Do Streaming Services Have A Quality Problem? Does It Matter?

Amid all the Disney distractions of spinoffs, sales and succession, it was easy last week to overlook telling remarks by the CFO of Disney’s biggest competitor, Netflix, who suggested shows on the streaming giant aren’t good enough, especially as usage droops for even the most popular shows.

“We have to improve every aspect of our service. Improving the content, improving the product, improving the marketing, and better monetizing all of that,” Neumann said. “But it starts with content. That’s what our members care about most.”

Netflix’s strategy is, ideally, a flywheel: offer lots of (ideally) good programming, then use the resulting good feelings of value received to justify raising prices that can pay for even more good shows. Repeat.

The industry leader has been vulnerable for some time to criticisms that it makes a lot of knock-off, run-of-the-mill, or unmemorable shows that aren’t really worth paying for. That critique only added more edge after the latest price hikes for its highest ad-free service tier, and elimination of its cheapest ad-free tier.

Churn, while still among the industry’s best, has been creeping up. And relatively few shows broke through into the broader cultural conversation this summer. The main exception might be the live-action remake of Japanese manga and anime hit One Piece, which critics beat up but viewers seemed to love.

One Piece’s Japanese provenance and durable franchise status perhaps guaranteed it would find an audience, but its success validated Netflix’s decision to remake the series. And its success demonstrates the strength of Netflix’s global pipeline amid the depredations of the pandemic’s production lockdowns and this summer’s Hollywood actor and writer strikes.

Those have complicated operations of the entire streaming industry, at a time when services are raising prices, and trying to meet Wall Street expectations that they stop losing billions of dollars. Consumers are showing an increased willingness to churn in and out of subscriptions, watching a few shows, then moving on.

But why does quality matter, as Neumann suggests, even though his company hasn’t enjoyed that reputation for quite a while?

After all, turning out crummy shows at scale is an industry tradition. Hollywood has been doing it for decades, Yes, many misbegotten broadcast network shows never made it past the pilot stage, or were killed off an episode or two into their first season.

But many other not-so-great shows found enough audience to trudge along for seasons at a time, pulling in ad dollars and filling out the program grid.

Nostalgists may pine for some putative TV golden age, but for every All In the Family, there was a Love American Style, or six. There’s a reason former Federal Communications Commission Chairman Newton Minow, who just died at 97, called TV “a vast wasteland,” in 1961.

Minow told a conference ballroom of broadcast executives that, if they put down their newspaper, magazine, P&L statement or other distraction, and actually looked at what they were making, “You will see a procession of game shows, violence, audience participation shows, formula comedies about totally unbelievable families, blood and thunder, mayhem, violence, sadism, murder, Western bad men, Western good men, private eyes, gangsters, more violence and cartoons. And endlessly, commercials — many screaming, cajoling and offending. And most of all, boredom.”

Sound familiar? Many are feeling plenty of boredom and malaise these days, especially on strike-bound primetime broadcast and cable networks, but also on the streaming networks.

Perhaps we should grant broadcast and cable some modest critical leniency. When you have to fill up the program grid seven days a week all year long, clunkers get made. And after all, no one was paying directly for those shows. They just tuned in and paid with their alleged attention.

Now some of those broadcast warhorses are getting a second life, helping populate thousands of FAST channels that media companies have launched the past 18 months. As before, you need something to feed that relentless programming prerogative, using whatever is at hand to keep the ad dollars rolling in.

But Neumann is right to worry about the perception that Netflix doesn’t have enough high-quality programming. The value equation is different when you actually charge people directly to watch, especially when you increase prices, crack down on password sharing, and start inserting ads.

And that’s the real problem for the entire industry. There’s a market for low-intensity, no-decisions-needed FAST programming, with low expectations for quality shows.

There’s also a market for engaging, well made shows that you actually have to watch with at least two-thirds of your attention. That’s supposed to be what you get when you turn on Netflix, Disney+, the FX corner of Hulu, Max, and the relatively few keeper originals on Peacock and Paramount+.

Of course, it seems like even the good shows are struggling these days.

At the same investor conference last week, Warner Bros. Discovery CFO Gunnar Wiedenfels, one of the architects of that service’s hack-and-slash budget approach to programming, said that shows need “oxygen,” i.e., viewers across multiple platforms and windows, to survive and thrive.

”For a decade, in streaming, an enormously valuable amount of quality content has been given away well below fair market value, and I think that’s in the process of being corrected,” Wiedenfels said. “This whole idea of warehousing content on Max, on a streaming platform, in retrospect is incomprehensible. Content needs to get oxygen to stay alive and to stay vibrant."

One of the few remaining gotta-watch new originals on Wiedenfels’ Max, Winning Time, wrapped its second season on Sunday with its makers begging online for more “oxygen.” Without it, there’s won’t be another season of the soap opera that was the Los Angeles Lakers’ 1980s Showtime rise to cultural prominence under Jerry Buss, Pat Riley, Magic Johnson and Kareem Abdul-Jabbar.

But, like those Lakers after one of Riley’s notoriously rugged practices, Winning Time is sucking air, according to its own creators. Writer Jeff Pearlman posted on X two weeks ago: “I'll be blunt: "Winning Time" is fighting hard to survive. Viewership keep going up, up, up. But if you want HBO to renew it and keep it going (and not have it fucking end with Boston winning), we need views. Seriously. It's the best show on TV. But #s matter. #winningtime”

Yes, “#s” (viewership numbers, for those don’t speak social media semaphore) matter, even for good shows. But without good shows, the numbers may never get to a level that audiences care about, or more importantly, will pay for. How streaming services balance production costs, value expectations, and audience scale will define the next era of streaming.