Is This The End Of Netflix?

Netflix’s stock is absolutely tanking right now and executives are panicking. Netflix recently announced that they’ve lost over 200,000 subscribers in just the first quarter of this year alone and plans to lose 2 million more subscribers by this July. As a result, Netflix has lost over $50 billion dollars in company value and Wall Street has almost completely turned on them. Why did this happen and why is Netflix adding ads to their service and what’s all this talk about cracking down on password sharing? Well, if you stick around until the end of this article, I think that I can explain to you why all of this is happening and why I think people are unsubscribing in the first place. So get ready. This is going to get interesting.

Hello everyone, I’m that movie girl and I am here to break down the latest in Tinsel Town and just try to make sense of this changing media landscape. Today I’m here to talk about the potential demise of Netflix. Yes, I’m being a little dramatic but you’ll see what I mean in just a moment. In the meantime, I would really appreciate it if you would join this newsletter, that would be totally awesome. Also if you would rather read this video in text form you can hope over to the article version of the video on Medium. The link is in the description below.

So why Is Netflix tanking right now? What’s happening? Well, there are roughly 3 reasons why I think Netflix seems to be on a bit of a decline at the moment and if you make it until the end I can even give you some of my predictions for the future of Netflix and the industry as a whole so stick around.

The Problem With Netflix Today

Problem One: Too Much Junk

Today, Netflix is a massive platform filled with an overwhelming assortment of films and tv shows that you can easily get lost in. Netflix used to be the go-to streaming service for just about anything you could possibly want. But ever since other studios started taking their own IP off of Netflix to build their own streaming services, Netflix’s strategy seems to have shifted. Now, instead of providing quality content backed by a huge catalog of giant hits from other studios, now it seems they just throw every piece of content they can think of at you in hopes that something eventually sticks. The whole point behind doing this is to provide you with just enough content to keep you subscribed month to month while occasionally providing massive hits like Squid Game or Stranger things to stay relevant in pop culture. The problem is, for the amount of content that Netflix actually puts out, their occasional mega-hits are just that…. occasional. You get way more shows like “Is that Cake?” and less like A Queens Gambit or Bridgerton. Anyhow, when your entire business model revolves around spending 100s of billions of dollars a year on original content just to hope for 1 or 2 mega hits, you can see how that might not be the soundest financial strategy for the long term.

Problem 2: Too Much Competition

The pandemic birthed countless competing streaming services including Disney+, HBO Max, Peacock, Paramount + and soooooo many more. Every studio wanted to make that Netflix money. After all, the traditional ways of consuming media are dying and Wall Street (at the time) loved Netflix. Getting into streaming just seemed like a no-brainer for Hollywood. Now Netflix has a new problem. Offering low-quality originals most people will forget about just days after watching is no longer going to work for them when you’re competing with the likes of Disney+ which has the entire MCU, all of the Star Wars movies, and classic Disney animated films on their platform. Netflix doesn’t have any of that. HBO Max has the entire Harry Potter saga, Game of Thrones, and every recent Warner Brothers release. Netflix doesn’t have any of that. Essentially, how can Netflix justify being the most expensive streaming service when they don’t even have the most popular content? This is an issue I don’t think Netflix can overcome and something Wall Street is definitely aware of.

Problem 3: Netflix Spends Waaaaaaaaay Too Much Money.

Can you guess the first year Netflix was actually profitable? Keep in mind Netflix first started as a company in 1997. If your answer was 2020, then congratulations, you are correct. Yes, you heard that right. Netflix the company that’s been around for 25 years hasn’t made a single dollar in profit until just 2 years ago. Don’t get me wrong, Netflix makes a lot of money but they also got themselves into a lot of debt to get there. As of 2020 Netflix has over 16 billion dollars in debt. Let me read that again. Netflix has over 16 billion dollars in debt. Yeah, streaming can be really lucrative but it’s also really expensive. In just this year alone Netflix is planning to spend 13.6 billion dollars on new original content. 13.6 billion dollars! And that number is up from last year when they spent 10.81 billion on original content. This is clearly not sustainable. If you take into consideration Netflix’s massive debt, increasing competition, and weak content options, then you can see why maybe Wall Street isn’t so enamored with them anymore. How did anyone not see this stock crash coming? I mean the warning signs were there. But all Hollywood cared about was the sweet cash Netflix was making and everyone wanted in.

I don’t think that Netflix is in any real danger just yet. However when I see recent stories like how Netflix’s own employees apparently no longer have faith in the company’s long-term future…. Well, that does make me question Netflix myself. But for now, they are still by far and away the number one streaming service and it’s not even close. Netflix knows about the issues they’re facing and here’s how they plan to fix them:

1. They are going to crack down on password sharing which means you can no longer share your password with your entire family who lives all across the country without paying more. This sucks for the consumer but makes sense for Netflix since apparently, they lose out on 100 million households from password sharing alone.
2. They are going to introduce ads at a lower-priced subscription fee. Their hope is that this will convince more people to subscribe to Netflix who currently don’t because of cost reasons. I don’t really know how well this is going to work out for them though. Even if Netflix is cheaper I think most people by now know what they’re getting into and have already decided if they want Netflix or not. A lower-priced option might entice some people but I don’t think it’s going to be a large amount.
3. Netflix is going to put out less content in favor of more premium, high-quality content…. or so they say. While it does make sense that Netflix would start to cut their spending on original programming I have my doubts about this plan. No studio sets out to make a bad movie or streaming show on purpose. If Netflix could make a lot of high-quality hits they would be doing so already. Basically what I’m saying is that this is all much easier said than done.

So will this new strategy Netflix is shifting to save the company? I think the jury is still out on this, to be honest. Yes, Netflix has a lot of challenges to overcome but it’s also the only non-Amazon prime-related streaming service to have over 200 million subscribers so yeah, that’s not nothing. I think Netflix is going to have to figure out a more sustainable way of building their business and not just relying on just throwing tons of money at something and hoping something good comes out of it because honestly, I don’t know why this was ever their strategy to begin with. I mean it’s clear that this was never going to work forever.

But anyway, what do you guys think about what’s happening with Netflix right now and what advice would you give them? Let me know down in the comments below. That’s all for now, I’m that movie girl I’ll see you next time.