David Canfield: Richard, it’s been a tough week—year, really—for Netflix. On Tuesday, after the company disclosed to shareholders that it netted a loss of 200,000 global subscribers in 2022’s first quarter, and is projected to lose a staggering 2 million in the three months to follow that period, the illusion of this disruptive streamer thriving within an untenable economic reality swiftly shattered. Netflix’s stock tumbled to a decade-worst low, and it felt like everyone on the internet had some corner of content to blame, from garbage reality TV to those pricey Oscar-courting movies that never win best picture. Personally, I’d argue it’s hard to pinpoint any specific programming strategy gone wrong. It seems inevitable that Netflix was going to hit a growth ceiling, especially as its fast-rising streaming competitors boast comparably durable assets in tech (Apple, Amazon) and entertainment (Disney, Warner Bros. Discovery). Though it still has some licensing deals, Netflix largely seems to survive on its own library, and no one would claim it’s perfect.
So where does Netflix go from here? That’s the big question given how severe the mood shift around Hollywood feels right now. A cheaper ad-supported tier is likely on its way—it wasn’t too long ago that Ted Sarandos talked about Netflix becoming, essentially, the next HBO—and I’d have to imagine, some shift in programming strategy. So let’s start there. Richard, the thing consumers care most about here is how this will impact what Netflix produces and distributes going forward. How will the streamer shake things up?
Richard Lawson: Every so often I’ll see some incredulous tweet or article about what content is actually performing well on Netflix. It’s typically some random movie that had an unremarkable theatrical release—Miss Sloane, 2008’s The Women remake, Men in Black: International—but has found a second life entertaining lazy browsers of Netflix’s frustratingly hard-to-navigate digital warehouse. So maybe that’s what Netflix should focus on going forward. Which is to say, focus on what it first was: a repository of titles meant to mimic (but never quite replicate exactly) the video-store experience. That’s an evergreen service, one that works all over the globe and is reliable—so long as studios nurturing their own streaming services don’t go snatching titles away.
Of course, that’s exactly what happened. That may be the current reason that Netflix needs so much original content, from a pure numbers perspective. But oftentimes the goal of the streamer seemed a lot more grandiose—and, frankly, sinister—than just stocking its shelves. There was a whiff of world domination in the company’s push to be a leader in specialty awards films and the hyped-up prime-time game-show space, to corner the market on glossy Bravo-style entertainment and cheapo thrillers. It wanted it all, and wouldn’t settle just for siphoning off viewers from premium cable, as it seemed was its initial goal in the House of Cards era. It was coming for broadcast viewers too, which demanded a much wider array of programming.
After a few years of all that—with the company sometimes unexpectedly canceling beloved shows after two seasons, replaced only by stiffly packaged stuff that gave off heady whiffs of corporate cynicism—it’s no wonder people drifted away. In trying to serve everyone, Netflix started alienating subscribers. If original content is necessary to sustain the company, if it can’t strike long deals with studios for titles in its back catalogs, then the company needs to be a heck of a lot more thoughtful and—to use a West Coast word—intentional about what it’s putting out there.
David, do you think it’s remotely possible for Netflix to shrink its ambition at this point? Or am I totally off base in thinking that’s the core problem?
Canfield: I think back to Kenya Barris saying, upon exiting his Netflix megadeal, that the streamer had turned into CBS—a shady way of saying, really, that it didn’t care about quality or originality as much as it used to. I don’t know if this was quite right, exactly because of what you point out—no version of CBS is making The Power of the Dog—but it did get at the larger, burgeoning problem with Netflix: that its ambitions were, long-term anyway, insurmountable.
So not only do I believe that you’re right, but it seems that some level of scaling down is both inevitable and required. Already there’s talk of cost cutting in departments like awards campaigning and Barris-size talent deals, and I’d assume many are casting a skeptical eye on side projects like the fan site Tudum and magazine Queue. But then, you have to wonder what Netflix is left with. The mandate is going to be popularity. But Netflix got as big as it did by mixing, to your argument, an enviable library of certified hits with highly regarded originals. Now that it can’t rely nearly as much on The Office or Friends or, hey, Miss Sloane—does that movie’s resurgence explain Jessica Chastain’s best-actress rise this past year?!—and now that broadly accessible programming is the goal, standing out in an ever-expanding sea of options will not be easy. That projected loss of 2 million subscribers feels like a warning that things are going to get worse before they can get better.
The bright spot for Netflix lies in its global production push. The streamer has unquestionably led that race by making hits around the world, banking on underserved audiences and markets even as those shows’ stars aren’t known in North America. Look at Squid Game. This coming Emmy season, Netflix will rely heavily on older hits like Ozark, Stranger Things, and Bridgerton. But its stronger player is also its biggest hit ever, a bracing Korean survival drama that shook up the entire media landscape. With high numbers of subscribers falling in the U.S. and Canada, you can expect Netflix to continue placing its biggest bets where it’s having the most breakout success—and where potential new subscribers can be found.
Speaking of Emmys, you and I both cover awards, and Netflix has transformed the landscape in more ways than one. Squid Game is proof this remains the case. But how do you see the studio’s aims in the space going forward? Are more Telluride blitzes in its future? Or is it going to be all Don’t Look Up, all the time?
Lawson: I’ve always wondered what the company’s awards end game actually is. Part of me feared that if Ted Sarandos finally gets his best-picture Oscar—a nice shiny trophy to put in a display case in the lobby headquarters—will that sate Netflix’s appetite for prestige? I worry about what a sudden shift in Netflix’s interest could do to that corner of the industry.
I’d much rather have fall films, or art house films, or awards-y films—whatever you want to call the non-franchise stuff—get released in theaters and given that particular kind of marketing push, rather than sink quickly in the bog of streaming content once they’ve blown through the festivals. That said, Netflix has been commendable for giving auteurs free financial rein to make their passion projects. Would The Power of the Dog have received that level of financing elsewhere, or Roma, or The Irishman? Maybe not. Well, until Apple started making moves and lured away Martin Scorsese.
Lots of big talent have sung the praises of Netflix, offering gratitude for the company’s shepherding of films through production and, eventually, the awards circuit. But I have, off the record and in whispery tones, also had some conversations with filmmakers who feel Netflix did their films a disservice. Especially the ones that were bought at festivals, and didn’t seem to get the care and attention that the homegrown stuff did.
So the Netflix and awards of it all have always been a mixed bag. My hunch is that as long as Ted Sarandos is around, the company will continue to cultivate a few cap feathers each year—while inching closer and closer to the inevitable future when all the awards-bait stuff can also function as populist entertainment, like Don’t Look Up. That’s not necessarily a bad thing, though! That’s what the traditional studios used to offer to the awards scrum every year. They still do, of course, to some extent, so maybe Netflix could simply add to those ranks. We’d see fewer Marriage Stories and more Forrest Gumps, maybe, but there are certainly worse outcomes than that.
David, do you think Apple is the most likely streamer to pick up where Netflix might someday leave off, in terms of giving space and massive budgets to established filmmakers looking to make their moon shot?
Canfield: Certainly, as we ponder just how much of a Netflix crunch is to come in this next phase, there’s another streamer spending similarly huge amounts right now—to lure top talent, compete in the awards arena, and redefine the look of a Hollywood studio. And Apple has already proven itself with a strong lineup of quality programming; with the likes of Scorsese (who made his last movie with Netflix) making the jump, the town seems to be buying what it’s selling. So yes, until Apple faces inevitable public headwinds of its own, it’ll take up that gluttonous prestige mantle to some extent. And hey—unlike Netflix, it’s already got that best-picture Oscar.
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