Stranger Things Season 5: Netflix in the Upside Down

In the boom phase, was Netflix looking at the numbers and seeing the hidden, explosive variables beneath them?

Netflix has been my go to place for escape with great films and series, learning, docuseries and documentary films. Is the crash a surprise? Is Elon looking for a new 4/20 joke (look it up)? Not sure. Maybe it’s a 4/20 and counting. But here is what I have been pondering on the Netflix earnings call on 4/20.

Netflix and Chill:

Not a lot to say here. The poster brand for great content, experience in the streaming world. Adoption and sales were pointing to nothing more than a golden child future. But then this happened.

Yes, but, the context is shit. Yes it is.

Yes, Netflix lost a declared 700,00 subscribers in Russia due to sanctions. Fair enough but many companies have instituted sanctions and not yet reported massive global losses. Time will tell.


Covid changed our habits for the ‘moment’. We binged on delivery food, delivered content. But we are bursting outside the confines of 4 walls and paper bags. Netflix needed to understand, as a smart company, that Covid behaviour was a bubble not a sustainable trend. Bad planning and projections of the future based on a very unique, specific and temporary present! Losing 200,000 subscribers (not counting Russia’s loss) rather than expecting a 2.5 million uplift based on a cosmetic trend should not have come as a surprise.


No kidding. Netflix allowed shared passwords as a way to sample the experience and increase customer reach. Guess what! When I got a freebie with my cousin’s access, I got the experience. I never asked myself, “gee, how can I pay for this when I can get it for free!” Free sampling for perpetuity will hit the bottom line.


I cannot speak to all Netflix users but in Germany where I live, the rate of new releases is very slow. So on a personal note, I diversified into Apple+, Amazon Prime Video and the crappy UI and UX of Sky Ticket. But I get my variety and a wide range of ‘payment’ options — free or relatively small charges. Netflix is no longer my only ‘go to place’. It reminds me of the old terrestrial TV tactics of selling the channel.

No one buys the channel. They buy the content they want and switch between channels. Consumers today are exercising the analogy of the TV remote for streaming. If I do not like your content, I switch the channel. The only difference is that today, switching the channel means canceling the subscription.

It’s the economy stupid:(not sure if the credit for this quote goes to Bill Clinton or James Carville but kudos to both)

In the UK alone, 1.5 million households have terminated streaming subscriptions. (Source: CNN)

Why: people need to eat, pay rent, pay surcharges for gas. A budget only goes so far. The pandemic, the aftershock and so many other circumstances have made people rethink what is a nice to have vs. a must have. I gather, people are streamlining streaming to get the one, the best for me.

Yes. So! No stupid knee jerk reaction.

Ad supported content: No, just no.

Netflix is toying with the idea of backpedaling to a quasi freemium subscription model. Why this is folly:

Platforms like Spotify started with a freemium model which I think is based on forced misery. Offer content where you have to simply accept the bad UX, in this case, ads. It’s free. It makes people upgrade because they do not want a bad experience or they demand a better one. It’s an upward trade towards a better experience. All know-how shows we trade up, not down (do not quote here the Innovator’s Dilemma, it’s a different market situation).

When have we heard people chant, ‘bring back the ads, bring back the ads!’. Anyone who uses an ad blocker knows what this means.

Netflix users have already become accustomed to a certain CX and UX. When they experience a downgrade, they will experience disappointment and choose an alternative. It’s about brand switching now as we see the streamlining of streaming.

Yes. And now what? Be smart!


Put out a statement that Covid binging was a bubble and calculate a weighted adoption rate applying unstable variables like Covid home bound binging and content demand. Make realistic future projections.

Better not more ads:

Stick to product placement as ad revenue if needed. It has not been lost on me how often I saw Dunkin’ Donuts on The House of Cards. Noticed but not negative.

Content — Content — Content:

Splurge on content and quick global releases. Get good stuff out, get it out faster and jump on hot topics faster. There is no reason why We Crashed, Super Charged and The DropOut, let alone Severance, could not have been Netflix. Keep your finger on the pulse of global conversations and get in on the game. BTW: listen to podcasts for sources of inspiring stories. Netflix did that with ‘Reinventing Anna’ based on the Wonderly podcast, “Fake Heiress”. Keep it up.

I am not canceling my Netflix subscription yet. But I will definitely not opt in for a cheaper ad filled version. I am fortunate enough to be price inelastic. Many people are not. And not to mention, ads these days suck.

Don’t we all just love the ‘skip this ad in 3 seconds’ button on YouTube?

If Netflix wants to maintain the positive halo it has cultivated until now, they should focus on value and experience creation. They should bite the bullet for unfortunate business circumstances and calculation and back-step to remind themselves of what made them so successful. Making money cannot be that difficult. Do not do it by taxing the experience of the user.

Netflix has always been about product quality dedication. So what is next? Increase prices, gauge the consumer, do an easy but UX poor monetisation scheme? Or reinvent and refresh the product. Focus on the value and the revenue is academic. Keep challenging conventions, deliver a great CX and the money will come.

Use the past to reinvent the future!




Frontira is a product studio that makes big products better and better products bigger.

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Joanna Bakas

Joanna Bakas

Founder and Managing Partner at We liberate strategy from PPT and make it happen.

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