The Netflix Subscriber Slowdown Isn’t Really a Problem (Yet)

Photo: Courtesy of Netflix

Netflix issued its quarterly report card Tuesday, and by now you probably know the headline takeaway: The streamer added 4 million new global subscribers at the start of 2021, which is 2 million fewer than the 6 million it had projected. Commence the usual panic that Netflix has peaked, the streaming wars are getting bloody, and the new king of video is [insert your preferred streaming platform here].

Okay, to be fair, I actually didn’t see that much freaking out among media or Wall Street types. Investors predictably — maybe even understandably — punished Netflix stock, sending the company’s share price down more than 7 percent the next day. But the instant narrative that seems to be setting in is that as rival streamers add more subscribers and better shows, Netflix is losing ground in the battle for audience attention, and that is having an effect on its ability to grow its subscriber rolls. The company pushed back on that Tuesday, blaming its slowdown on the ’rona. “It really boils down to COVID, frankly,” Netflix chief financial officer Spencer Neumann said on an investor videoconference.

Neumann said the pandemic lockdowns at the start of 2020 artificially inflated growth last spring, making it tougher to grow this year. What’s more, production lockdowns in 2020 messed up Netflix’s timetable for new and returning series launches, pushing back what might have been early 2021 debuts to later in the year. And what about the notion that Netflix’s newbie competitors are starting to steal its thunder? Founder and co-CEO Reed Hastings argued that’s not happening, at least not yet. “Of course we’re wondering, ‘Well, wait a second, are we sure it’s not competition?’ Because obviously there’s a lot,” he said. But Hastings insisted Netflix research shows otherwise. The company combed sign-up and consumption data from around the globe, comparing markets where its new rivals have debuted to those where they have not. “And we just can’t see any difference in our relative growth in those regions,” he said. “I mean, we’ve been competing with Amazon Prime for 13 years, with Hulu for 14 years. It’s always been very competitive with linear TV, too. So there’s no real change that we can detect in the competitive environment. It’s always been high and remains high.”

Now, Hasting’s logic is a bit off there, in my opinion. Having two major rivals (Hulu, Amazon) is not the same as having those two plus Disney+, HBO Max, Apple TV+, smaller streamers such as Paramount+ and Peacock, and even ad-supported streaming services which are now offering premium original content (see Roku and IMDb TV). Peak TV’s first victims were broadcast and cable networks, but it’s not out of the question to think streaming could soon eat its own tail, or at least nibble off a few bites. Plus, don’t forget about last fall’s price hikes. The more expensive Netflix gets, the more some subscribers on the margin will decide they don’t really need the service, at least not every month. Neither price nor competition are irrelevant, even for a force as mighty as Netflix.

But even if Netflix spun just a bit too hard after its earnings came out, I also think the company’s overall public attitude — move along, nothing to see here — is not that far removed from the truth, at least for now. Netflix is still churning out buzzy new titles on a regular basis, including on the feature-film front, where a big chunk of the nominees at the Sunday’s Oscars will be Netflix originals. It has managed the loss of content from Disney and other rival conglomerates about as well as anyone might have expected it to, moving aggressively to gobble up O.P.I.P. (other people’s intellectual property) wherever it can, such as the deal for the Knives Out sequels and its film output pact with Sony Pictures. Co-CEO Ted Sarandos has also been careful not to get too comfortable on the programming front. He overhauled big parts of his content team last year, shifting to a more global-centric approach, even if by all accounts the folks he had in place had a pretty decent track record and were well-loved among creators. I have no idea if he made all the right calls, but he’s also not sitting around counting his Emmys and Oscars.

Streaming has replaced linear TV, and arguably movies, as our dominant form of entertainment. Netflix is still the biggest brand in the space, by far. Back in the days when network TV ruled the land, CBS spent most of the medium’s first quarter century absolutely dominating its rivals, before falling from grace starting in the late 1970s. Since then, each of the other three major networks have had moments on top, and CBS has had subsequent periods of dominance again, too. I don’t know if Netflix can remain No. 1 as long as CBS did. Culture and society may have sped up so much that two or three years from now, I’ll be writing about how the Apple–Disney SuperStreamer or HBO Universal+ now rule the world. More likely is that going forward, Netflix is going to have great years, bad years, and years which land somewhere in the middle — just like TV networks did before it.

I also think recent history is worth remembering. Back in July 2019, Netflix had an even worse quarter than the one just reported: It didn’t just grow slowly, it actually lost members in the United States. There was much gnashing of teeth and pulling of hair and lots of warnings about how things were going to get worse with Friends and The Office leaving the service and with the pending arrival of new services from Apple and Disney. At the time, Netflix had a bit more than 150 million global subscribers and about 60 million in the U.S. and Canada. Less than two years later, it now has more than 200 million members globally and more than 74 million closer to home. It’s not inevitable Netflix will always be okay. For now, it’s still doing just fine.

HBO Max’s Latest Numbers

HBO Max turns one year old next month (they grow up so fast!), and the latest update on how it’s doing suggests continued slow and steady growth. During its quarterly earnings report, parent company AT&T said its WarnerMedia-operated combination cable-streaming platform now boasts 44.2 million subscribers here in the United States — up 2.7 million from the 41.5 million who had access to the service at the end of 2020. That’s apparently a bit better than Wall Street had expected — maybe people really wanted to see Tom & Jerry and Wonder Woman ‘84 for “free”? — so if you have AT&T stock, expect a little instant stimmy to your bank account today (the company’s shares are up about 4% Thursday morning).

Keep in mind, HBO already had around 33 million paying customers before it got supersized for streaming, so adding “Max” to the brand has helped bring 11 million new customers into the mix over the last night months. That’s pretty impressive for a service which has been around in some form or another for 50 years! On the other hand, it’s still modest compared to the blockbuster growth posted by Disney+ its first year, and still light years behind Netflix (even just comparing U.S. subscribers.) No other big news on the Max front, though AT&T said it’s still planning to roll out the long expected ad-supported HBO Max early this summer. It’s still not saying how much it will cost.

Shudder Knows What You’ll Stream This Summer

While I’m definitely down for some thrills and chills in my cinema, I am not particularly into horror movies (particularly the really gruesome modern stuff like Saw or The Purge.) But a few weeks ago, I checked out Shudder, the AMC Networks-owned streamer devoted to all things screaming, and in addition to be impressed with one of the better user interfaces I’ve seen (on a streamer which isn’t Netflix or HBO Max), I was surprised at how many titles sparked my interest.

Shudder doesn’t have the endless rows of content you’ll find on the big platforms, nor does it always have the mainstream franchises you might expect (or which a horror novice such as myself might recognize). For example, Freddy’s Dead—but he and the rest of the Nightmare on Elm Street movies don’t have permanent spots on Shudder (though they’ve visited before.) Nonetheless, I was able to quickly find a bunch of interesting things, from a TV reboot of the classic feature anthology Creepshow to a cool doc about one of the stars of the second movie in the aforementioned Nightmare series. Stuff like that can get overlooked when you’re scrolling through the hundreds of titles on Hulu or HBO Max. On Shudder, much more stands out.

For AMC Networks, Shudder is part of a larger strategy of super-serving specific fan bases (through Shudder as well as sister streamers like Acorn and ALLBLK), even as it goes after cord cutters with its broader-focused streamer AMC+. “The targeted businesses … have really exceeded our expectations,” AMC Networks chief operating officer Ed Carroll told analysts during the company’s most recent earnings call. “The model is a lot more efficient than we originally thought, and the efficiency is holding as we scale.” What’s more, AMC is finding that stand-alone streamers that don’t try to have something for everyone — and actually lean into specific fandoms — manage to do better at holding on to subscribers, and getting them to engage more frequently with programming. Services such as Shudder “represent not only a destination for the viewers, [who] tend to form a community around the content,” Carroll said. “And as you would imagine, that’s helpful on churn.” Between Shudder, AMC+, and the other niche streamers, AMC Networks said in February it had signed up a total of 6 million streaming subscribers and expects to increase that to at least 9 million by year’s end.

I recently checked in with the three top execs involved in running Shudder: general manager Craig Engler, program director Samuel Zimmerman, and global acquisitions/co-productions director Emily Gotto. We spoke about the streamer’s less-is-more philosophy, how horror programming actually has pretty broad appeal and what it’s like competing against streaming giants such as Netflix. You can check out my full interview with the trio over here.

Apple’s Jazzy New TV Hardware

I’ve prayed for this day for years, and it finally happened: Apple is rolling out a new remote control for its Apple TV box. I haven’t had a chance to test it out, but based on the images I’ve seen, it looks … promising? You can read my full rundown of the deets on Apple’s contender here. (And P.S., I do love that little ol’ Roku managed to beat Apple to announcing its own better voice-activated remote by a week.)

Hulu’s Your Daddy?

I don’t care what the haters say: I was totally fine with the finale of How I Met Your Mother. I bring this up because Wednesday, Hulu announced a straight-to-series order for How I Met Your Father, the third attempt in a decade or so to rework the original from a female POV. (This one stars Hilary Duff.) Some folks on Twitter are still convinced the controversial finale is why we didn’t get Greta Gerwig in one of the past failed attempts at spinoff, but I stand by my reporting from 2014: It was not why that pilot died. If you want the real story about what happened, you don’t have to … wait for it. You can just read my 2014 Vulture investigation into the matter.

The Netflix Subscriber Slowdown Isn’t Really a Problem (Yet)