It might not be noticeable when we plop on the couch and turn on Netflix, but the golden age of streaming entertainment may be over. We probably won’t like what happens next.
Soon, we may be paying more for lesser options, feeling wistful about the old days of unlimited streaming showers, and sitting through annoying commercials.
A quick explanation for this vibe shift: There is a small loss of confidence in streaming’s growth potential, and doubt has profound ripple effects.
This started with Netflix and its surprising revelation earlier this year that it was losing subscribers for the first time in a decade. On Tuesday, Netflix said the weather had shrunk, although not as much as it predicted. Netflix co-chief executive Reed Hastings described the company’s bottom line as “less bad”.
When the streaming leader started to stumble, it caused a massive questioning about streaming services in general.
Investors in entertainment companies and corporate executives began to take seriously questions like: is streaming a worse business than cable TV? What if we overestimate how much people would pay for streaming or misjudge how quickly they would change their habits?
Streaming remains the future of entertainment, but as I wrote before, the future doesn’t necessarily come in a straight line.
An investment analyst told my colleague Nicole Sperling that he believed the total potential market for Netflix could be 400 million customers worldwide, instead of the billion that Netflix had long said it was aiming for. If Netflix’s potential isn’t as great as the company expected, or if it takes longer to get there, that’s not just a problem for Netflix. It also shows that streaming may never be as big as optimists thought.
We don’t always have to worry about a rich company panicking that it isn’t growing as big and fast as it wanted. But this is different: we’ve taken advantage of the careless streaming optimism, and the potential mismatch between entertainment companies’ expectations and reality will affect us.
Over the past decade, companies including Netflix, Disney, HBO, Comcast, Apple and Amazon have been throwing money around, mostly without making a profit, to lure customers into their streaming services. All that money has probably given us cheaper and better streaming video services than we would have had if there hadn’t been so much hope that these entertainment services had a huge and lucrative potential audience.
If we had fun when streaming hopes were high, it might be a shame now that the industry is questioning its own optimism.
Netflix and other companies say they still trust it, but they don’t act like it. Netflix said on Tuesday that after spending blobs and then even more money on making or buying entertainment, the program budget would remain about the same for years to come.
Being careful with money at Netflix is a new look, and Netflix isn’t alone. Reporters have been busy recording cuts in the streaming industry and show cancellations to save money. “The days of drunken sailor spending are over,” an entertainment agent recently told Lucas Shaw, a reporter for Bloomberg News.
(Frankly, there’s still spending on drunken sailors, especially from companies like Apple, who have goals for their streaming services other than making a profit.)
We’ll all be seeing the effects of this austere streaming phase soon, if we haven’t already. If you’ve wondered why Netflix and some other streaming services release episodes of series one at a time or in batches rather than all at once for our binge eating pleasure, it’s partly a result of growth issues. Netflix wants you to subscribe for months to watch the new season of “Stranger Things” instead of watching all the new episodes in one weekend and then canceling.
Companies concerned about growth may be releasing fewer wow programs or charging higher prices than we are used to. Netflix is starting to push “paid-sharing” subscriptions, a euphemism for extra costs to those people who now share a single Netflix password with six cousins and the pizza delivery boy. When Netflix was confident in its growth, it mostly ignored account sharing. Not anymore.
For Hulu and HBO Max, cheaper streaming plans with commercials have been popular, and Netflix will try them too. They’re an option for us to pay less, but they’re also an acknowledgment that the relatively cheap, all-you-can-eat, no-ads entertainment buffet is probably behind us.
It’s possible that this sadder phase for streaming is a blip. We will see. But it’s amazing how much has already changed since streaming companies that assumed they would continue to grow rapidly for a long time had to face the possibility that they were wrong.
Before we go…
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Owning starting stock can be a burden: Starting employees regularly borrow money with the value of shares from their employer as collateral. My colleague Erin Griffith wrote about concerns that the downturn in the start-up economy could leave workers with loans or tax bills they can’t afford.
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If anyone can make a face-worn computer desirable, it’s Apple: Vanessa Friedman, a fashion critic for The New York Times, says Apple’s design sensibility was essential to making smartphones and other technology mainstream. She wonders who will champion design at Apple next time and make “access to the metaverse fashionable.”
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Here’s how to keep your gadgets cool when it’s hot: Frozen peas, good. Hot car in July, bad. Read more warm weather advice on smartphones from The Washington Post. (A subscription may be required.)
Hug for this
Be here hugging a couple of pigeons. Don’t mention it.
