The Price Point | Netflix Subscriber Miss Signals New OTT Phase

Netflix’s subscriber miss last week shocked analysts, particularly because it came before the launch of competing services from Disney and WarnerMedia. Netflix is the gold standard in over the top services, but its subscriber slowdown should not be surprising.

OTT has been such a hot subject lately, it’s easy to forget we still live in a world where each consumer has only 1440 minutes a day to eat, sleep, work and perform every other activity. Mobile has stretched the media window, allowing greater access and the ability to participate, but users still must be judicious with the little time they have.

This lack of time has made consumers much more sophisticated. Few still think “Let’s go home tonight and see what’s on Netflix.” Instead, they say “Let’s finish The Marvelous Mrs. Maisel.”  The fact Mrs. Maisel is on Amazon Prime registers the same way NCIS is on CBS. They watch the show, not the network. That’s why a home might have Netflix, Hulu Plus and Amazon Prime, plus a few add-on services such as Britbox, because each offer something they are willing to pay for.  Oh, and let’s not forget their local television stations, still the biggest dogs in town.

Will The Office be enough to lure households into adding Disney? Maybe, but this gets at the heart of the Netflix miss. Every new service is an additional bill. Each price hike increases the pressure to pare down. Disney’s vast library will be compelling for some families, but for most simply adding another service doesn’t make economic sense. What will they be willing to give up?

A second problem is that all streaming services are at constant risk of becoming commodities. The antidote is original programming. HBO understood decades ago that without signature programming, it was just another movie service. It also had the advantage of being unregulated. Thus, The Sopranos and Sex and the City were edgy in ways shows on NBC never dared to be. Netflix and the other premier services have followed suit, producing some of the finest work on television, but no programmer creates hits every time, which is the rub.

There is currently a show on DIY called Barnwood Builders. My wife loves it. All her friends love it. They know all the character’s names. I don’t get it. It appears to be the same show every week. Last week I was out of town, so my wife had all her friends over for a Barnwood Builders marathon. They think it is the greatest show on television. At some point Barnwood Builders will go the way of Pawn Stars, American Chopper and hundreds of others, after which I will be forced to watch Maine Cabin Masters, which is also the same show every week.

All of this means OTT services are beginning to learn what traditional broadcasters have always known. Not only does no one produce hits every time, even the best have a shelf life. That’s why local news and local information is so important. The station/network system continues to work, but every new service launched is not just a competitor to Netflix, it is our competitor too.

Simply producing more local news is not the answer. We need a deeper relationship with viewers based on more expansive services, some of which consumers participate in. Younger consumers are broadening their definition of news, so ours must also broaden. Not all television stations will survive because not all have the will to do this. But those that do will always be on the short list of services consumers are willing to pay for. Long term, that’s a better proposition than any OTT.

This is one in a series of occasional columns from Hank Price, a media consultant, author and speaker. He spent 30 years managing TV stations for Hearst, CBS and Gannett, including WBBM Chicago and KARE Minneapolis. He also served as senior director of Northwestern University’s Media Management Center and is currently director of leadership development for the School of Journalism and New Media at Ole Miss. He is the author of Leading Local Television, a handbook for general managers.