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Will Netflix stop binge-watching? Experts are weighing

A scene from Netflix’s Stranger Things.

Source: Netflix

Could Netflix move away from the riotous release model? Strange things happened.

The “all at once” TV show release strategy is at the heart of Netflix’s strategy. The first seven episodes of Stranger Things, which premiered on May 27, broke records. It was the biggest opening weekend for an English-language TV show on the service, with nearly 287 million hours watched.

However, despite the success of its outstanding series, Netflix is ​​struggling to accelerate subscriber growth. As such, its overeating strategy is being tested again as the company looks for ways to better retain its subscriber base.

“Never say never to Netflix or anyone else,” said Peter Chati, founder and chairman of consulting firm Creatv Media. “Just like they said, ‘No way, no ads,’ don’t think binge browsing is forever.” He added: “Drunken browsing on the table.”

Investors are questioning Netflix’s ability to cope with the loss of subscribers and growing competition in the streaming space. The streamer’s shares have fallen from $700 a share to about $160 in the past year. The company reported a loss of 200,000 global subscribers on its first-quarter earnings report in April. He also warned of worsening problems, predicting that he would lose about 2 million paid subscribers worldwide in the second quarter.

Now, Netflix is ​​revisiting a few of the core principles that once made it king of the nascent streaming world. Co-CEO Reed Hastings said the company is exploring cheaper ad-supported tiers to bring in new subscribers after years of resistance to ads on the platform.

Those familiar with the streaming space suggest that additional changes may be coming, including a stronger focus on franchise content and even a change to the phasing of new episodic content.

Netflix has experimented with various release models, largely due to pandemic-related production delays, and noted that splitting the seasons into two can be a “satisfying long-term binge” for subscribers. However, the company has not given any indication that it will stop releasing all episodes of the scripted series at the same time.. Instead, decisions will be made on a case-by-case basis.

Netflix declined to comment.

“When Netflix started, it really had its own field,” said Robert Thompson, a Syracuse University professor and pop culture expert. “One of the reasons they started to overeat was to get people to talk and really run their new original programs. In this they succeeded. However, things are completely different now.”

Netflix no longer has licensed content like The Office or Friends that kept subscribers coming back month after month to watch it on repeat. Instead, it has several high-profile shows like Stranger Things, Bridgerton, 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 available to listen to. This is how they are first presented to an audience controlled by the platforms.

To drink or not to drink

“Releasing everything at once, the Netflix model, increases the value of overeating,” said Nick Cicero, vice president of strategy at data analytics firm Conviva. “It allows customers to consume at their own pace, but relies on a deep catalog.”

“The flip side,” he said, “is week after week, which is meant to bring people back and give them what they look forward to. It’s a completely different marketing model.”

On services such as Disney+, HBO Max and Hulu, single episode releases keep audiences hooked for weeks, which means less churn from month to month. Meanwhile, Netflix subscribers can watch the full season of the show they’re interested in and then leave the service at the end of the month.

In this photo illustration, the Netflix logo is displayed on a smartphone screen with a stock market graphic in the background.

sopa images | Light rocket | Getty Images

Linking content throughout the year allows services like Disney to encourage subscribers to stay every month as well as convince them to pay for a year’s subscription up front. The Disney+ platform uses two of the biggest franchises, Star Wars and Marvel, to keep subscribers coming back.

The company released The Boba Fett Book, which ran from late December 2021 to early February. Then Moon Knight was added at the end of March and ran until early May. Then, at the end of May, Obi-Wan Kenobi came out, which will run until the end of June. Ms. Marvel came out in early June and will run until the end of July. In August, She-Hulk will be released, with episodes running until October, and then Andor, the first season of which will end in November.

Then, in December, Disney+ will release a Guardians of the Galaxy Christmas special. By hitting these releases, the company could encourage Star Wars fans and Marvel fans to stick with the service long term.

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

In recent years, Netflix experimented with weekly releases for some reality shows, but have not tried this strategy with scripted series.

“We fundamentally believe that we want to give our members the choice of how they watch,” said Peter Friedländer, Head of Scripting for Netflix US and Canada. earlier this month. “And so allowing them to watch these scripted shows for as long as they want when they watch it is still fundamental to what we want to deliver.”

However, Netflix has attempted to halve or split the seasons in order to spread them out. The fourth and final season of Ozark was split into two parts, as was the final season of Stranger Things. The final two episodes of the fourth season of Stranger Things, including its 2.5-hour finale, will begin airing on July 1.

“Before, splitting seasons had a practical reason, which was delays due to Covid and all those projects that led us to split some seasons,” co-CEO Ted Sarandos said during the company’s first-quarter earnings report in April. . “But we found that fans like both.”

“So being able to share it gives them a really enjoyable binge experience for those people who want that really satisfying long-term binge,” he said. “And then the possibility of releasing the next season in a few months, while in some cases the new season of Stranger Things will be released almost three years after the previous one, or more than two.”

Netflix has long stuck to its all-at-one model because of its subscribers, who it says want more control over when and how they watch content. Shows like The Maid, Anna’s Invention, The Lincoln Lawyer, and The Squid Game have held the top 10 spots on the streaming service for weeks, showing that Netflix shows can be watched for a long time on the service as word of mouth spreads. word of mouth. to a new audience.

However, Netflix can learn a lot from the phased releases of Ozark and Stranger Things to determine if there are other scripted shows that would benefit from this strategy.

Pachter suggested that Netflix could take a cue from Amazon and release three episodes a week.

“It’s totally fine to say, ‘We’re revolutionaries, but there are things our competitors do that we admire, we respect them and think they’re doing it right,'” Pachter said. “This is not a police exit.”

franchise fever

Netflix’s “all at once” release strategy may set it apart from other streaming services, but it also means it must ramp up content releases to fill gaps between episodes. According to Pachter, instead of, say, 30 shows a year, you need 300.

“The Netflix data dump means they need to make more content to minimize churn,” he said. “I think they will do much better if they focus more on quality than quantity.”

For years, the streaming service has used licensing deals with networks and studios to add to its library of long-running and popular series such as Parks and Recreation, Schitt’s Cove, Mad Men and a selection of Marvel-based superhero series. .

Those contracts have ended and the shows are now airing on other streamers. In another blow, Netflix is ​​about to lose 12 seasons of the CBS series Criminal Minds at the end of the month. Another staple in the Netflix collection, New Girl is expected to leave the platform in 2023.

Breaking Bad, Grey’s Anatomy, NCIS and Supernatural remain for now.

Series of this type, spanning multiple seasons or dozens of episodes, have been a major driver of viewing traffic on the streaming service for years. Netflix now relies more on its own original content. relying heavily on content creator deals and surprise hits like “Squid Game” and “Love is Blind”.

“Netflix has a lot of content, but the cult evergreen content falls short of the catalogs of other existing streaming services,” Cicero said.

Relatively new streamers like Disney and NBCUniversal’s Peacock have decades of legacy content to fill their libraries with. That’s why Netflix agreed back in 2021 to be the first streaming platform for new Sony releases.

That’s why Creatv’s Csathy thinks Netflix should focus on developing franchises or buying the rights to existing franchises.

“Instead of throwing all the names at the wall to see what consumers like, focus on franchises and established brands,” Chati said. “The smartest bids are those with a recognizable name and a built-in audience.”

“Wall Street will reward those who come up with a public ‘less is more’ strategy,” he added.

However, there are those who don’t think Netflix will rethink its established strategy so quickly.

“I think in our industry people tend to forget that it’s not one size fits all,” said Dan Rayburn, media and streaming analyst. “I don’t think Netflix will refuse to watch binge anymore.”

Instead, Rayburn foresees that streaming will continue to try new models, such as plans to add an ad-supported plan to its platform.

He noted that the sharp stock reaction is a result of Netflix getting all of its revenue from streaming. This means that when a show is down or a service sees a slowdown in subscriber growth, there is an immediate response.

After all, streaming analysts say content spending won’t come down, even with continued economic pressures such as inflation and higher interest rates, and a potential recession on the horizon. Streaming competition will continue to drive these companies to create and distribute more content.

“The question is where the dollars will be reallocated,” Chati said. “For Netflix, I think the ‘less is more’ strategy is paying off.”

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

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