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Is Netflix having its own Blockbuster moment?

A variety of unpopular decisions threaten to turn the streaming service into the bad guy it once dethroned.
Image; Netflix office, Hollywood Exteriors And Landmarks - 2021
The Netflix office in Hollywood, Calif.AaronP / Bauer-Griffin/GC Images file

The initial idea for Netflix was born, the story goes, on a visit to Blockbuster Video gone awry. “I had a big late fee for ‘Apollo 13,’” founder and CEO Reed Hastings told The New York Times. “It was six weeks late and I owed the video store $40. I had misplaced the cassette. It was all my fault. I didn’t want to tell my wife about it. And I asked myself, ‘I’m going to compromise the integrity of my marriage over a late fee?’”

This origin story, which appeared in Vanity Fair, Fortune, CNET and other outlets, is apocryphal; co-founder Marc Randolph subsequently disputed it as “emotionally true” but “oversimplified.” But part of why that story played so well to Netflix’s expanding customer base — the reason it feels “emotionally true” — is that Blockbuster was, for a variety of reasons, a villain. And it was thus easy for Netflix to position itself to an eager customer base as the scrappy underdog looking to disrupt the video rental business.

If Netflix has entered its Blockbuster era, it’s hard to guess precisely what its spoiler will look like.

These days, however, the roles have shifted. Netflix dominates home media consumption as much — if not more — than Blockbuster did in its late-20th-century heyday, its brand name as interchangeable with streaming entertainment as Blockbuster’s was with video rental. But a variety of unpopular decisions threaten to turn Netflix into the bad guy it once dethroned. Is it risking a fall from grace of its own?

The complaints from its customers, and from critics online, are not without merit. The company raised its subscription price early this year — the third such price hike in the past four years. But subscribers are increasingly paying more for less; its library of streaming films and TV shows has been steadily declining for years, with the streamer diverting most of its budgeting for licensing fees to the production of in-house originals and acquisitions (and increasingly losing streaming rights to rival services). The library of its DVD-by-mail service, originally the cornerstone of the operation, has similarly shrunk to a shadow of its former self. And countless beloved Netflix original series – “GLOW,” “The Babysitter’s Club,” “American Vandal,” “Mystery Science Theater 3000”and “Sense8” among them – have been abruptly canceled, infuriating their enthusiastic fan bases.

And what is that fee increase paying for? Increasingly dodgy material — sloppily assembled true crime docuseries, rinky-dink Ryan Reynolds vehicles, carbon-copy rom-coms and pricey “comedy specials” from transphobes and has-beens. (When Netflix’s comedy account, “Netflix is a Joke,” posted a dated, unfunny joke from its new Jeff Foxworthy special, several of the copious @-replies quote-tweets specifically mentioned the price hike.) Meanwhile, the company is attempting to further enrich its coffers by cracking down on password sharing, in stark contrast to the suggestion of (checks notes) the official Netflix Twitter account, which tweeted in 2017, “Love is sharing a password.”

This recent proposal — an attempt to increase subscriptions, as growth has otherwise slowed – could amount to the digital-age, streaming-era equivalent of Blockbuster’s long-loathed late fees: a transparent cash grab for something that everyone has done, and that ultimately amounts to a tiny financial hit for a comically well-funded media company. To be sure, Blockbuster’s villainy was rooted in different issues: how it used its deep pockets to put mom-and-pop video shops and smaller chains out of business; how it focused, with a Netflix-like single-mindedness, on new releases over catalog titles; how its “no NC-17” model forced edgy filmmakers like David Cronenberg, Darren Aronofsky and Abel Ferrara to create bastardized R-rated versions of their movies; how it used hefty rental prices and peculiar, frequently shifting due dates and times to squeeze its customers. It was primed for toppling; Netflix came along at the right time, with the right alternative.

If Netflix has entered its Blockbuster era, it’s hard to guess precisely what its spoiler will look like. It may be an unpredictable business model or an as-yet-unimaginable technology. Or it may just be that other services are now doing what Netflix initially did, but better. Amazon Prime and HBO Max have far better film catalogs, Criterion Channel tops Netflix easily in classics, Hulu has Netflix beat by a mile on TV shows, Disney+ is the pick for kids and Shudder is the place to go for original genre films and series. Once upon a time, Netflix seemed like a one-stop shop; nowadays, it’s just one of the many streaming services one has to put together for a complete package of viewing options.

Netflix is still handily on top — its 222 million global subscribers still nearly doubles its closest competition, Disney+ (at 118 million) – so perhaps it has no reason for concern. But its rivals are gaining ground, and Netflix is starting to lose the long-term battle for hearts and minds as fought in the trenches of public relations and social media. It has rapidly transformed from a David into a Goliath, and while its origin story may have been somewhat debunked, it can still learn from its lessons.