How Netflix Went from Media's Golden Child to the Bane of Its Own Subscribers

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How Netflix Went from Media's Golden Child to the Bane of Its Own Subscribers

When Netflix announced that they lost 200,000 subscribers in April of this year, it seemed to some that this was the beginning of the end for the streaming giant. If the company had never crushed Blockbuster into a fine powder and built their streaming platform on top of its massive grave, TV would look very different. Broadcast shows might still dominate awards, the decline in people watching live TV might have been slower, and it’s almost certain that there wouldn’t be over a dozen other streaming services trying to compete for subscribers in what is essentially a second era of cable television. As of now, Netflix has spent a decade at the top of the streaming game, and TV will forever be changed. However, no business is indestructible, and you don’t have to look far to realize that the hits Netflix has taken in the last few years are all—in some way or another—self-inflicted.

— Humble Beginnings —

Netflix was ahead of the curve in a lot of ways that allowed it, intentionally or not, to mold a decade of TV. It’s not likely that anyone saw that coming back in 2007 when the first version of the streaming platform was launched; subscribers were limited to a certain number of hours they could stream based on what plan they paid for until the service became unlimited for all subscribers almost a year later, and the streaming catalog had a mere 1.4% of what the DVD service had to offer. In the end, the amount of things people could watch didn’t matter. By the time Netflix’s streaming service reached its second birthday, subscribers preferred it over the DVD mailing service. Netflix beat Blockbuster because it was more convenient to get a movie out of your mailbox than make the trip to the closest video store for something, so it isn’t surprising that their subscriber base was ready to ditch that for a service that was even more convenient came along, especially when everyone paying for the DVD mailing service was automatically grandfathered in.

By 2010, Netflix’s streaming service had made huge leaps. Distribution companies were making deals with them to try and minimize the damage the DVD mailing and streaming services were doing to DVD sales, and in the meantime Netflix was acquiring movie streaming rights from multiple distributors, increasing their catalog size on the platform to over 7 times what it was when it was first launched.

2010 is also the first time that the power of Netflix’s influence became apparent. AMC hit Breaking Bad was under threat of cancellation after the third season ended, but after it was added to Netflix, viewership doubled by the time the fifth season rolled around. Creator Vince Gilligan even thanked Netflix at the 2013 Emmy Awards, saying he “[thought] Netflix kept them on the air.” The series was one of the first that was actively airing at the time while also being binged by Netflix subscribers, giving early proof to the idea that the “binge-model” of releasing a bunch of episodes at once instead of stringing people along week to week could be successful. Without that success, Netflix would never look like how it does today.

In the wake of Breaking Bad and other shows like Mad Men and Lost being binge-watched by Netflix subscribers, the company decided to make its first foray into original content, lifting VP Cindy Holland out of her role acquiring licensed content for streaming, and putting her in charge of getting original content onto the platform. For all intents and purposes, Holland created the foundation for the Netflix Original brand that we are all so familiar with today. She was responsible for House of Cards and Orange Is the New Black, along with the rest of the first wave of Originals that Netflix launched, which was met with undeniable success. OITNB’s first season wasn’t just a critical darling, it was Netflix’s most-watched series of all time, and was renewed for a total of 7 seasons before it ended in 2019. House of Cards was the first show exclusively hosted on a streaming service to be nominated for a Primetime Emmy Award, leading the charge for the streaming takeover of major television award shows. Before Netflix broke the door down, broadcast networks were usually able to hold their own in the awards circuit, but recent years have made it clear that if a show from the Big 4 wants a golden statue, it needs to be extraordinary.

— The Golden Years —

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If you went back in time to 2016 and told everyone that Netflix was reaching its peak, I don’t think that anyone would have believed it. Unbreakable Kimmy Schmidt and Grace and Frankie both released their second seasons that year, Baz Lurhman’s The Get Down had premiered its first part, Marvel’s Netflix endeavors saw yet another hit with Luke Cage, and both The Crown and Stranger Things had incredibly successful first seasons. Everything was looking up, and Netflix was a beloved product by the general public, and in the niche fandom spaces of Tumblr and Twitter as well.

Fandom is something as old as time, but its modern, online incarnation is a beast all its own. As the more casual internet boomed in the 2000s, with the introduction of social media platforms like MySpace, Facebook, and the previously mentioned Tumblr and Twitter, certain fandoms for television shows spread like wildfire, and while the rise in smartphone usage certainly played a part, it’s undeniable that Netflix did as well. One of the largest groups of fans in the early 2010s was the SuperWhoLock fandom, the amalgamation of fans who liked Supernatural, Doctor Who, and BBC’s Sherlock series that featured Benedict Cumberbatch. During the time the fandom was at its peak, all three shows were available to stream at least in part on Netflix, which made joining the fun all that much easier.

Netflix was also seen as sort of a haven for content that featured people from marginalized communities in both their catalog of originals and their acquired content. At the time, the American market was still Netflix’s primary focus, and shows like OITNB were featuring a lot of characters of color and giving them depth that characters like them in the past were severely lacking. Specifically in the case of OITNB, many of these characters were a part of the LGBTQ+ community, and while there was a boom in queer characters on screen following the legalization of same-sex marriage in the US in 2015, the first half of the decade didn’t see a lot of massively popular television feature people in the community, much less queer people of color.

Even as a new era of representation in media was ushered in, Netflix was still at the forefront in the eyes of many. While there is something to be said about how these characters were treated on these shows, the fact of the matter is that they were there in the first place. A lot of people in fandom spaces were just happy to see someone like them in a popular show that the general public was accepting of, and unlike regular broadcast and cable networks, that positive feeling towards Netflix made them better than regular TV to a lot of people.

Netflix had also gained a lot of goodwill from consumers by saving shows from the wretched fate of cancellation. In the early days of Netflix Originals, multiple series were saved or revived after an untimely cancellation, something that was an easy way to pull in new subscribers and create positive buzz around the company. Not only did Netflix come off as a company that cared about giving a platform to underrepresented voices, they were also a saving grace for shows that didn’t make it through the Nielsen ratings gauntlet every year. Fandoms have campaigned in various ways to save their canceled shows long before social media and streaming became large parts of popular culture, but Netflix (and other streaming platforms) gave fans a new place to direct their efforts towards, and they were met with success enough times to make streaming platforms feel like an ally. Paired with the advent of social media managers humanizing brands via Twitter, there is no doubt that Netflix came off as a buddy to a lot of people: a brand (person) they could trust to give them the content they wanted.

— Internal Bleeding —

While Netflix’s decisions were giving their marketing team win after win, things were—allegedly—getting very messy between the people calling all the shots. September of 2020 saw the exit of Cindy Holland as VP of Original Content and the promotion of Bela Bajaria to VP of Global TV, where she would oversee all original content including her previous domain of unscripted and international original series. To her credit, Bajaria had helped establish Netflix’s original reality shows in a way similar to the way Holland had pioneered the scripted side, launching the platform’s first big unscripted hit, Queer Eye, in 2018. By 2020, Netflix was done looking at the US for more subscribers and was trying to reach as many international markets as possible, and Bajaria was a large part of that effort. But it wasn’t until Netflix reported their subscriber losses in April that we finally got a look at what was potentially going on behind the scenes.

Still, about a week after the dip was reported, The Hollywood Reporter published an article detailing an alleged feud between Holland and Bajaria that began in 2017. The article argues that, as we know, Cindy Holland was the person who made the Netflix Originals brand what it is, not just because of the projects she greenlit but because of how she maintained relationships with the people creating the shows. Holland may have shelled out the big bucks for the shows she launched, but there was a limited number of them and they were all largely critically acclaimed. In contrast, current co-CEO of Netflix, Ted Sarandos, pushed for the original content farm to pump out more shows, and that led to the “Walmart-ization” of original content. Since 2017, the output of scripted dramas has increased by 453% with scripted comedy output increasing by 357%, and neither of these figures include Netflix’s international original productions. Bajaria greenlighting the Holland-rejected Insatiable allegedly caused “absolute demoralization and chaos” in the halls of Netflix, with a source saying that, “Everybody thought it was a terrible thing Ted did, allowing one team to greenlight something that another team had passed on.” People allegedly had no idea who to pitch their shows to, and Sarandos is said to have loved using the phrase “There are multiple paths to yes,” which could only have fostered more confusion and bad blood in the Netflix offices.

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There are plenty of other head-swiveling anecdotes in THR’s article, but the conclusion drawn from it is that, like in so many cases, money got in the way of Netflix’s upward climb. Netflix began to pump out too much original content as the 2010s came to a close, and what goes up must come down. While we will never know what would have happened in a world untouched by the COVID-19 pandemic, it’s unlikely that all of the shows Netflix claims the pandemic had a hand in cutting short would have made it out alive. Among the 21 shows Netflix axed in some way or another in 2020 was The Society, a series that had originally been renewed for a second season before falling victim to pandemic-related cuts. Many fans argued the show should have been given a chance, as did fans of Netflix’s other canned teen drama I Am Not Okay With This, but it’s doubtful that they either would have made it to a third season regardless. Of the Netflix originals that premiered after 2017, only 17% have gotten a Season 3 and, only 13 shows have made it past that to a 4th season with none of them getting a season 5.

These cancellations, alongside shows like Glow, led to speculation online that Netflix was specifically targeting shows that featured leads who were women, queer, or people of color. To the average person who doesn’t know much about the ins and outs of Hollywood, that might seem like a reasonable conclusion to jump to. Plenty of people went on to ask, across various social media platforms, why their favorite show was canceled while other, less diverse properties were kept alive and given sequels and second seasons. While it’s always upsetting to see something you like end prematurely, most consumers had a fundamental misunderstanding of how Netflix funded its projects, and part of that is due to Netflix’s own public image.

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In reality, much like when they cut multiple departments in the company after the subscriber drop, Netflix canceled shows that weren’t making them enough money to justify continuing. The budget for The Kissing Booth 3 didn’t come inside a goodie bag from I Am Not Okay With This’s funeral, but that doesn’t matter when that’s what a chunk of your customers think. The company may have coasted on seeming like a friendly neighborhood streaming service in the 2010s, but at the end of the day a company will always care more about money they stand to make than the people they can make that money off of. The slew of cancellations in 2020 shattered the façade Netflix had willingly stood behind of a company that cared about amplifying marginalized voices, and the good standing they had with larger fandoms and people in underrepresented communities began to waver. A purely financial decision caused a rift with previously loyal subscribers, and that rift was only going to get bigger.

Along with this, Netflix was no longer a place where people could beg for their canceled show to be revived. The only three English-language shows the platform has saved since 2019 are Cobra Kai, which was acquired from YouTube with a fully finished and unaired third season in 2020, Manifest, a series that was originally rejected by Netflix before it was picked up for a final season, and Girls5Eva, a former Peacock Original that has moved over to Netflix because it lacked an audience on its original platform. Both Cobra Kai and Manifest had massive watch time by Netflix subscribers, and while Girls5Eva is an unexpected grab, it’s still safe to say that they’re going to be the last shows Netflix saves from death for the foreseeable future.

—Is This Still Worth Watching?—

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Netflix lost a lot of user trust in 2020, and the only reason they didn’t lose subscribers sooner was because everyone was stuck inside at the same time with nothing to do and nowhere to go. COVID-19 created a perfect environment for streaming services to capitalize on, because even if someone was upset with Netflix, it was unlikely that they would cut off their access to one of the only avenues of entertainment at the time. The early days of the pandemic were also a great time for Netflix to be pumping out as many shows as possible, but that “Walmart-ization” only had the ability to be successful for so long. Netflix’s licensing deals for outside content began to dry up, as IP-driven services like Disney+, Hulu, HBO Max, and Peacock began to snatch up the back catalog that Netflix’s original streaming service had been built on the back of, so it’s not that Ted Sarandos’s push for more original content came out of nowhere. The issue came when the new batch of originals wasn’t at the same caliber as the content they lost access to. By the time the ball really started rolling on all of the new shows releasing, Netflix was already known for canceling shows prematurely, and no viewer wants to start a show that might not get an ending when there are tons of other finished series at their fingertips. These new originals also lacked the high budgets that early Netflix shows had, so not only is there no guarantee that they’ll get renewed like there used to be for shows on the service, they aren’t as good as they used to be overall. Netflix is still a steady presence at the Emmys, but the overall quality of their original shows has dipped in a way that’s obvious to even a casual subscriber.

A core part of Netflix’s initial expansion strategy was taking on massive amounts of debt to finance more original content. As of September 2022 the company sits on top of $14.2 billion that will start maturing in various amounts starting next fall, and while it was announced that there would be no more borrowing in January of 2021, they only have a decade to get everything back in order. That has driven a number of financial changes that are put on subscribers in the form of regular price hikes and the recent crackdown on password sharing. Despite cheekily supporting the phenomenon on social media a few years back, they are currently testing charging for each “sub-account” or profile that is on an account. If they were the powerhouse they were in the late 2010s there might not be as much pushback on these changes as we see now, but after wearing down consumer faith in their own brand, it’s really just a race to see how much people are willing to put up with.

All of this lost trust and drama aside, Netflix isn’t going away anytime soon. In the time it took to write this, they announced that they gained 2.4 million subscribers in the last quarter, dwarfing their losses from earlier in the year. Regardless, the streaming bubble is bound to officially burst at some point, but it’s likely that as the pioneer of the industry, Netflix will be one of the last platforms standing when everything is said and done. Their missteps are clear, and if they’re smart enough to stop the past from repeating itself they’ll be able to get out alive. Their current focus on gaining international subscribers isn’t a bad business strategy, but at some point they lost sight of the fact that they have to keep the subscribers they’ve already gotten, too. Once both missions are given equal attention, Netflix might be able to claw its way out of the hole it accidentally dug itself into.



Kathryn Porter is a freelance writer who will talk endlessly about anything entertainment given the chance. You can find her @kaechops on Twitter.

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