Netflix’s bi-release model under new scrutiny as streaming giant struggles

A scene from Netflix’s Stranger Things.

Source: Netflix

Could Netflix Abandon Its Binary-Release Model? Strange things have happened.

What is the basis of a one-time release strategy for television shows? netflix strategy. The first seven episodes of “Stranger Things,” which premiered on May 27, broke records. this was it The biggest premiere weekend ever for an English-language TV show on the service, with nearly 287 million hours of views.

However, despite the success of its marquee series, Netflix is ​​struggling to accelerate subscriber growth. So its binge-watching strategy is facing new scrutiny as the company looks for ways to better retain its customer base.

“Never say never with Netflix, or with anyone,” said Peter Cathy, founder and president of advisory firm Creative Media. “Like he said ‘No way, no ads,’ Don’t assume that binge-watching is forever.” He added: “Binge-watching is on the table.”

Investors are questioning Netflix’s ability to address customer losses and increasing competition in the streaming space. Dreamer’s stock has fallen from $700 per share to about $160 over the past year. The company told Loss of 200,000 global customers During its first quarter earnings report in April. It warned of deepening trouble ahead, predicting it would lose about 2 million global paid customers during the second quarter.

Now, there’s Netflix Rethinking several core principles That once made it the king of the nascent streaming world. Co-CEO Reed Hastings said the company is Discover low-cost, ad-supported tiers To bring in new customers after years of resisting ads on the platform.

People familiar with the streaming space suggest more changes could be coming, including a shift to a greater focus on franchise content and even staggered releases of new episodic content.

Netflix has toyed with different release models, mostly due to pandemic-related delays in production, and noted that the split season could be a “satisfying long binge experience” for subscribers. Still, the company has given no indication that it will shy away from releasing all episodes of the scripted series at once., Instead, decisions will be made on a case-by-case basis.

Netflix declined to comment.

“When Netflix started it was really territory in itself,” said Robert Thompson, a Syracuse University professor and a pop culture expert. “One of the reasons they started doing Bing was to talk to people and actually launch their new original programming. They were successful at that. Now, though, it’s a very different matter.”

Netflix no longer has licensed content like “The Office” or “Friends” that keeps customers coming back to watch over and over from month to month. Instead, it has several high-profile shows, such as “Stranger Things,” “Bridgeton” and “The Witcher”—as well as an extensive library of series that haven’t reached the same level of prestige or popularity.

Thompson noted that all shows released on streaming services eventually become binge-watching. This is how they are first introduced to the audience that controls the platform.

binge or not

This photo illustration shows the Netflix logo displayed on a smartphone screen, with a graphic representation of the stock market in the background.

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Stringing content throughout the year allows services like Disney to entice customers to stay every month, but also persuades them to pay for an annual subscription. The company’s Disney+ platform uses two of its biggest franchises – Star Wars and Marvel – to bring back customers.

The company released “The Book of Boba Fett”, which ran from late December 2021 to early February. Then “Moon Night” was added in late March, which lasted until early May. Then in late May, it released “Obi-Wan Kenobi”, which would continue through the end of June. “Ms. Marvel” came out in early June and will run through the end of July. In August there is the release of “She-Hulk,” which holds episodes until October, and then “Endor,” which will wrap up its first season in November.

Then in December, Disney+ will release a “Guardians of the Galaxy” Christmas special. Shocking these releases, the company may tempt Star Wars fans and Marvel fans to stick with the service for a long time.

“With Netflix, it’s very easy to join for three to six months and then leave for three to six months,” said Wedbush analyst Michael Pachter. “Once ‘Stranger Things’ is over and ‘Ozark’ is over, now what?”

In recent years, Netflix has experimented with weekly releases For some reality shows, but haven’t tried this strategy with scripted series.

“We basically believe that we want our members to like how they watch,” said Peter Friedlander, Netflix’s head of scripted series for the US and Canada. earlier this month, “And so giving them the choice on these scripted series as much as they want to see it, when they want to see it, is still fundamental to what we want to provide.”

However, Netflix has split the seasons in half or in parts to spread them out. The fourth and final season of “Ozark” was split into two, and so was the latest season of “Stranger Things”. The final two episodes of “Stranger Things” season four, including its 2.5-hour finale, will air on July 1.

“There was a really practical reason to split the season before, which was the Covid delay and all those projects gave us some reason to split the season,” co-CEO Ted Sarandos said during the company’s first quarter earnings call in April. inspired.” “But what we found is that fans seem to like both.”

“So being able to split that makes them a really satisfying binge experience for people who want to satisfy a really long binge experience,” he said. “And then being able to deliver a follow-up season in a few months is, in some cases, a new season of ‘Stranger Things’ coming almost three years after the last one or two anyway.”

Netflix has long stuck to its all-at-one model because of its subscribers, which it says want more control over when and how they watch content. Shows like “Made,” “Inventing Anna,” “The Lincoln Lawyer” and “Squid Game” all held the top 10 spots on the streaming service for weeks, showing that Netflix shows may have a longevity of viewing on the service. For new audiences.

Still, Netflix can learn a lot from the staggered releases of “Ozark” and “Stranger Things” to determine whether there are other scripted series that would benefit from this strategy.

Pachter suggests Netflix can learn from heroine And releases three episodes in a week.

“It’s perfectly fine to say, ‘We’re disruptive,’ but there are things our competitors are doing that we admire and we respect and we think they’re doing it right,” Pachter said. “It’s not a cop.”

suffrage fever

Netflix’s all-at-one release strategy may set it apart from other streaming services, but it also means that it has to increase the output of content to fill in the gaps between series. Pachter said, instead of saying, there are 30 shows spread out throughout the year, it needs 300.

“Netflix’s data dump means they have to do more content to reduce churn,” he said. “I think they’ll be far more successful if they focus more on quality than quantity.”

Over the years, the streaming service has used networks and studios to pad its library with long-running and popular series like “Parks and Recreation,” “Shit’s Creek,” “Mad Men,” and a suite of Marvel-based superhero shows. Licensing agreements with. ,

Those contracts have expired and the show is now on other streamers. In another blow, Netflix is ​​about to lose 12 seasons of “Criminal Minds” to CBS at the end of the month. “New Girl,” another staple in Netflix’s collection, is expected to leave the platform in 2023.

“Breaking Bad,” “Grey’s Anatomy,” “NCIS” and “Supernatural” are sticking around for now.

These types of series, which span multiple seasons or dozens of episodes, have been a major driver of viewing traffic on the streaming service for years. Now, Netflix is ​​more dependent on its original content, Too Much Leaning on Content Creator Deals and surprise hits like “Squid Game” and “Love Is Blind.”

“Netflix has a lot of content, but iconic evergreen content hasn’t reached the catalogs of other streaming services,” Cicero said.

relatively new streamers such as Disney and NBCUniversalPeacock has decades of heritage material to fill its libraries. That’s why Netflix made a pact to be Sony’s first streaming space for new releases Back in 2021.

This is why Creatv’s Csathy believes Netflix should focus on developing franchises or buying the rights to already established franchises.

“Instead of throwing all the titles against the wall to see what sticks with consumers, focus on franchises and name brands,” Cathy said. “The smartest bets are those that have name recognition and built-in audience.”

“Wall Street will reward those who come out with a public strategy of less,” he said.

Still, there are those who don’t think Netflix will be so quick to overhaul its established strategy.

“I think people forget within our industry that it’s not one size fits all,” said Dan Rayburn, a media and streaming analyst. “I don’t think Netflix won’t ask to binge-watch anymore.”

Instead, Rayburn continues to let streaming try out new models, such as plans to add ad-supported plans to its platform.

He said the stark stock reaction is a result of Netflix getting all of its revenue from streaming. This means that when a show doesn’t do well or the service sees a slowdown in customer growth, there’s an immediate reaction.

At the end of the day, streaming analysts say content spending won’t subside even with ongoing economic pressures like inflation and higher interest rates and a potential recession on the horizon. Competition in the streaming space will continue to push these companies to create and distribute more content.

“The question is where the dollars will go to be reallocated,” Csathy said. “For Netflix, I think ‘less is more’ is a strategy that pays off for them.”

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.