Netflix has bet its future on high-quality original content. And, it has spent huge amounts of money trying to make that future a reality. Last year, for example, Netflix spent more than $15 billion on content, more than any other streaming service. This year it spent a reported $160 million on the Martin Scorcese film, The Irishman.

It looked like it might pay off, earning a total of 10 Academy Award nominations. That is, until last night, when, for the second year in a row, the biggest story about Netflix's Oscar showing is that it came home nearly empty-handed.

I say nearly, because the company did win two awards, Laura Dern for Best Supporting Actress in Marriage Story, and Best Documentary Feature for American Factory. That's out of a total of 24 nominations, a huge number even compared to last year's 15 nods.

To be clear, that's not to take anything away from last night's winners--all of whom were deserving. For example, Best Picture-winner Parasite was widely praised and broke ground as the first foreign language film to win the top award. But for Netflix, it's hard to describe the losses as anything but a major disappointment.

For what it's worth, Netflix has shown that it has production chops. It is absolutely capable of capturing an audience with shows and films that are on par with anything coming out of traditional studios or competitors like Amazon. But creating high-quality content is quickly becoming the barrier to entry for a streamerr, not a unique value proposition.

That's because high-quality content production has become a crowded space, especially as HBO Max enters the streaming war in the next few months, and competitors like Disney+, Amazon Prime Video, and even Apple TV+ continue to spend on big name talent in an effort to attract an audience. For example, WarnerMedia spent $250 million on a deal with JJ Abrams to create content for HBO Max.

The biggest problem for Netflix is actually the simplest one. That's because the biggest problem is one of expectations. Netflix has created huge expectations for itself. It has long been the largest streaming service by number of subscribers. It spends more on content than anyone else. It accounts for more than 12 percent of all internet traffic. Shows like Stranger Things are watched by more people than just about anything on television. 

All of that creates huge expecations, and expectations provide a clear dividing line between success and failure. When you exceed expectations, it creates extraordinary momentum.

That's why Netflix invests so much in promoting its most-watched shows (which all conveniently happen to be original productions). It's why it spends on Oscar and Golden Globe campaigns, because those awards provide validation.

On the other hand, when you fail to meet expectations, the story isn't how you did great but just fell short of a standard that was too high. The story is that you failed. And, like success, the expectation of failure can become its own self-fulfilling prophecy.