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Trouble Ahead: Netflix's Bad Quarter Could Turn Into a Bad Year

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Ever since the news that Netflix would be losing Disney and Marvel content—a move that's well underway—as well as Friends and The Office in the next couple years, analysts have been predicting that the streaming giant is headed for a major loss in subscribers. But yesterday Netflix announced its first major drop in U.S. subscribers—126,000 left in the second quarter—indicating that the exodus may have already begun, indicating that a lack of licensed content isn't really the issue.

BlogThe Office and Friends are, according to some reports, the most-watched shows on Netflix, and they're still on the service. Rather, by Netflix's own admission, Q2 was light on tentpole original content. The third season of Stranger Things didn't premiere until Q3, Orange is the New Black's new season is coming later this month, and season three of The Crown is coming later this year.

When Netflix doesn't have to pay the hefty licensing fees for Disney/Marvel, The Office, and Friends, it will have even more to spend on Netflix Originals, and it's going to have to do just that. Original series like Ozark and Dead to Me pulled in Emmy nominations, but nobody is checking daily to find out when the next seasons will premiere, so Netflix is going to have to come up with a lot more original series to fill the void. And let's face it, as big as i is, Netflix has yet to create its Game of Thrones. Netflix has had a few blockbusters, but has yet to create a mega-blockbuster like that.

With Disney+, TimeWarner's HBOMax (which will feature Friends), and NBCUniversal's yet-unnamed streaming service (which will include The Office) in the wings, Netflix has its work cut out for it, and that work needs to happen on two fronts: the blockbusters and the "comfort food" series like Friends and The Office, which are the streaming equivalent of the M*A*S*H reruns that used to run on local affiliates up to three times a day: shows that keep viewers coming back but don't demand too much from them. Unfortunately for Netflix, that kind of content isn’t necessarily something they can create themselves, as it requires familiarity, nostalgia, and many seasons' worth of episodes.

Without it, though, Netflix's days as the undisputed streaming service champion are over.

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