is the biggest streaming service in the world. In that time, Netflix’s success has had an impact, not only on film and television content and the way it’s viewed, but on advertising and the business structure of the entire industry.

It invented the “binge watch”. Releasing all of the episodes of a series at once meant that people’s attitudes towards television changed: they no longer had to wait for a new episode to come out next week. And, where television series once offered viewers a series of cliff-hangers, writers now focus on the story as a whole. This has meant that the quality of television has improved. TV series, once seen as secondary entertainment, are now just as important as films. The result? All major channels are now re-evaluating how they release content.

This, coupled with Netflix’s absence of ads has revolutionised the viewing experience. The difference between advertising in live programmes and advertising in downloaded content has caused a huge change in the advertising and TV business models.

An unprofitable company that spends a lot on content, Netflix has been taking out more and more debt in order to invest in the production of new original series. They have signed enormous deals and even bought an entire publishing company (Millarworld) which has kept Netflix’s share price up. Other channels have been making less from advertising, because Netflix has changed the entire model. They have also lost money from cord cutting: young people are now more comfortable with taking the “pay as you go”, Netflix option than paying the compulsory TV license.

However, although Netflix has constantly adapted to market forces, it is beginning to suffer. In the past few months, increasing competition (such as Disney Plus) and a disappointing number of new subscribers (2.3 million instead of Netflix’s own prediction of 2.5 million) has put pressure on a firm that previously had the market all to itself. Any decrease in growth is bad news for a company that measures itself by revenue growth instead of profit, and bad news for a company that’s in so much debt.

In some respects, Netflix has been an extraordinary success — its directors have been allowed more freedom than ever. Episodes no longer needed to fit into the TV timeframes. They no longer had to limit swearing, sex, violence. This birthed Orange Is the New Black (the most viewed Netflix series of all time). This enabled Martin Scorsese to make “The Irishman”, the three-hour gangster film when no one else would take it on.

But things have begun to slip. Netflix’s recent creations have been mediocre. With “Rebecca” and “Emily in Paris” constituting outright critical failures, we might wonder where Netflix’s spark has gone — is it the pandemic, or something else? Where is the “refreshingly new” appeal it once had?

For Phillip Bergson, film critic and broadcaster, Netflix’s business model is sustainable providing its founders continue to be innovative. (A recent decision by Netflix to give free access for two days to everyone in India fits that bill.) He recommends diversifying content and more foreign films: “Turkish historical sagas are the best of what Netflix has to offer”. With more series like these, Netflix will attract aspirational, educated viewers. Although Bergson much prefers a traditional film experience, he notes that Netflix is cheaper than the cinema and has been a lifeline during the pandemic. He added that “Netflix has made cinema like reading a book”. For particularly long films, the ability to pause and make a cup of tea makes for a new kind of viewing experience.

Netflix specialises in the shocking, the decadent, the guilty pleasures and the quirky. We no longer have to like the things that are palatable to other people. We no longer fight over the TV remote. We don’t have to share our television screens with our families, or find someone to go to the cinema with us. Netflix is private: tailored to the individual viewer.

But that made me wonder. Maybe the reason why Netflix is suffering is that, in these lonely times, it makes for quite a lonely experience. Netflix gives us choice and freedom, but its algorithm caters towards what we already know and like. Gone are the days of finding something truly bizarre on a strange TV channel. And gone are the days (as Bergson recalls) of a whole nation stopping to watch “The Forsyte Saga” on Sunday evenings. That communal experience is gone. (It’s now only really found with live sports, which Netflix doesn’t offer). And sometimes, especially now, it’s nice to compromise and watch something with someone else.