Netflix Say Down with Subs! And Pretend Streaming’s Discoverability Crisis Isn’t Happening.

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It’s that time again, Netflix earnings. Generally, all’s well in the house of TUDUM. Advertising continues to be a key focus, the toe dip into live with WWE seems to be turning into more of a gusset drop, and content remains at the heart of every decision. The main shocker was the announcement that they’re no longer going to disclose subscriber numbers from next year, which I’ll get into more in a minute.

?But first, some shameless plugging…

Bluey, BLUEY, BLUEY, before you think the show can’t get any bigger, it does. Feature episode “The Sign” dropped in the last few days and is sure to drive monstrous engagement. Last week I wrote up my thoughts on what the IP can tell us about building a kids brand in 2024 for The Drum.

In addition to this, for London folks, the lovely team at Precise TV are having me over for this free event in a few weeks. I’ll be hashing through the art of building a preschool IP in streaming, with Bluey at the core, natch. You may have heard me speak of Precise TV before; they publish the quarterly PARK report, a data source on kids streaming I reference often. Please come along—it would be lovely to see old friends and new.

Finally, we’ve had some stunning recent guests on the Kids Media Club Podcast. Sophie Peachey schooled us on how Gen Z consume news and Stephen Dypiangco got into the nitty gritty on Roblox. We’ve lots more exciting guests in the mix for upcoming episodes.

And now back to our scheduled programming…

Key Netflix Earnings Headlines

Subscribers are out… I said out, not down. They’re actually up over 9 million and Netflix took this strong moment to redefine their own “keeper test.” The streamer will no longer be sharing quarterly subscriber movements at earnings. This deconstructs the opportunity for scrutiny on this metric. Timely, given they’ve just had a bump from password crackdowns which will undoubtedly soften.

Lots of services don’t share this metric: Apple, Amazon… That being said, lots of services aren’t one trick streaming ponies.

Engagement is in… which means more details on content performance. The six-month data drop at the end of last year will continue, with further areas of disclosures coming too. Y’all know I’m here for the data. And will be chewing up and spitting out anything that relates to kids media.

Netflix really, really, really want you to know that they’re good at content discovery… A full paragraph in the letter was an ode to how successful the Netflix platform is as a promotional tool. Impressions for trailers outstrip the count on YouTube. Features like “remind me” and the hallowed recommendation algorithm drive content to broad audiences and into the zeitgeist. Who doesn’t like a gourmet cheeseburger? And I get it, I agree, but I have one issue. Netflix are great, wonderful in fact, at hard-hitting promotional plans for typical streaming hits. They literally wrote the playbook, and it works. The fault line lies in audiences outside of that broad target. I’m talking about kids, obviously. We know that cultivating a following with younger audiences takes time. It’s not as simple as PR-ing your way there with star talent. Neophobia is real—sampling, sampling, and sampling again is the only antidote. This requirement hasn’t really gelled in streaming, as you essentially need to keep plugging something that might not be immediately popping. Netflix want immediate hits, but kids don’t work like that.

Kids Content Performance:

Kids Series

Coming in as a surprise outsider on series (and completely contradicting the above rant—FFS—one outlier DOES NOT make a pattern) was Bad Dinosaurs, ranking for three weeks now and holding. Hats off to this Original series for cutting through, and that’s without the backing of a major toy or gaming company as far as I know.?

If one thing remains true for kids TV, it’s that physical comedy and fart jokes still sell. Is the Netflix recommendation algorithm directly coded for flatulence? Should it be? You decide!??

The clear winner of the quarter was Hot Wheels: Let’s Race from Mattel. The show featured in the top 10 across four weeks. When looking at comparable shows (which are hard to come by so forgive me for keeping it broad) we can see that it came in neck and neck with Unicorn Academy, which launched from Spin Master before Christmas.?

Staying with series, it would be remiss not to mention the live-action adaptation of Avatar: The Last Airbender, a long-running Nickelodeon anime-inspired animated series. This was referenced specifically as a success in the Earnings letter. It topped the charts for Netflix, both globally and in the US, bringing in numbers matching the streamer’s other recent anime adaptation One Piece. Something Netflix do exceptionally well is carving engaged audience niches out into mainstream, creating a natural flow for viewers from one show to another. And they’re particularly adept at doing it for teen-skewing fare. Ginny & Georgia leads to My Life with the Walter Boys. Heartstopper leads to Sex Education. Emily in Paris leads to XO, Kitty.?

Kids Movies

For film, the main Original feature that launched this quarter was Orion and the Dark. This came from DreamWorks, in a new straight-to-streaming approach. The movie dropped on Netflix February 2nd and, from a global performance point of view, wasn’t a premium draw for the streamer. More like The Monkey King or The Magician’s Elephant, rather than Leo,starring Adam Sandler, which struck big over Christmas.

More devastating for DreamWorks, however, was the streaming performance of Ruby Gillman, Teenage Kraken. This film bombed at the box office last summer and didn’t fare any better in its first US Netflix window. It hit lower than any other previously pronounced turkeys such as Lightyear and even Strange World. It does underscore just how overachieving Elemental on Disney+ was, despite tales to the contrary. Animated features for original IP are in a tough spot currently, but there Elemental gives at least some hope.

It takes all types of family movies to prop up a streaming service of course, and Netflix remain dependent on animated films from seasoned cinema franchises hitting their service. There is a particular reliance on DreamWorks’ sister studio, Illumination, which regularly holds multiple spots in the top 10 ranking thanks to The Super Mario Bros. Movie, which continues to drive hard, and instalments from the Minions franchise.

One final shout-out on film goes to The Casagrandes Movie from Nickelodeon, a derivative of their animated series The Loud House. This came in very modestly, even below Orion and the Dark. You’d be forgiven for wondering why this title wasn’t retained for Paramount+. There seem to be wholesale changes happening with the kids strategy at Paramount Global overall which might be behind this decision. Other developments include the shuttering of preschool streamer Noggin, and a rake of kids shows suddenly dropping off Paramount+including what you’d expect to be key series like Blue’s Clues & You!, Rugrats and Ryan’s Mystery Playdate.

What’s Next?

On the animated feature front, next quarter sees Thelma the Unicorn hit on May 17th. On the face of it, this movie ticks quite a lot of boxes: catchy music, unicorns, spunky characters, laughs. Let’s see what it can bring in for the streamer.

For series, Jurassic World: Chaos Theory, sequel to the very successful animated series Jurassic World: Camp Cretaceous, is set to release in May also.

In the longer term, Sarandos referenced excitement for the “big new animated feature” Spellbound, promised before the end of the year. This will be the first movie from the deal with Skydance Animation under John Lasseter. Lasseter took the helm of the production post greenlight and brought in musical legend Alan Menken. Voice talent currently consists of ?Rachel Zegler as the lead, plus Nicole Kidman,?Javier Bardem,?Tituss Burgess,?John Lithgow,?Jenifer Lewis, and?Nathan Lane.

So, there you have it. Wall Street frothing at the mouth regarding streaming subscriber numbers will soon be a thing of the past. In its place they’ll get to join us in losing their minds about content performance. More focus on which shows are hitting and which are not will have to shed light on streaming’s underlying content discoverability crisis. Disney+ are purportedly turning back to tried and tested methods to solve this, looking to bring in brand lead linear feeds.?

?Imagining new ways of applying the historical programming toolbox seems sensible to me. It’s certainly better than hoping/pretending that streaming recommendation algorithms are anywhere close to where they need to be. Particularly when stickiness driven by competitors like TikTok is so obviously streets ahead. This is sure to become more in focus as the leading front in “streaming wars” evolves from user volume to user engagement—the next frontier.?