What Next For Netflix?

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Given its prominence in the streaming world, there is always speculation about what Netflix’s next move will be. Recently, this has revolved around two things in particular – attempts to stop password sharing and potential moves into live sports coverage.

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It is worth remembering a couple of things. Firstly, Netflix leaders long promised there wouldn’t be ads on the service. There now are, via a cheaper tier aimed at encouraging people to pay for their own account.  

Secondly, Netflix leaders frequently feigned disinterest in broadcasting live sport. A week ago, it announced an enormous deal to broadcast WWE. It’s not my thing, but wrestling is huge and people who care about it really care, so be in doubt that such a deal is significant. 

A recent Enders Analysis report did though warn against reading too much into this move. “Although, at some point the desire for continued growth (not to mention higher CPMs) will require Netflix to move into live sport,” the report said, “there is enough distinction between the product of professional wrestling and sports to mean that it cannot be assumed that Netflix will be any more competitive for soon-to-be-available sports rights like the UFC and NBA.”

It’s a good point, and I’m not convinced that Netflix is going to get the NBA rights. In fact, I’d be surprised if it did. However, the WWE deal is undoubtedly a big step beyond the odd comedy special, disastrous reality show reunion and embarrassing golf tournament that Netflix has shown live before.

Then there is the catalogue. Across the board, streamers and studios are reducing the amount they produce. Netflix is no different. Bloomberg News’s Lucas Shaw reported in his Screentime newsletter:

The company released about 130 fewer original programs in 2023 than the year before, according to What’s On Netflix, a site that covers the streaming giant. That is a dip of 16%.

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Of course, a lot of this was prompted by the Hollywood strikes, although you can’t help but feel the industrial action served, in some instances, as a convenient excuse for companies to reduce their productions and their associated costs.

The metrics of success are also changing for Netflix. It’s not all about adding new subscribers any more. As noted in the aforementioned Enders Analysis report: “Emphasis is placed on revenue growth (+12.5% YoY).”

Ted Sarandos stepped down as CEO a year ago. The company he founded is unlikely to shift its fundamentals too much this year, but its next moves are going to be fascinating nonetheless. 

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