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Netflix Execs on Content, Sports, and Gaming After Big Drop in Subscribers

Matt Tamanini

After releasing a letter to shareholders on Tuesday in which Netflix revealed that they had lost a net 200,000 subscribers during the first quarter of 2022, some of the streaming service’s top executives came together to answer questions from JPMorgan analyst Doug Anmuth about their quarterly report.

The two major takeaways from the interview is that the streaming giant is currently working on plans to introduce an ad-supported tier in the future and that they are actively working to roll out plans to curb password sharing.

While those items were understandably the most notable from the discussion, there were other points that deserve not to be overlooked.


Content has always been the single biggest determiner of which streaming services customers are willing to spend money on, and from concerns over beloved series being canceled after a single season to a philosophy of quantity over quality, many consumers have become concerned over Netflix’s ability to keep up in the content department as more and more high-quality programming gets released on other platforms. And, given that Netflix has long had the highest price point in the industry, if the quality of the content diminishes, so does the value of the subscription.

“We’ve got to compete,” said co-CEO Ted Sarandos. “And we’ve got to continue to improve on the core service, which is making TV series and films, and now games, that people really love. That’s what we’re really focused on.”

Sarandos said that while everyone at the company is disappointed with the quarter’s sluggish subscriber numbers, they are proud of the content that hit the service in the first three months of the year.

“While we were not happy with the top line subscriber growth,” Sarandos said, “we definitely saw that the new season of ‘Ozark,’ ‘Inventing Anna, ‘The Adam Project,’ and certainly the biggest of them all, the new season of ‘Bridgerton’ delivered exactly as expected, actually a little bit bigger than expected with our fans. Now, of course, we think we’ve got to do that. And we have to have an ‘Adam Project’ and a ‘Bridgerton’ every month.”

If Netflix is to have an “Adam Project” and “Bridgerton” every month, they will need to have a major hit more than once in the coming months, but Sarandos believes that they can and that they will sustain those levels of success.

“The upcoming slate in ‘22, we’re confident is better and more impactful than it was ‘21, and we think ‘23 will be better and more impactful than ‘22,” he said.

On the series front, the streamer will release a number of high-profile shows in Q2, most notably the first part of “Stranger Things” Season 4 on May 27. Also releasing soon is Part 2 of the final season of “Ozark” on April 29 (the same day that the final season of “Grace and Frankie” drops), Season 2 of “Russian Doll” on April 20, “The Umbrella Academy” Season 3 on June 22.

“Stranger Things” and “Ozark” are two of Netflix’s biggest hits and notably, both have had their 2022 seasons split in half; for “Ozark,” it is also their final season. One concern that some onlookers have about Netflix’s business model is that their strategy to drop entire seasons at a time encourages customers to “churn and return” only around the releases of major, tentpole properties.

The thought is that if Netflix released episodes weekly, as most other streamers do, they would be able to retain more of their userbase who would feel compelled to stick with the service from the beginning until the end of the season.

While COVID pushed more of the streamer’s shows to do split seasons (still not the same as weekly releases), the core philosophy at Netflix has always been to allow viewers to binge shows all at once. However, Sarandos did admit that in certain circumstances, they do see the value of releasing half seasons at a time.

“What we found is that fans kind of liked both,” he said. “So being able to split, it gives them a really satisfying binge experience for those people who want that really satisfying long binge experience. And then being able to deliver a follow-up season in a few months … when you can deliver both halves of it in a really high-quality way, like in the case of ‘Ozark.’”

The co-CEO also noted that dropping “mini-batches” of one to three episodes on a weekly basis has been successful for some of the streamer’s unscripted shows.

With the declining subscriber count and slower revenue growth, Anmuth questioned the execs as to whether that would mean that they would pull back on their multi-billion dollar content spends.

“I think we’ve got to continue to invest in the content; both in the quality and the variety of the content,” Sarandos said. “And we will continue to grow the content spend relative to prior years.”

However, Chief Financial Officer Spence Neumann noted that there would be some changes in the company’s spending. While they would continue to spend more year-over-year, there would be some belt-tightening in relation to what their initial plans had been.

“We’re pulling back on some of our spending growth across both content and non-content spend,” he said, “but still growing our spend and still investing aggressively into that long-term opportunity. But we’re trying to be smart about it and prudent in terms of pulling back on some of that span growth to reflect the realities of the revenue growth of the business.”


Netflix’s Chief Product Officer Greg Peters admitted that January's price hikes likely had an impact on the Q1 losses, but that most of Netflix’s customers understand why the increases were worthwhile.

“Sometimes see a blip in churn, and in some markets, we also see a marginal impact on acquisition,” he said. “And we move through it and win those folks back. But I would say that the big takeaway is the vast majority of our members recognize that we’re investing you know, what they pay us in the incremental amount that we’re asking them to pay us into more entertainment value back to them — back to our members — more great stories, bigger films, more variety of content, and higher quality of programming.”

However, the exec also said that the company is cognizant of customer concerns around pricing and that they are always looking to find ways to meet customers where they are.

“We’re also working hard to ensure that we have a range of price points across a set of plans with different features that deliver on different consumer needs and consumer desires,” he said, “while making sure and being very focused that we retain good accessibility to the service for a broad group of people and every country we serve at sort of that entry-level.”


Over the past year, Netflix has been investing significantly in mobile gaming, both in creating and acquiring games and turning games into series and movies.

In the interview, Peters said that gaming was a “top-level priority” for Netflix and co-CEO Reed Hastings is excited about the trajectory the gaming team has built up.

“I’m really happy with what the team has built,” Hastings said. “We’ve had some nice successes … So I think we’re building capacity, frankly, faster than we did when we entered film. So that’s very encouraging … And you’ve seen we’ve been doing these small acquisitions, to build up the know-how and the creative chops to be able to make some really great games.”

Earlier this week, the streamer announced that they would be launching both a mobile game and animated series based on the popular Exploding Kittens card game.

Peters said that the game and the series would adapt and inform each other allowing customers to have a cohesive experience across both versions of the content.

“That’s sort of initial step on a long roadmap,” Peters said, “about how do we make the film and series side and then the interactive-games experience, [and] the interplay between those, magnify the value that our members are getting from both. So it’s like 1+1=3, and then hopefully 4 and then 5 situation.”


Much of the streaming world is falling over itself to secure live sports rights, with Apple and Amazon dueling over who can land the NFL Sunday Ticket, but as of now, Netflix doesn’t seem to be interested in getting into that corner of the streaming game.

“We think that we can build a big revenue and profit stream by adding games,” Sarandos said, “we’re not quite so sure that you can add the big profit stream by adding sports. Other folks are trying it and … we’ve gone down this other path.”

However, there have been rumors that the platform might be interested in becoming the streaming home for NFL Films. That type of move seems to fit more organically with the way that Netflix has been approaching its sports content in recent years.

“We’re incredibly excited about … the ‘Formula 1: Drive to Survive’ as an example of kind of sports-adjacent programming,” he said. “We’re taking that bet in the world of tennis, and golf, and others coming up. And we also have an incredible sports documentary business that keeps growing. So, I’m not saying we’d never do sports, but we’d have to see a path to growing a big revenue stream and a big profit stream with it.”


Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.

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Netflix spends more money on content than any other streaming service meaning that you get more value for the monthly fee.


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