Netflix Co-CEO: I’m Very Sorry That I Promised We’d Focus On Quality A Decade Ago
from the growth-for-growth's-sake dept
Back in 2013, Netflix co-CEO Ted Sarandos noted that his company’s goal was to “become HBO faster than HBO can become us.” His point, at the time, was that Netflix wanted to become synonymous with quality and creative artistry in the same way HBO had after decades of hard work.
11 years later, and everything has changed dramatically. HBO is a mockery of its former self after a series of pointless mergers by AT&T and Discovery resulted in thousands of layoffs, higher prices, and the death of the HBO brand. Product quality has deteriorated, with high end television programs steadily being replaced with cheaply produced, lowest common denominator reality TV drek.
And as streaming subscriber growth hits a wall, many other streaming giants have stopped being innovative in similar ways. Netflix, Amazon, and most other streaming giants have resorted to familiar tactics in order to goose quarterly revenue growth. Namely, more pointless mergers, price hikes, annoying nickel-and-diming efforts, layoffs, new restrictions, and sagging product quality.
Speaking recently with the New York Times, Sarandos says he regrets ever having said they were hoping to emulate HBO’s approach to quality content. In short, he’s forced to admit that focusing on quality won’t deliver Wall Street the unsustainable, unrealistic, impossible and permanent growth investors so crave:
“Look, if there’s one quote that I could take back, it would have been in 2012, I said we’re going to become HBO before HBO could become us. At that time, HBO was the gold standard of original programming. What I should have said back then is, We want to be HBO and CBS and BBC and all those different networks around the world that entertain people, and not narrow it to just HBO. Prestige elite programming plays a very important role in culture. But it’s very small. It’s a boutique business.”
Sarandos kind of pooh poohs the obvious sag in Netflix quality by pointing out that the streaming service is still winning Oscars. But, as a leading executive, Sarandos can’t really acknowledge a foundational truth: Wall Street’s need for impossible unlimited quarterly revenue growth means that, sooner or later, Netflix is on an unrealistic path toward self immolation just like the cable giants that preceded it.
The result: a bottomless roster of terrible reality TV shows about people trying to have sex on remote islands, peppered with a lot of movies like Under Paris.
As a publicly-traded company you can’t just consistently offer a quality product people love. So inevitably, sooner or later, once normal subscriber growth taps out, you’re forced to get “creative.” That creativity, especially in media and telecom, almost always results in pointless mergers to goose stock valuations and nab tax cuts, cutting corners on customer service and support, going cheap on product quality, while simultaneously raising rates and imposing more and more annoying restrictions.
Add lazy automation to the lowest common denominator chase for eyeballs at any cost and you have to wonder what mainstream television looks like a few decades from now.
To be clear, I still think Netflix offers a decent value proposition. Especially in comparison to traditional cable TV. But there are endless warning signs that Netflix executives are dead set on pushing their luck in terms of weird restrictions, sagging quality, and price hikes, and that will end badly.
Executives think they can strike a balancing act between quality and mass adoption at unlimited scale, but Wall Street’s demand for impossible, unlimited growth isn’t an achievable or realistic ask. And this inevitable trade off, where consumers consistently are asked to pay more for less, ultimately isn’t sustainable, opening the door to another wave of disruption.
In Netflix’s case that will increasingly come in the form of free or ad-based short form video apps, or piracy. And when piracy surges in response, which data suggests is already happening, streaming executives will blame absolutely everything but themselves.
Filed Under: competition, hbo, lowest common denominator, quality, streaming, ted sarandos, tv, video
Companies: netflix
Comments on “Netflix Co-CEO: I’m Very Sorry That I Promised We’d Focus On Quality A Decade Ago”
He may not be wrong that quality movies and TV shows have becoming a niche because of streaming since people watch much more on their phone or computer than on a 100″ screen with surround hifi.
He’s clearly not wrong about the overall quality of Netflix declining because they’re still prioritizing foreign crappy action and comedy movies to fill their catalog with recent content without putting some good indie movies (as cheap to produce) that would, once in a while, make a good movie.
But hey, Wall Street eat fast food, soda and buzzwords so better stink to quantity than quality.
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Home video has been the dominant movie watching experience ever since just after Betamax was declared the boston strangler of the movie industry. Historically, almost no one has been watching movies on 100+ inch screens, and even fewer for television. That market just isn’t there. Hell, home video got popular when 19″ screens were common.
By your standard, Quality films have been niche for half a century, and quality TV has always been niche.
“becoming” niche. ffs.
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As a Netflix shareholder, I’m going to sell my shares and vote for Donald Trump if they don’t work single-mindedly in pursuit of quarter-to-quarter profits.
LCD vs GCF
“lowest common denominator”
You mean “greatest common factor.”
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Nope.
There is indeed a stink to their quantity 😉
I kind of interpret his comments another way:
Let’s walk back wanting to be HBO, cuz damn, have you seen what’s become of them?
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On the contrary, Netflix is proud to have become today’s Max rather than yesterday’s HBo.
Sometimes you are spot on
“As a publicly-traded company you can’t just consistently offer a quality product people love.”
So, maybe don’t be a publicly traded company? Other business models are available….
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None of them come with the kind of funding that would turn Netflix into what it is today, though.
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… and ensured that it’s not a matter of if it will crash and burn thanks to a system/mindset that values short-term gains over long term stability but when?
More money early on may have helped it grow but the tradeoff of mandatory unsustainable growth and the resulting degradation and death of the company seems like a pretty lousy deal for anyone that cares about the long-term existence of the company/service.
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Don’t let your dreams be dreams. Yesterday, you said “tomorrow.”
qui bono
Sometimes I wonder if the issue isn’t as directly Wall Street seeking endless number-go-up so much as the fact that CEO pay packages are structured so heavily with stock options.
The incentives for a CEO to goose the numbers in one year and bring in a huge payday, and to hell with the future, are baked into practically every corporate structure out there so firmly it’d be hard for one company to operate otherwise.
But as long as they do, even with some feeble efforts to throw in clawbacks in case the company really tanks 2 quarters later, the CEO is sitting there knowing full well that they cannot get paid unless the number goes up. Wall Street itself doesn’t have to apply pressure much in that situation; it’s already baked into the company’s entire C-suite.
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I’d say it’s a bit of both. The C-suite execs get paid so much for doing so little (and sometimes for making things worse!) that cutting their salaries in half and putting the money back into the company would absolutely do more good than harm.
That makes one of us.
I pirate all the content I consume and have never felt better about doing so.
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🏴
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Thereby subversively supporting the copyright industry. Way to go, shit for brains.
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Everything subversively supports the copyright industry at this point.
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Including getting free content without resorting to illegal actions? Ion think so.
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Lets them justify demanding for stricter laws because their profits aren’t high enough. But you’d know a thing or two about that, BDAC, because you defended copyright laws as necessary to keep free-to-access, out-of-market software available.
Funny thing is, I haven’t watched Netflix in 5 years, and haven’t missed it at all. And during that time I’ve willingly paid for months of streaming on most of the other streaming services.
Last time I subscribed to Netflix, I found they were cancelling or dropping series before I could finish them; I eventually got frustrated enough to leave and not come back.
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I use Pluto TV, so I don’t pay any money for anything I stream, no piracy required. Hopefully, Pluto TV doesn’t get enshittified, but I’m holding my breath just in case.
SOP, standard operating procedure.
You hit 2 points that affect All corps.
Being on the stock exchange and the inevitable Max amount of customers.
The stock exchange was not designed to be:
A permanent Long term low interest bank loan.
A forever increasing Bank.
It was setup to Share Some ownership of business and how well a company Could be. Not Stretched to the nth degree to get every penny it could. It was to show a small profit to those that invested, as a value of the corp goes up. NOT inflated to a point it cant sustain.
here's what happened to Netflix
What happened is this: there are two kinds of subscribers, the churners and the stickers. The churners aren’t happy to just passively watch whatever Netflix promotes via their alleged algorithm (which I think they’ve turned off since it’s irredeemably broken). They watch whatever is good or tolerable on Netflix and then churn over to competitors to repeat the process there.
The stickers are passive viewers who do watch whatever Netflix promotes to them and don’t worry if they’re missing better stuff on competitors. The stickers give Netflix money year in and year out while the churners might give Netflix money for a month or two per year. Netflix is following the money so they give the stickers more of what they want and ignore the churners.
Now what do you think happens to quality when your lodestar is unfussy people who watch whatever is shoved in their faces?
The last tv shows I watched on Streaming
The last TV shows I watched on Streaming were X-Men ’97 on Disney+ and Avatar: The Last Airbender (The original animated series) on Paramount+. The former is a sublime continuation of the 1990’s Fox Kids TV show and the latter is an old TV show.
Everything else is watching Last Week Tonight with John Oliver and The Daily Show With John Stewart.
Netflix hasn’t gotten anything good to watch lately, but I will eventually catch up and watch that Live Action Avatar show, even if many other people are saying it’s a pile of shit.
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Tell us you’re a deranged, Democratic partisan who thinks men can be “women” without telling us!
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Tell us you’re a deranged, MAGA cultists who thinks former presidents should be above the law without telling us!
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Tell us you’re Matthew M. Bennett without using your user name.
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Oh, men can absolutely be women. You haven’t seen what identifying as non-binary can do for you, sweet cheeks.
Better lube up good!
So, it was a race? …to the bottom.
I’m not even sure what sort of meaningful change could be achieved here. If Sarandos’ point is that being the best of the best is a small niche, he’s not wrong. Being at the top involves huge investments in resources and even huger risks.
This isn’t to say that Netflix should be absolved of all blame in the drop of content quality. But it’s something that has become inevitable for the reason that Karl has already pointed out: the grand, impossible dream that Netflix will keep on posting growth statistics. It’s not sustainable in any industry, especially in the field of entertainment and content creation, but because miracles have happened once or twice before, MBA holders and CEOs continue to think that their grunt forces should still be able to deliver quality on shrinking shoestring budgets.
Eventually consumers will take a leaf out of the executives’ books and simply refuse to pay to take risks. They’ll entertain themselves by revisiting and rewatching existing content. If it’s not legally available, they’ll find someone with a freely available archive.
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And they might do it without the streaming services, too. DVDs and Blu-rays still exist despite Hollywood C-suite execs doing everything they can to hasten the demise of home video.
I don’t know what it means to be “like Under Paris”, particularly given that the movie hasn’t been published yet. It seems the only real information we have is that it’s in French and is a horror movie about “a large shark … swimming deep in the river”.
Anyway, you forgot to mention the deluge of crime series. Almost everything on Netflix that’s not “reality TV” seems to revolve around a murder—most often in the form of a police procedural, or sometimes as a true crime documentary.