As Netflix tops 230 million global subscribers, the company continues to grow, but that pace is definitely slowing. In the U.S. and Canada, Netflix has only surpassed 75 million subscribers once. Domestic numbers have remained largely flat for two years, and it’s becoming a major question as to whether Netflix can ever grow significantly beyond that ceiling.
One possible area of growth could be the addition of FAST channels. Free ad-supported TV has become wildly popular. According to Nielsen, Pluto TV alone accounted for 0.8% of viewing time in December 2022. For reference, that’s more than half the time spent on HBO Max. (Netflix notched 7.5% of all viewing time for the month.)
So might Netflix lean into the trend? The leadership team was asked point-blank about a FAST option.
“We’re open to all these different models that are out there right now, but we’ve got a lot on our plate this year,” co-CEO Ted Sarandos said. “But we’re keeping an eye on that segment for sure.”
Netflix would be smart to consider the idea. FX Chief John Landgraf recently revealed data to support his claim that 80% of TV viewing is classified as “lean-back.” It’s the TV you have on in the background while you’re cooking dinner or mopping the floor. We love having TV on to keep us company.
Unfortunately, Netflix’s “lean-back” library is lacking. You could argue that a cooking show like “Nailed It!” might work as background TV, but the best “lean-back” experience is familiar. It’s the sitcom you’ve seen a hundred times or the game show you could enjoy for a few moments between chores. Back in 2018, “The Office” accounted for somewhere between 3-7% of all time spent on Netflix. That’s a huge number for an old TV show. “Friends” wasn’t far behind. (Those titles have since left for Peacock and HBO Max, respectively.)
This love for old sitcoms explains why Netflix spent an estimated $500 million for “Seinfeld.” Fans know those episodes by heart, so they can work as that “comfort food” TV that many people crave.
Even this week, Netflix’s Top 10 list in the U.S. reveals a preference for many non-Netflix originals.
“New Amsterdam” originally aired on NBC; two seasons rank in Netflix’s Top 10. “The Walking Dead” was an AMC show. “Love Island” aired on CBS. How should Netflix feel about audiences choosing these shows over the hundreds of Netflix originals?
The Case for ‘Channels’
FX’s John Landgraf suggested that merely having the back catalog of an old show isn’t enough. “When we bought ‘The Simpsons,’ we built an app called Simpsons World that had every episode ever made in a perfectly searchable system,” Landgraf told Vulture. “Then it had so-called channels, which were linear streams of Simpsons episodes. Eighty percent of the consumption was from the linear playlists, and 20 percent was on demand. Netflix threw more scripted original series and original movies at its consumers than any service in history in any given year by quite a margin. And as far as we can tell, according to Nielsen, what that has yielded is about 25 percent consumption of original, first-window product and about 75 percent consumption of library-window product.”
Why, in a world where every song ever recorded is available on your phone, do we still listen to the radio in the car? It’s the same principle. We want content we know, but we want the thrill of not knowing what’s next. It combines the familiar with an element of spontaneity. That’s what Netflix is lacking now, and that’s why Pluto TV is racking up obscene viewership with old “Star Trek” and “Baywatch” reruns.
While we may turn to Netflix to watch the latest hot new show, something is causing users to turn elsewhere when they want to relax. And that’s where a curated FAST experience might make sense. Tom Ryan, President and CEO of Paramount Streaming, mentioned in a 2022 Paramount+ investor presentation that people who used the Paramount+ linear channels spent 40% more time on that service than they did previously.
Netflix likes to think of itself as different from other streamers. Only the panic of dwindling subscribers was powerful enough to get them to offer an ad-supported tier. Now, as the service looks for ways to diversify and stay ahead of competitors, the FAST solution may be one worth pursuing.
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