In the first quarter of 2022, it finally happened: Netflix had a bad quarter. It lost more than 200,000 subscribers and acknowledged that newer competitors such as Disney Plus and HBO Max are effectively putting an end to the way the company has done business for nearly a decade. Netflix is now moving away from the frantic pace of release and mid-range movies, which have made it an almost critical favorite with a new plan to make “bigger movies” at a less “greedy pace,” according to a report by The Hollywood Reporter.
You know, something like what most people in Hollywood already do.
A key finding from The Hollywood Reporter’s article is that while Netflix doesn’t seem exactly sure what it wants to do, it just wants to do it more carefully than it has in the past decade.
But the last decade has not just been about flooding the content area in an attempt to quickly build a library that could try to rival those of Disney and Warner Bros. It was also about Netflix, trying to bring some of the technological thinking to Hollywood. In Hollywood, caution is key. The reason Hollywood withdrew from middle-class movies Netflix briefly made its bread and butter is that Hollywood has found a bigger and more consistent return on huge blockbusters (usually involving one superhero or actor playing a superhero in another franchise).
Netflix, with its then almost endless source of money and no need to please distributors or theaters, can afford to produce more diverse content to try to provide people with subscriptions every month. And he could further streamline the heavy costs because he was trying to better understand the audience by carefully analyzing audience data that his competitors simply didn’t have access to.
Netflix had to transform Hollywood. Instead, it turns to the same practices that made its competitors giants, only without the lucrative franchises, fandoms, and huge back catalogs that those same competitors enjoy.
Netflix is already working to create a new ad-supported subscription level to provide more subscribers who are reluctant to spend money on Streaming Wars. Peacock and Paramount Plus already have similar levels, and both Disney Plus and HBO Max plan to add ad-supported levels.
Netflix is also fighting password sharing, a practice it claims more than 100 million households use to avoid additional subscriptions. Previously, password sharing was seemingly ignored by the company – and sometimes even implicitly approved. Meanwhile, HBO Max had built-in password-sharing mitigations.
But the biggest way Netflix is now chasing the competition is how it chooses what movies to make. CEO Ted Sarandos said in a recent Netflix call about profits that he would focus on “big event movies” and the company has spent the past few months ruthlessly deleting large parts of departments such as animation (which is usually more expensive to produce with more -low return), original independent films and family action films.
You’ll notice that two of them, animation and live family action, are also areas where Netflix’s biggest competitor, Disney, is doing great business. Almost like Netflix is doing what many movie companies have been doing before: stepping away from competing with the Mouse House in areas that have historically dominated.
But given that Disney is the largest producer and distributor of films in the United States by a wide margin, has almost a monopoly on theaters, and has a library of the biggest franchises in film history, Netflix may not help. . And structuring more like Hollywood may not help either. When Bob Chapek took over as CEO of Disney, he quickly began reorganizing the company to operate more as a technology company.
Trying to bring the tech ethos to Hollywood may not be a big win for Netflix, but it can’t be the same for its competitors.
Disclosure: The Verge is currently producing a series with Netflix.
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