It's interesting that Netflix's hits seemed to come towards the start of their career producing content. If the issue is "hits are hard" then I would've expected them to struggle first.

My intuition is that it's more like statistics led Netflix to produce low quality content that performed on their target metrics. This strategy led Netflix to a local optimum that is far from a global optimum. Plus, given market conditions, that local optimum is starting to be, objectively, pretty bad.