Is Netflix Quietly Removing Content and Changing its Model?

MPP Global Tuesday, 19 April 2016

It is a remarkable statistic that is mind bending from a consumer perspective: There is now 31% less content in Netflix’s US library compared to 2014. How can that be, was Netflix not promoting content democracy and marching onwards with the world’s greatest catalog of streaming content?

Netflix Changes

According to Allflicks recently, the Netflix content watchdog, there are now 2,571 fewer titles; that is a 33% drop in the number of movies and 25% fall in TV shows.

For a start, it is amazing that we need a separate watchdog service just to monitor what subscribers get when they sign up. However, this is not just applicable to Netflix, very few streaming services are actually transparent across their range. Which begs the question; are consumers getting what they signed up for? Well, I suppose that depends on the individual on the couch.

There are a few tell-tale signs of change. Firstly, the competitive landscape for content has moved dramatically. Netflix will continue to fight increasing demand for studio and local content in any part of the world they play in. It is quite hard to be an expert in all areas. Netflix have worked out that the big ticket TV series are what gets press, sells subscriptions and drives early viewership. They have been investing in developing their own hit shows and it would seem that the era of the massive content library is well and truly over.

The other quiet change to their business model is that they are now a long way from the simple price point that blazed their marketing for the first 10 years of life. I find it perplexing that many new OTT streaming services have blindly followed this old chestnut. In many markets, Netflix has multiple plans targeting higher and lower value customers and just recently in the US, they removed the grandfathered older pricing of long-standing customers. It looks to me like they are moving towards a value based pricing strategy. If you have had it a long time, clearly you are less likely to want to give it up.

Net Neutrality

We could also take a look at net neutrality, which has become tightly associated with Netflix as the key consumer torch-bearer. Yet, we found out this week via WSJ that Netflix has indeed been throttling speeds at their discretion, specifically across AT&T and Verizon networks in the US. They have also made preferential business deals in new markets, such as Australia.

But let’s go back to the consumer. It is interesting that you can quietly remove such a large amount of content that a consumer signed up for, without making much noise. I wonder what the critical mass impact of this is. I cannot think of any other industry, product or service where you could reduce value by 30% without clearly communicating this in big neon letters to the customer and get away without outrage.

Awareness could play a big factor. Netflix has done well in branding their image of having a massive catalog, so they have a little time on their side. I gather most consumers do not get the complex global content licensing systems and are probably confused as to why search features are no longer bringing up Doctor Who, 24, or other shows they thought they previously had access to. It is not like the search feature tells you this. Only Netflix knows this one, or maybe I am missing something more obvious.

Curiously, I cannot quite picture how consumers will differentiate streaming services in 5 years with the current model. It does feel that consumers are being herded into an existence of binge style viewing, where they sign in and out of subscriptions based on the latest release of hit content. Whether they decide to check back in for longer than a month at a time, will likely decide the winners and losers.

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MPP Global will be in Bali for APOS, Asia’ premier event for the media, telecoms and entertainment industry. Meet us at APOS to discuss how operators and broadcasters need to extract the maximum value from their content and embrace monetization opportunities in today’s digital landscape.