Netflix has a line it rolls out for shareholders: engagement with its content, it says, is “our best proxy for member happiness”. This invites a philosophical question. Does watching lots of Netflix make you happy or just happy with Netflix?
Of course, what the company cares about is whether we are happy with Netflix, not how everyone’s mood is holding up amid the crushing onset of winter. For the sort of global entertainment behemoth that seemed unlikely to thrive as recently as 15 years ago, it is always summer somewhere.
The happiness of its members appears to be faring just fine, judging from its estimate-beating third-quarter earnings data and accompanying shareholder letter, in which it notes that each paid membership of Netflix consumes an average of about two hours of its content a day. Nobody cancels a service they watch for two hours a day.
When households that availed of its paid sharing option – introduced as part of its crackdown on password sharing – are excluded, engagement has risen throughout 2024, which is good going given that its volume of fresh series and films has been “patchier” than usual in the wake of last year’s writers and actors strikes.
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Popular, easy-to-consume shows such as glossy murder mystery The Perfect Couple – starring Nicole Kidman, Eve Hewson and the underrated Dakota Fanning – and the bingeable Nobody Wants This, in which someone finally cast Adam Brody as a romantic-comedy lead, have helped.
While half a dozen frosty Kidman looks and the advent of “Hot Rabbi” Brody would scarcely be enough to make Wall Street swoon, luckily those are just the ones I’ve watched.
Basking in its “string of hits”, Netflix also cited Tokyo Swindlers, “returning favourites” Emily in Paris and Cobra Kai, and “big films” Beverly Hills Cop: Axel F, Rebel Ridge and Officer Black Belt.
If you’re only dimly aware of the existence of one of those three “big films” and have never heard of the other two before now, you won’t be alone. That’s almost the point of Netflix. It’s both broad church and smorgasbord. Not everything on it will be for everybody, a point only underlined by its year-long excitement about an upcoming live event, postponed from July: a fight between Mike Tyson and YouTuber-turned-boxer Jake Paul.
As for the other two slabs of content highlighted as part of its “great Q4 slate” – the second season of mega-hit Squid Game and two Christmas Day NFL games – they’re not for me either, but both outlays make undeniable sense for the platform and will be gracing its Top 10s soon.
It’s my poor timing to be writing about Netflix at a time when half the people I know spent the weekend watching Rivals on Disney Plus. Rivals is the best kind of show for a streamer – one that inspires sign-ups among both people who miss the 1980s and people young enough to be persuaded that this is how everyone lived then.
The publicity campaign combined with word-of-mouth will surely give Disney Plus a boost on this side of the Atlantic, and not just among the Fan of David Tennant Since 1994 demographic to which I belong. With The Crown long over, it seems like a missed opportunity for Netflix to deliver some member happiness to lovers of upper-class soaps, but their loss is Disney’s gain.
In all the delight over Rivals’ bed-hopping, appropriately little attention has been paid to the fact its plot hinges around the perils of ITV regional franchise reviews.
This is a piece of broadcasting regulation history – Rivals is set at a time when there was a patchwork of replaceable and separately owned ITV franchises across the UK – that seems extra quaint in the age of global streamers. But I wouldn’t want to put anyone off. It’s mostly about people with ridiculous names (Lord Baddingham, etc) behaving terribly.
Rivals-less Netflix, meanwhile, will often squeeze in a pop at unnamed rivals in its shareholder letters.
“Programming for such a large, engaged audience, with so much variety and great quality, is hard,” it says. This “tough at the top” appeal for understanding is then swiftly followed by a burn.
[ How Netflix won the streaming warsOpens in new window ]
“It’s why streaming services which lack our breadth of content are increasingly looking to bundle their offerings,” it continues.
Back in July, it swung effortlessly from a defensive reference to its spending strategy to an attack on its peers.
“Commentators often ask if Netflix needs so many shows and films, and the answer is an emphatic yes,” it declared, citing its audience of more than 600 million (more than two per household).
Catering to “many different tastes and moods” is the name of the game. “It’s why we continue to increase the investment in our programming, even as many of our competitors are pulling back.”
I’m sure Jilly Cooper and the writers who adapted Rivals could come up with something wittier, but there’s no disguising the sting in the tail.
Netflix’s enviable challenge now is to tread the line between saying everything is going fabulously to assuring investors that they’re not going so brilliantly that it doesn’t still have room to grow. That’s why its shareholder letters also tend to reference the fact that the platform represents less than 10 per cent of television-watching time in its biggest markets.
Investing more in its slate and creating a “steady drumbeat” of new content is its chosen path to member happiness. And while “healthy” engagement with Netflix might not be an accurate pointer to general life bliss, it is likely a proxy for shareholder contentment: after soaring to a record high on Friday, the company’s share price is up 57 per cent in 2024 to date.
This reflects a convincing victory for Netflix in the streaming wars. Like the champagne that flowed after the successful renewal of an ITV franchise, it must taste sweet.
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