Netflix’s Weird Week

Happy Thursday, and welcome back to Buffering. This week’s edition takes a look at a couple of crazy days at Netflix, and why the drama of late may represent a new normal for the streamer. We’ve also got a dispatch from the Max front courtesy of my colleague Eric Vilas-Boas. Also, if you haven’t already, do catch up on the stunningly good final installment of Star Trek: Picard, which wraps up today on Paramount+ and blows away the just-wrapped season of The Mandalorian in terms of geeky goodness. And when you’re done with that, head over to Peacock and have a blast with Mrs. Davis. The less you know, the better. As always, thanks for reading. –Joe Adalian

Reach Joe on Twitter @tvmojoe or email [email protected].


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It’s been a weird week for Netflix. That’s not to say it’s necessarily been a bad week for the company, but the past few days have been a bit of a rollercoaster for the No. 1 streamer. Let’s recap:

➽ What should have been a milestone moment— Sunday night’s Love is Blind live reunion special— turned into a massive customer relations fail (as well as a social media nightmare) when the vast majority of Netflix users were unable to access the livestream.

➽ Then on Tuesday, in a not-entirely-surprising but still unexpected move, Netflix announced it would be shuttering its iconic DVD delivery service this fall. It felt like the end of an era because, well, it is.

➽ Finally, later the same day, the company said it added a meh 1.75 million subscribers during the first three months of 2023 and that its profits during the quarter were down modestly vs. last year. The results weren’t that far off from what many industry analysts had been predicting.

Taken as a whole, all three events this week underscored that we really have entered Netflix’s Era ofLoweredExpectations. Shutting down DVD delivery won’t undercut the main mission — it’s a streaming company, and has been for a decade — but it also feels like the sort of move tech companies make when they start to move away from “surprise and delight no matter what” and into their “every penny of profit matters” phase. (See also: Apple.) Similarly, this week’s earnings report was not at all awful, and the good news was that there wasn’t the sort of nasty surprise — like a drop in subscribers, which a year ago led to the Great Streaming Correction. But the fact that Netflix was back to barely growing after two stronger quarters was a reminder that the days when nearly every earnings report brought stunning news of growth are probably over.

And then there’s the Love Is Delayed mess. My first reaction to the meltdown was that this was basically just a bad night on Twitter, and something which would be quickly forgotten. I still don’t think there will be any serious long-term consequences for Netflix, but I’m now of the mind that it would be wrong to just chalk this up to “stuff happens.” For a decade now, Netflix has stood apart from the rest of the streaming (and TV) industry in part because its actual product — the tech platform, not the shows — has been just lightyears ahead of anyone else. Sure, some folks don’t like user interface or the lack of curation, but as an app, Netflix just tends to work better than any rival of its size: It loads faster, crashes less often, and it’s easy to navigate even if you’re an 80-year-old tech-averse granddad.

Netflix has suffered bugs before and certainly outages, but rarely has it crapped the bed in such a high-profile way. To his credit, co-CEO Greg Peters admirably (if a bit belatedly) stepped up and owned what happened during Tuesday’s earnings report. He didn’t try the obvious spin, i.e., that there was so much demand for Love Is Blind, Netflix’s servers crashed. Instead he chalked it up to a bug related to some new tech the company was using to try to improve upon the livestream performance of its earlier live Chris Rock special (the one which went smoothly). “We just didn’t see this bug in internal testing,” Peters confessed, adding that the glitch in the software didn’t become apparent until after it was scaled up on Sunday night.

His explanation made sense to me, since the idea of Netflix’s servers not being able to meet streaming demand seemed too far-fetched to consider. I do not doubt Love is Blind is extraordinarily popular; it’s likely the No. 1 reality show in America and maybe even the English-speaking world (I’m not up on ratings for India). But even if you account for a lot of people trying to log in at once because of the “live” factor, I can’t imagine the mere volume of users would phase the same servers which handled so many simultaneous streams of Stranger Things season four. On the other hand, a bug tied to new live tech is more logical — and yet, it still seems like the kind of big mistake which wouldn’t have happened at Netflix a few years ago. The company under founder Reed Hastings was relentless in analyzing everything in advance; even the most minor change to the user interface would undergo rigorous A/B tests.

So a failure this big makes it worth considering whether or not other factors might be having a trickle-down impact on the streamer’s world-class (and justifiably very well-paid) engineering division. The wave of layoffs which hit Netflix last year — while much smaller than the cutbacks which have followed at other media and tech companies — still represented a psychological sea-change at a company which had been experiencing virtually non-stop growth for more than a decade. Sometimes a mistake is just a mistake, but the idea that a year of bad news could impact morale and performance doesn’t seem completely far-fetched.

Or maybe Sunday’s snafu was partially the result of Peters and fellow CEO Ted Sarandos pushing the live feature out into the world too quickly, nudging the product team to launch a feature which really wasn’t yet ready to scale up at this level? No doubt the engineers relished the challenge of adding a new feature: I’ve talked to some of them in the past, and these folks make MacGyver look like a hack. But Netflix execs have been very eager to squash the whole “correction” narrative: Hastings and his c-suite colleagues went from “never advertising” to “Mad Men, baby!” virtually overnight in part because they knew it would give Wall Street types something to talk about other than sagging subscriber growth. It’s hard not to wonder whether jumping into live TV with blockbuster events was a similar attempt to change the subject.

That’s not to say Netflix is wrong to want to make more of its projects feel like events. Audiences crave communal experiences, and tuning in at a given hour makes that a lot easier. The social media attention also acts as amazing marketing. But I’d argue Netflix didn’t need to lead with “live” here. A much easier, possibly less tech-risky option would simply have been to just tape the reunion a day or two earlier and then have it go live on the service at a reasonable hour in the early evening — you know, that things folks over 40 used to call “primetime.” A scheduled premiere wouldn’t have been as gimmicky as a live show, but it might have achieved the same goal — make the reunion into an event — with far less risk.

In the end, the last few days of mildly negative Netflix news are unlikely to have any major lingering effects on the company. The streamer’s stock closed down a modest three percent Wednesday, nowhere near the 35 percent collapse it suffered a year ago this week. Plus, after all the drama of 2022, Netflix shares are now right about where they were at the start of 2020, before the pandemic created a bubble of perhaps irrational exuberance among investors about how big the streamer could get. None of this is to suggest there aren’t serious challenges ahead, including the not-insignificant brand damage it could suffer once its crackdown on password sharing hits the U.S. by the start of summer. But with Disney and Warner Bros. Discovery still going through painful readjustments in their streaming strategies, Netflix’s new normal of slower growth, steady profit and, yes, lowered expectations doesn’t seem too bad by comparison.

This week, Warner Bros. Discovery kicked off a 10-week campaign to sell consumers on its new streaming service Max — which is really its old service, HBO Max, but with a lot more stuff on it. Finally unveiled last week after nearly a year of planning and speculation, Max launches May 23 and will combine the contents of HBO Max and Discovery+ into a super-app, a bet that the company’s execs are undoubtedly praying will pay off.

“For me, one of the KPIs is what I call this probability game of, when you log into your Roku or Fire TV and see the sea of apps, that there’s a higher probability that you’ll choose Max,” says Pato Spagnoletto, Warner Bros. Discovery’s chief marketing officer, as he explains the service’s new slogan “the one to watch.” “The intent is to create a connection with you, the audience, not necessarily in a slapstick way or in an ultra-serious way, but just in a way that gets you, in a way that is relatable,” Spagnoletto said.

For the fledgling Max’s success, creating that connection feels like an existential challenge — the company’s stock dipped a bit after Max was unveiled — but it isn’t a unique one. Spagnoletto caught up with us to talk about the decisions that went into the campaign to rebrand HBO Max and how the company hopes to stand out in a field of streaming services, some of which also happen to be the same color as Max.

Let’s start with the name. Your colleagues spoke about some of the thinking behind it last week. What discussions, arguments, different thinking flew around while you were trying to decide whether to call it Max. Were there any fun rejected candidates that lost out?

It was a highly considered and high-judgment decision. We went through what you probably imagine to be the full array of everything from: Do you change the name at all? Do you go to something that is completely different? You know where we netted out, without calling out any of the names that were completely different. We quickly realized that we didn’t need it to go that far out, but we wanted to continue to lean on as much of the equity that we had built, but give ourselves room to change and signal change, which is where we ended up with Max.

But for sure, when you’re messing around with a name like HBO Max or HBO in it, you can imagine there’s a lot of emotions and a lot of sensitivities. I will say this, that it was always around what is best for the long term of the business and never about personal what do you like versus what do you like. It was long and arduous, but I think we came out with the right end product, hopefully.

I also wanted to ask about the color blue. Your design rationale states that, “it’s a popular color that resonates across genders and age groups.” It strikes me — and people have called this out already — that your competition would probably agree: Amazon Prime, Paramount+, Disney+, they all use blue. Max now uses blue.

Look, I think the name and the color, everything is what you make of it. While, yes, there are other services that are in the blue family, and of course we knew that going into this decision, we thought and believed: One, there’s a reason they’re all blue and it’s because of the consumer psychology behind it and how consumers react to the color. But two, when you look at them and more importantly when you look at Max, just in position to the other ones, it’s a very distinct color, it’s a distinct design. Paramount and Prime are a little bit on the lighter side, Disney+ has more of a gradient. But Max has a little bit more of a dark richness into the blue, which was deliberate — intending to signal not just change from HBO Max of the purple, but a much more sustainable premium version of the service. We think the color that we came up with resonates that.

We’ve talked before and you’ve mentioned that streaming services can be a little bit like selling insurance. That a lot of different streaming services haven’t quite figured out how to differentiate their product from everyone else’s. Everybody knows insurance brands. GEICO has a gecko, the “15 Minutes” slogan. Knowing that, how did you land on “the one to watch” as Max’s slogan?

There’s three criteria that we look at to make sure that these things work. One, is it unique? Two, is it relevant? And three, does it matter? When we thought about the campaign, the brand, and ultimately even the tagline of “the one to watch,” the answer was a convincing yes. The beauty about “the one to watch” is that it works in multiple dimensions. It can be very functional, like “the one to watch on a Sunday night,” but it can also be “the one to watch when you’re feeling inspired,” it can play at different levels. Our job is to own something in a way that’s more than just functional, but has an emotional connection. “The one to watch” gives us a ton of runway to play with that line. You’ll see it in the campaigns starting next week, without a home, where we play with it with mood states, we play with it with days of the week, we play with it with specific content.

There’s a challenge of marketing a new product. Then there’s also the challenge of marketing the programming. Recent HBO hits like The Last of Us and Succession probably benefited from how closely associated the service and the content were in the name and everything like that. Do you worry you’re throwing out the baby with the bath water by removing HBO from the name? Is that something you talked about?

It is, and I don’t worry about it because we thought about it and we planned for it, to be really direct with you. I don’t need to reiterate why HBO’s not in the name, part of it is obviously to preserve the brand equity that is in it. But the perfect answer that I can give you is actually in actuality in the next 10 weeks, we will continue to have title-specific marketing for the upcoming titles that we have, whether it be Love & Death, or The Idol, or even And Just Like That.. — oh, And Just Like That… is a Max title, sorry.

But for the other ones that are HBO, we’re going to be very clear that those are HBO originals that can be found on Max. Creatively speaking, it’s actually not that hard to do at all. That’s where we can have the best of both worlds. By the way, in the actual product experience, we will be very clear about what and where the HBO content lives so that people who are seeking it can find it easily and people who are not can discover it through their own personal experience.

Years ago, HBO Go infamously lagged during Game of Thrones. Then there was confusion between HBO Now vs. HBO Go, and which was which. Then came HBO Max, now being replaced by Max three years later. What if Max.com breaks on day one?

One of the reasons it took us — whatever it is — 10 months to launch this product is we wanted to make sure that we have a platform that scales and that works. The product team and the engineering team, I think have taken the best of both worlds and then added on top of it. Think about The Last of Us, The White Lotus, Succession. These are all titles that had record-breaking viewership, The Last of Us being really the biggest numbers. Thankfully you did not hear anything about anything breaking because of the investments that have been made on the platform, and those are the same investments that will carry over to Max.

We’re very lucky to be able to have a first impression for the second time and that we get to build off of some of the great work that was done by the independent services. For me, success, the next 10 to 12 weeks is not obviously just a successful launch of the service, but more importantly starting to build foundations with consumers from a brand perspective.

If people know and like what the brand stands for, it makes our lives easier to not only acquire but to retain subscribers. We have our work cut out, don’t get me wrong, but I feel very fortunate with the cards that we have in our hands to get it done. Let’s see. Maybe we’ll talk in 10 or 12 weeks, and we’ll be high-fiving or I’ll be telling you of other things that we learned that we need to fine tune.

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