Netflix still offers value for money, but it needs to prove it to subscribers

Data suggests that UK subscribers are slowly turning off, while the streaming giant undershot Wall Street’s expectations with its recent results, writes James Moore

Chris Evans at the premiere of ‘The Gray Man’, Netflix’s attempt to create a mega-franchise (Getty/Netflix)

Netflix appears to have been the biggest loser in Britain’s post-Christmas streaming cull, according to data from researcher Kantar. Overall, it found that 7 per cent of households had cancelled at least one of their subscriptions in the first quarter of the year. Some 144,000 households dropped out of the video on demand (VoD) market altogether, while there was a marketwide net loss of 167,000 subscriptions.

As regards the formerly undisputed kingpin of the sector, while Kantar found no dramatic drop in the majority of its key performance metrics, there was a gradual decline across almost all areas.

They included satisfaction with the variety of TV series on offer, the amount of original content provided, and the overall quality of shows. Just three of the top 10 most enjoyed VoD titles were Netflix properties, compared with six a year ago. In addition, Netflix subscribers’ net satisfaction rating in value for money fell from +31 per cent to +22 per cent.

Some level of decline was inevitable, given that the cost of living crisis has forced consumers to take a critical look at what they are spending their money on.

Part of Netflix’s apparent difficulties can also be attributed to increased competition, and in particular to its rivals’ willingness to produce more high-quality domestic offerings.

Apple showcased the consistently excellent Slow Horses. Amazon’s Clarkson’s Farm might be TV Marmite, but this brand of yeast extract has a lot of fans. Even The Rig, a befuddling supernatural drama, found an impressive audience. Kantar’s chart had it sandwiched in fifth place between two global smashes: Netflix’s Wednesday and Disney’s The Mandalorian.

Amazon, of course, got a boost in the fourth quarter through the bundling of its streamer with its delivery service, and Clarkson seems to have helped it to keep hold of some of those subscribers into the new year. Apple, meanwhile, has carved out a niche as a high-quality add-on, although its relative paucity of new content compared to its rivals hits its value-for-money rating.

But perhaps the closest competitor to Netflix is Disney+, which has something Netflix lacks: an impressive roster of global mega-franchises, including Marvel, Star Wars, Pixar, Disney Princess, and Walt’s roster of animated classics, plus a huge library from 20th Century Fox (now 20th Century Studios).

It isn’t that Netflix doesn’t have franchises per se. Stranger Things has another season coming, a spin-off in the works, and a prequel play in London. Bridgerton was a global hit. Ditto South Korea’s Squid Game, which provided some cross-pollination for another Netflix property, the Japanese show Alice in Borderland. Critics were a little sniffy about The Night Agent, a propulsive new conspiracy thriller, but viewers have pushed it into the all-time top 10, with a second season approved within a week of its release. Don’t sleep on Netflix’s ability to produce hits.

But its attempt to produce an uber-universe that could spin off multiple properties centred on, umm, The Gray Man. It found an audience, but are they going to be queueing for Comic Con panels ahead of future releases from this universe?

What Netflix does have is a massive library, featuring shows from around the world. It isn’t just Squid Game and Alice. Netflix throws off new content at an impressive rate compared to its rivals, even if the quality is sometimes mixed.

The question here is this: is its value for money really in doubt? Or is it more that the streamer is struggling to demonstrate the value it offers, or is capable of offering, to its subscribers? Could this be a consequence of Netflix’s somewhat confusing homescreen, and the frustrating amount of time it takes for viewers to find what they might want?

These are questions the company might care to ask itself. From a cultural standpoint, you want to root for Netflix. It is capable of expanding subscribers’ horizons in a way its rivals cannot. But while that’s all very well, it also needs to pay the bills and keep its investors sweet.

The streamer’s struggles aren’t just a UK phenomenon. Last week, it reported the addition of 1.75 million new subscribers globally in the first three months of the year, well below Wall Street’s forecast of 2.4m. In what was a busy week, the company also appeared to delay the expansion of its much-anticipated crackdown on password-sharing until sometime in July, and closed down its DVD postal business.

The latter was what helped the company to climb into the mega-cap category, catalysing the demise of another global brand, Blockbuster, in the process. Could Netflix – Netflix – really become a casualty of the streaming wars? Let’s not get ahead of ourselves. But the business has no cause for complacency.