Netflix Co-CEO: I’m Very Sorry That I Promised We’d Focus On Quality A Decade Ago

Back in 2013, Netflix co-CEO Ted Sarandos noted that his company's goal was to become HBO faster than HBO can become us." His point, at the time, was that Netflix wanted to become synonymous with quality and creative artistry in the same way HBO had after decades of hard work.

11 years later, and everything has changed dramatically. HBO is a mockery of its former self after a series of pointless mergers by AT&T and Discovery resulted in thousands of layoffs, higher prices, and the death of the HBO brand. Product quality has deteriorated, with high end television programs steadily being replaced with cheaply produced, lowest common denominator reality TV drek.

And as streaming subscriber growth hits a wall, many other streaming giants have stopped being innovative in similar ways. Netflix, Amazon, and most other streaming giants have resorted to familiar tactics in order to goose quarterly revenue growth. Namely, more pointless mergers, price hikes, annoying nickel-and-diming efforts, layoffs, new restrictions, and sagging product quality.

Speaking recently with the New York Times, Sarandos says he regrets ever having said they were hoping to emulate HBO's approach to quality content. In short, he's forced to admit that focusing on quality won't deliver Wall Street the unsustainable, unrealistic, impossible and permanent growth investors so crave:

Look, if there's one quote that I could take back, it would have been in 2012, I said we're going to become HBO before HBO could become us. At that time, HBO was the gold standard of original programming. What I should have said back then is, We want to be HBO and CBS and BBC and all those different networks around the world that entertain people, and not narrow it to just HBO. Prestige elite programming plays a very important role in culture. But it's very small. It's a boutique business."

Sarandos kind of pooh poohs the obvious sag in Netflix quality by pointing out that the streaming service is still winning Oscars. But, as a leading executive, Sarandos can't really acknowledge a foundational truth: Wall Street's need for impossible unlimited quarterly revenue growth means that, sooner or later, Netflix is on an unrealistic path toward self immolation just like the cable giants that preceded it.

The result: a bottomless roster of terrible reality TV shows about people trying to have sex on remote islands, peppered with a lot of movies like Under Paris.

As a publicly-traded company you can't just consistently offer a quality product people love. So inevitably, sooner or later, once normal subscriber growth taps out, you're forced to get creative." That creativity, especially in media and telecom, almost always results in pointless mergers to goose stock valuations and nab tax cuts, cutting corners on customer service and support, going cheap on product quality, while simultaneously raising rates and imposing more and more annoying restrictions.

Add lazy automation to the lowest common denominator chase for eyeballs at any cost and you have to wonder what mainstream television looks like a few decades from now.

To be clear, I still think Netflix offers a decent value proposition. Especially in comparison to traditional cable TV. But there are endless warning signs that Netflix executives are dead set on pushing their luck in terms of weird restrictions, sagging quality, and price hikes, and that will end badly.

Executives think they can strike a balancing act between quality and mass adoption at unlimited scale, but Wall Street's demand for impossible, unlimited growth isn't an achievable or realistic ask. And this inevitable trade off, where consumers consistently are asked to pay more for less, ultimately isn't sustainable, opening the door to another wave of disruption.

In Netflix's case that will increasingly come in the form of free or ad-based short form video apps, or piracy. And when piracy surges in response, which data suggests is already happening, streaming executives will blame absolutely everything but themselves.