The news that Netflix lost subscribers in the first quarter of this year for the first time in a decade no doubt caused some Schadenfreude amongst cinema operators, scarred as they were by pandemic-induced headlines proclaiming the demise of cinema at the altar of streaming. The news that Netflix lost 200,000 global subscribers over the last quarter, rather than gain an estimated 2.5 million, also led to a mass pile on of every media, film and cultural commentator, not to mention analysts, bloggers, tweeters, hot-take havers and general opinion dispensers; so we would be remiss not to offer our USD $0.02’s take on it and illustrate how exhibitors and Netflix might both benefit from becoming frenemies.
The explanations for the decline were laid out in a note to investors stating, “Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.” So password sharing, and competition from the likes of HBO Max and Disney+ has brought the lockdown boom to an abrupt end. It didn’t help either that Netflix lost 700,000 subscribers in one go when the company suspended its service in Russia.
What it means was summarised in brutal candor by La la land’s new favourite trade-publication-with-an-attitude The Ankler. “As was widely predicted, this marks the official end of the tech utopian period of Netflix growth, after which it will be subject to earthbound laws of finance, profits and loses — just like a company! — rather than magical fairy dust valuations.” It should be noted that while GlobalData predicts that Netflix US market share will drop from 25% to 16% by 2026, it is not cause for celebration by its bigger rivals, with Disney+ cancellation rates having tripled this year compared to Q4 2021. Nor is it a pure case of smaller niche services (inserting a shameless self-promotion plug for Cultpix) mopping up any lost Netflix subscribers.
This scenario has led to Netflix being pushed into having to consider creating an advertising-supported tier, rather than it being part of a well-thought out long term strategy. But if Netflix is prepared to consider the previously unthinkable, it should reconsider how it can form partnerships with the cinema industry to build a stable and profitable future for its still considerable content output. It is unlikely that Netflix will ever embrace a 45-day window or even a 30-day window for all of its titles, but a degree of flexibility that deviates from its standard two-week window for feature films that arrive in cinemas prior to dropping on Netflix is possible. In France it can now show films on its platform 15 months after a theatrical release, so why not settle on something between 15 months and 2 weeks for the rest of the world?
“Misery acquaints a man with strange bedfellows,” as Trinculo said in Shakespear’s “The Tempest,” and there are few worse miseries for a CEO then watching your share price collapse by double digits overnight. Netflix might yet make good complimentary bedfellows with cinema operators, now that the outline of the new post-pandemic media landscape is starting to come into focus.
By the way, you won’t want to miss the CJ Cinema Summit on 21 April. Pete Ludé, the CTO of Mission Rock Digital will give us a detailed presentation on the latest advances in LED direct view cinema displays and an update on market adoption. Mark Collins of HARMAN will explain the latest solutions sound engineers have come up with to overcome LED’s audio challenges.
Daniels and the Sound of Everything Everywhere All at Once | Sound + Image Lab
Part one (of two) of our exclusive, in-person interview with the filmmakers of this mind-blowing new film, now playing in cinemas.
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