How Netflix’s “Stranger Things” experiment helped to beat subscriber estimates
By Maru Entertainment & Technology | August 2, 2022
Ever since reporting an overall subscriber decline for the first time in ten years—a 210k fall— in April, the streaming giant’s fortunes radically changed.
The streaming giant predicted much worse fortunes for the second quarter. In their Q1 shareholder letter, a forecast of 2 million subscribers lost was made. As it was, Netflix reported a total subscriber decline of 970,000, beating their own estimate and buoying investors.
One reason for this better-than-expected performance is a new release strategy. Fearing that another set of negative subscriber results in the Q2 results would worsen their market valuation, Netflix experimented with hit show “Stranger Things,” which was set for a Q2 release on May 27.
Unlike Netflix’s regular release strategy for shows, where all episodes are available at once, Netflix opted to hold back on the final two episodes of the season, releasing these instead on July 1. Coincidentally or not, this is the first day in the Q3 reporting period and meant that Netflix would be able to rely on subscribers across the world remaining in the system until the second quarter was over.
Maru’s Entertainment and Technology team attempted to quantify the impact that this new strategy had on Netflix subscribers. Respondents were first asked whether they had watched any of June’s high-profile streaming releases. Of note is just how dominant Stranger Things was, with it seeing close to double the reported viewership of other big streaming drops.
Viewership was strongest among the youngest cohort, with over half of 18-34s saying that they had watched the show recently. Compare that to the levels saying they’d seen Obi-Wan Kenobi or Umbrella Academy and you can see precisely why Netflix utilized the delayed-finale strategy for the hit sci-fi horror show.
The vast majority of viewers are determined to keep their Netflix subscription now that the season is over. Rebasing these figures to be among all Netflix subscribers (n=938) does show a very small figure of 0.6% who are bottom box or not at all likely to keep their subscription.
Even if a third of these followed through, and global subscriptions followed suite, that would be a subscriber decline of -0.2% attributed to “Stranger Things” being over, greater than the -0.1% change in Q1 which precipitated the tremendous fall seen in Netflix’s value. Thus, stretching these out into another quarter will have aided Netflix in beating their forecast.
Netflix officially remains committed to their ‘all at once’ release strategy for content. Yet the success of the Stranger Things experimented in mitigating losses (at least until the following quarter) will likely result in other tentpole content like Squid Games, Bridgerton and The Crown seeing the finales extended to the start of the following quarter. It will be a strategy Netflix uses sparingly and won’t be for all major content pieces, but it is a play to expect the streamer to strategically return to.
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