372. The Growth

Time spent watching Netflix grew by less than two percent last year. This is the number. Several of Netflix's biggest returning shows suffered steep audience drop-offs during this period. A returning show is a show that previously succeeded, which means the audience already watched it and already decided they liked it, and then this year they watched it less. Netflix produced the shows. Netflix also measured the decline. Netflix then told people about it, which is how we know.

The streaming era began with a premise: people would pay a monthly fee to watch unlimited content instead of paying for cable. This was correct. People canceled cable and began paying Netflix a monthly fee. Netflix used the monthly fees to produce content, which people watched. Content was produced. People watched it. This continued for approximately twenty years.

The content people are now watching less of is the content Netflix produced with the revenue from the previous era of people watching it more. Netflix has identified this and is aware of it. The quarterly earnings call will include a discussion of the awareness.

In the meantime, the content continues to be available. The fee continues to be charged. The cancellation process for Netflix accounts requires navigating several screens, confirming a decision, and then, in some cases, completing a brief survey explaining the reason for canceling, after which Netflix presents a final offer and asks if you are sure. Most people are not sure enough to complete this process. This is also a growth strategy.

Less than two percent growth in viewing is considered meaningful because the previous years involved more than two percent growth in viewing, and the difference between more and less is, in this context, the industry's entire thesis. The thesis was that people would watch more, indefinitely. They are watching more. Just less than expected. The thesis is under review. The content continues.