Why are people switching off Netflix?

Elon Musk says ‘the woke mind virus’ is making Netflix unwatchable. So has the Netflix bubble burst, and what problems does the company face?

Naomi Scott, Sienna Miller and Michelle Dockery attend the World Premiere of "Anatomy Of A Scandal" at The Curzon Mayfair in London. Picture: Supplied

When TV viewers settled down over the Easter weekend to watch the latest Netflix drama spectacular, Anatomy of a Scandal, hopes were high. A glossy six-part drama about class, sex and politics, it had a stellar cast (Sienna Miller, Rupert Friend and Downton’s Michelle Dockery), oodles of production money splashed across the screen and the promise of a very timely poke around a particular brand of English privilege.

In the same week that Boris Johnson was facing fines and a serving Tory MP was found guilty of sexual assault, the show, based on Sarah Vaughan’s novel, even had a boozy Bullingdon type with a shock of blond hair who meets an untimely end. The timing could not have been more perfect. And then we watched it. Oof.

It “has Twitter-level depth and the subtle grace of a rollerskating elephant”, said the Times critic (that was me, I’m afraid). “If the subject matter of rape, consent and chummy political patronage weren’t so serious and important you might even snigger, such are the clunky chunks of dialogue and symbolism that fall on you like a ten-tonne Acme weight falling on Wile E Coyote,” I went on.

Still, I wasn’t the only one. “Borderline criminal dialogue”, “brutally silly” and “poorly executed melodrama” were some of the warmer epithets from rival publications.

On social media some viewers wondered whether to cancel their Netflix subscriptions because of this show. And they wouldn’t be alone if that was exactly what they did. This week the company announced in its report to shareholders that its global business had lost subscribers for the first time in more than a decade – about 200,000 of them – and warned that it could rise by many more.

In the hours that followed its shares took a hit, with Elon Musk, the billionaire Tesla founder, enjoying the company’s misfortune, tweeting that “the woke mind virus is making Netflix unwatchable’’.

The woke mind virus is making Netflix unwatchable

— Elon Musk (@elonmusk) April 20, 2022

These are not the kind of headlines that the Netflix co-founder and chief executive officer Reed Hastings and his co-CEO and chief content officer Ted Sarandos are used to. From the moment it launched in 1997 as a DVD mailing business, and a decade later had the brilliant idea of becoming a video-on-demand online service that pioneered the streaming revolution, it has been a western success story.

Even its brand name became a byword for watching streamed content, although parents probably now know that “Netflix and chill” doesn’t necessarily mean your daughter is watching the latest series of Better Call Saul with her boyfriend.

Given that it was so successful, others joined in. Amazon, Apple and Disney were among those spending heavily to build rival platforms, and even dear old Britbox, the BBC and ITV’s streaming venture that hosts plenty of archive programs and one or two new ones, joined the party. Rather interestingly, the bespoke Britbox drama this Easter, Hugh Laurie’s adaptation of Agatha Christie’s Why Didn’t They Ask Evans?, was excellent.

So has the Netflix bubble burst, and what problems does the company face? From its letter to shareholders this week, it’s clear it’s facing what business people call “headwinds”. Competition from rivals is an obvious issue. Account sharing is another.

“The woke mind virus is making Netflix unwatchable,” tweeted Elon Musk. Picture: AFP

Netflix has 221.6 million paying users but estimates that an extra 100 million households share passwords and so use its platform without paying (it is trialling schemes to remedy this). Macroeconomic and global political factors are also a problem, with Netflix suspending its service in Russia to a paying audience of 700,000. The platform’s base in the US and Canada has declined by 600,000. And the cost of living crisis is putting a squeeze on disposable income that is unlikely to change anytime soon.

When the pandemic struck in 2020 Netflix enjoyed a rare bonanza, shared with only a few (PPE and toilet paper manufacturers among them). People stuck at home were keen to subscribe, and Netflix was more successful than many traditional broadcasters in keeping its productions going and fresh programs on air.

It had the money to pay hefty insurance bills for shows that more cash-strapped organisations such as the BBC lacked, and some of its more unusual programs, such as Tiger King, became global hits for a captive audience. Now the pandemic is receding, the mists are clearing. Or, as the shareholder letter says, “The big Covid boost to streaming obscured the picture until recently.”

Netflix is notoriously secretive about its numbers, and even sources at the company give only an estimate for its UK subscription numbers – between 10 million and 15 million people, I’m told. Asked whether UK subscriptions have stalled, one source told me: “The short answer is no. They are holding up well in the UK, though the UK market faces the same issues globally, which is where growth is slowing.”

The company remains bullish, and insiders are insisting that it is in a good position to weather the tricky business conditions. However, if you talk to TV viewers and industry practitioners, there is a growing feeling that the problems could be deeper than the company admits.

One issue seems to be the content, and the feeling that Netflix’s range of programs isn’t always quite up to the mark. Its global model is to have enormous amounts of content, with bespoke deluxe shows made for each “territory”. Up until now, the strategy has worked brilliantly. In Britain the big show, driving Christmas subscriptions, is The Crown, a lavish, strangely irreverent and not always factually accurate story of our royal family. In France they have Lupin (a hit in the UK), in Spain it’s Money Heist (ditto) and in South Korea it is Squid Game (possibly the biggest hit of all). It’s a lot, but is it too much?

As one leading independent producer tells me, there are creative drawbacks to this international model of program-making. “There’s so much of it, and everyone knows when something’s not made for them. That’s not to say that it can’t be enjoyed. For years our viewing life has been full of extraordinary shows from abroad, particularly America, but in the rush to streaming we have lost sight of what makes TV so good, particularly in this country, and that’s that indefinable quality of local appeal.”

Similar arguments from those defending the BBC from further cuts, and Channel 4 from privatisation, hold that no international streamer will cater for this crucial part of the TV market. Netflix, Amazon, Apple and others don’t do news, and only Amazon is a meaningful player in live sport. And none of these services are particularly interested in Panorama-style programs about, say, the NHS response to the Covid pandemic, or arts documentaries on very particular British personalities such as Miriam Margolyes (on the BBC next week).

Netflix’s Jimmy Savile documentary recently addressed a running sore close to the hearts and minds of many people in this country, but there was no escaping the fact that, despite the bombshell disclosure about correspondence between Prince Charles and the paedophile, many felt as if it was being made for an audience not fully acquainted with who Savile even was. Plus, Netflix relied on the BBC for most of its archive.

Brand recognition is a good thing, but many TV professionals are beginning to give voice to an idea previously thought unthinkable: whether the streaming revolution has been overhyped. According to an analysis of TV set use by the industry body Thinkbox, in the UK in 2021, 80.2 per cent of viewing was for broadcaster TV (live and on demand), 12.6 per cent was subscription video on demand (the streamers, essentially), 5.9 per cent was YouTube and 1.3 per cent was DVDs. Even if you consider viewing across all screens (including phones and laptops, where services such as YouTube and TikTok are mostly watched), traditional broadcast TV commands 58.2 per cent of total viewing, with the streaming services at 11 per cent.

“There’s been considerable hype about Netflix, often to the detriment of established broadcasters,” Matt Hill, the research and planning director of Thinkbox, tells me. “But this hype has often distorted its place in our lives. While streamers are certainly fierce competitors, broadcaster TV remains incredibly popular and lives at the heart of our culture and lives, not least because British broadcasters are experts in the British TV that audiences treasure.

“Even as Netflix and other subscription services have become well established, broadcaster TV – both its live and streaming services – continues to take the lion’s share of our TV viewing time.”

Netflix and other streaming services should not be underestimated, of course. They are bullish about the future and are constantly devising new strategies (the latest being a cheaper package that contains adverts). But there are signs that the battle for the world’s eyeballs is far from over.

“The problem is the government has swallowed the Netflix spin and thinks their model is always the best,” says the acclaimed TV producer Damien Timmer, whose drama The Serpent was made as a co-production with Netflix and the BBC. “We have an extraordinary and balanced TV ecology in this country, which the government needs to get behind. And they can start by not attacking our economy-driving broadcasters and saying the ‘Netflix model’ is the future. That’s not necessarily the case.”

The Times