Their dwindling catalog is the result of the other services thinking that removing their old content from Netflix will help them. But nobody is going to subscribe to a different service just so they can do a one-time watch of a series that has been on Pirate Bay for five years, so all those companies are really doing is depriving themselves of the money Netflix would have paid them to license that series.
What about the super-series content? netflix just purchased the rights to Seinfeld for example -- probably for an insane amount of money. Or The Office which is leaving netflix in a few years.
Those probably drive new users and retain current ones.
