Netflix, the beloved OTT platform that pioneered the bet on original programming as opposed to the pure content aggregation model, has lately been facing a de-growth of subscribers. 

The market leading strategy of producing Hit original content like House of Cards by mining troves of data had been the pillar of Netflix’s user acquisition strategy. For example, it went All-in on House of Cards allocating production budgets upto 2 seasons, without even premiering a pilot, which contrasted with the approach of traditionalists in the entertainment business that relied on pilots for validation. The key insight from Netflix was that Kevin Spacey’s movies almost always succeed, ‘The social Network’ by David Fincher had high completion rates, and the platform audience also loved the British version of House of Cards on the platform. This overlapping set was large enough to justify an investment, upwards of 100 Million USD on HOC’s first 2 seasons. By tracking viewing habits post a sign up, Netflix could easily work out which content was helping it gain traction, and keeping subscribers engaged.

9 out of 10 most popular shows on OTT platforms are produced by Netflix today, so it still demonstrates how good the streaming giant is at harnessing data to produce hits, but this alone would not support their revenue growth initiatives.

Competitors like Prime, Disney Plus, Hulu and HBO were quick to jump on the OTT race, replicating and doubling down on the strategy outlined above. They have also successfully amassed large subscribers, and collectively pose a threat to Netflix’s future prospects. Netflix also estimated it lost 1 Million subscribers in Q2/2022 which could be tied to factors like higher pricing versus other streaming apps, competition, and other unfavorable macro economic factors affecting consumers.