People joked they had ‘completed Netflix’. With such a vast library, the streamer had always been more filler than killer. But strip away the prestige series, the splashy true-crime documentaries and the shows people had always wanted but never found time to watch – and what is now left?

A lot of similar content is the answer. In October, for instance, Netflix released Baking Impossible, a series in which contestants build things out of cake, including a mini-golf course and a robot. Five months later, it launched Is It Cake?, a series produced from the same mould. It has been received as lazy and uninspired compared to what was offered up by Disney+ and Apple.

Lockdown chaos hardly helped the company, with temperature checks and strict social distancing guidelines making filming difficult. Managing Covid risks added as much as 30pc to budgets during the crisis, producers said at the time.

“I know the soaps are going back and they are socially distancing but that doesn’t work with high-end series. Looking at big crowd scenes, big stunt scenes, all of these require very methodical thought and planning,” Ben Holt, Netflix’s UK director of physical production, told the Financial Times in 2020.

“Wearing PPE all the time doesn’t quite work unless you are filming a medical drama.”

In an indication of the level of competition over content, Apple last month became the first streaming service to win best picture at the Oscars, for CODA. This was a bitter pill for Netflix to swallow. 

The company has nakedly pursued the best picture win for years, pouring millions into campaigns for The Irishman, Roma and Mank. But it turns out even a Martin Scorsese epic or beautiful black-and-white film-making can’t make Academy voters choose Netflix. 

Throwing money at the opposite end of the market hasn’t paid off either as judged by comedy action flop Red Notice, which soaked up a $200m budget. 

Pandemic push

Meanwhile, industry figures have even questioned whether Apple’s success at the Academy Awards was a fair reflection of the streaming industry’s strength.  

Tim Richards, chief executive of Vue cinemas, said the achievement was symptomatic of cinemas being closed during the pandemic rather than streamers’ superior commissioning strategy. 

The choice facing the Oscars, Baftas and other global award ceremonies was “significantly more limited” this year because of the cinema shut down, he said, adding: “That’s why you saw a disproportionate number of subscription films up for awards”. 

While Netflix is capable of coming up with the goods – as highlighted by the final season of acclaimed series Better Call Saul this week – there remains a feeling in the industry that the commissioners have lost their touch. 

One television executive questioned whether the streamer had become a slave to an algorithm producing data about what shows are most popular with its subscribers, but failing to identify upcoming hits in the same way a commissioner can. 

Squid Game, for instance, became a stealth hit last year in spite of a lack of marketing. The Korean show’s popularity took the streamer by surprise, evident by it telling subscribers the success was “mind-boggling”.

“They commission willy nilly and there is less rigour,” the executive adds.

“In the glory days of the American networks or Alan Yentob in his prime at the BBC, they reflected the commissioner’s personalities and their interests. There is no sense of that at the streamers. There is a sense that the algorithm has taken over.”  

Share price woes

Warning signs for Netflix have been growing for some time. 

Investors wiped about $25bn (£18bn) off its market value last April when shares plunged 11pc in response to slowing subscriber growth. And in January, the streaming behemoth posted its slowest annual growth since 2015 and predicted its worst start to a new year for 13 years due to a “Covid overhang”. 

The latest wobble caused it to shed another $49bn on New York’s Nasdaq exchange, after Hastings lamented how the “big Covid boost to streaming had obscured the picture until recently”.

That has prompted Netflix to try and shift its measure of success away from subscribers and towards revenue growth, which rose 9pc to $7.8bn year-on-year in the first quarter following its decision to increase prices. A near 10pc rise is also expected in the following three months. 

Netflix has hiked UK prices three times in as many years. Last month the basic tier and premium offer rose by £1 to £6.99 and £2 to £15.99 respectively. Hastings is betting that, despite a number of price bump ups, viewers will still see the service as value for money compared to a meal out – even as the cost-of-living crisis bites. 

How relevant this argument is was up for debate even before Netflix’s most recent results landed. The number of UK homes that have at least one-paid subscription to the likes of Netflix, Disney+ and Prime Video fell by 215,000 in the first quarter.

Netflix’s share of new subscribers has fallen sharply in the past two years, according to data from Kantar. At the end of 2020, 17pc of British households joining a service opted for Netflix. A year later, that had fallen to 5pc.

Increasing prices may simply drive viewers into the hands of Sky, which has been aggregating streaming services into its offers and provides a TV package with Netflix for £26 a month. 

Amazon also offers a more flexible alternative, with its Prime Service costing only £7.99 a month and including free deliveries as well as original shows. Customers then have the added opportunity of paying a one-off fee to “rent” thousands of other shows, often for as little as £3.50.

There is also the question of how far Netflix can realistically use price rises to counter falling subscriber numbers, considering the ease of cancelling a streaming subscription. 

Mark Mulligan of Midia Research says discretionary entertainment spend will be one of the earliest victims as viewers grapple with the soaring cost of fuel, energy and grocery bills.  

“Video subscriptions inadvertently made themselves an easy target,” he adds.

“The sheer volume of choice and competition, combined with rolling monthly subscriptions, make it all too easy to drop one subscription without seriously denting your overall video experience.” 

Balancing act

Meanwhile, Netflix has its own inflation conundrum. 

The wave of streaming rivals wanting to fill their services with exclusive shows has caused the cost of talent, studio space and production staff to rise rapidly. 

If passing costs down to consumers becomes unpalatable then the streamer may be forced to take a hit on profits – a move likely to irk shareholders even further. The stock fell more than 30pc on Wednesday.

Hastings has pinpointed password sharing as a line of attack the company can pursue to shore up subscribers and pull in extra income. 

Netflix could bring in as much as $14bn by converting the 100m households that use shared passwords. Yet enforcing the rules is a fine balancing act that risks irritating existing subscribers and prompting more cancellations if the streamer is too aggressive.

Tom Harrington, of Enders Analysis, says Netflix’s attempts to “dismantle the culture of free that currently surrounds the brand” can “only target the low-hanging fruit, so as not to risk inflaming subscriber relations”. 

The bigger question is whether Hastings’ bet on shifting to an advertising-funded model can bring the kind of security Netflix needs to protect its dominant position. 

According to Neil Campling at Mirabaud Equity Research, the pivot towards a lower tier ad-funded model was an “admission that the latest price increase was a mistake”, but believes it could go some way to balancing out the move.

Global brands such as Nike or Unilever may be attracted by the prospect of paying a single fee for an advertising blitz that reaches all of Netflix’s global subscribers.

The risk, however, is that Netflix simply cannibalises its own subscriber base as viewers decide to pay less and view ads. That could force Hastings into a more complicated system of hiving off the best shows for more expensive packages, which risks even more cancellations. 

Netflix has flirted with diversifying the business by snapping up video games studios – and dished out £500m on Roald Dahl’s catalogue to create a steady stream of hits, following Disney’s example with Marvel Universe. Yet Campling believes Hastings would be better off buying a rival such as Paramount+ to give an extra brand that offers lower-priced tiers of content. 

How Hastings moves forward marks the biggest challenge yet for Netflix, whose growing dominance in the market accelerated the fall of video rental business Blockbuster around a decade ago. After losing subscribers for the first time in ten years, the video streaming app appears at the mercy of its rivals. 

Can Netflix escape its own Blockbuster-moment? As his Oscar glory fades into history, that is one cliff hanger Hastings will be desperate to avoid.