After changing the culture with the introduction of streaming, Netflix has hit a wall. Even more ominous, the divisions and corporate material are being arranged that will lead to its downfall. This is not investment advice in any form. This is just the warning that the death of Netflix will come soon.
If you doubt this, look up the stock chart for Blackberry. Blackberry was one of the four horsemen of the tech investor world. It allowed you to email from a mobile device. Blackberry was at all time highs even when the Iphone was introduced and other phones accumulated more capabilities. Blackberry never recovered from the financial crash because by the time the market bounced back, having an Iphone was all that mattered.
Netflix experienced its first reduction in subscribers. Analysts expected growth of over 300,000 subscribers but actually, they lost over 125,000. The stocked dropped and apologists said it was a temporary occurrence. Revenue was in line thanks to their subscription fee increase. The storm clouds are there because what exactly is Netflix? It is a pizza delivery service.
Netflix is like a pizza delivery service as they set up the infrastructure and system to deliver to you Hollywood content. Netflix was always going to be subject to competitors who could do the same. Their executive team was aware of this, which is why they moved into becoming a studio that produced content. After several years of big investments, does anyone associate Netflix with quality content? No, but they do associate it with wildly pozzed series.
This is a situation of ideology of the staff and employees destroying a chance for success. What does Netflix have that every studio would die for? Unlike the Nielsen ratings, Netflix knows exactly what every viewer watches, how often and what their account profile is. Nielsen is a sampling. Netflix is the whole population. Netflix could craft content to match what Hollywood products new and old generate the most views. This is the reason they rebooted Danger Mouse.
Netflix’s problem? Excessive pozzing and needlessly appeasing woke preferences. Netflix observed households watching horse shows and pony cartoons therefore they greenlit a live action show about an American girl who visits her family in England, tries to fit in and makes friends with a horse. The lead girl? A half black girl that immediately hampers the ability for a large majority of young viewers to identify with. Netflix does this over and over again with their original content. The manga vs. anime vs. Netflix adaptation meme is perfectly expressed via their Witcher adaptation, which is annoying Witcher fans and likely suppressing future viewership.
An upcoming title is Slutty Teenage Bounty Hunters. It is a comedy. This is already cast. It sounds like a ’70s porn title or a biker movie. This is what Netflix will be banking on in the future. They had an opportunity to do things differently, to zig when Hollywood zagged and to use their streaming user data to carefully craft exactly what people want to see. If Friends really was the most popular show streamed on Netflix, make a Friends rip off. The new titles will be low cost productions with some hook. They want clickbait come to the streaming service. Clickbait failed internet journalism. It will fail here.
After years of this, Netflix has squandered time and their edge. Other streaming services are popping up, with studios launching their own. The Office is leaving Netflix, its most watched property of all time, because that studio wants the rights to offer it. Disney launches it service soon so why would Disney keep their content on Netflix? As streaming services pop up, people will pick and choose which services they want to have a la carte. Netflix has nothing.
There is one more out Netflix has, and that its defenders will push. Netflix has such amazing viewer data that they can start showing advertisements and sell that ad time. This comes with multiple pitfalls. First, people use Netflix because it has no ads. This could cause viewers to tune out and move to other services. Second, Netflix knows the household account, but how much about the buyer within the household? Third, Netflix does this and it allows Amazon to use ads for its Prime streaming which is like bringing a knife to a gunfight.
The moment Netflix implements ads is the moment Amazon can implement ads. Netflix loses this battle. Netflix has data on its subscribers, but Amazon has the greatest dataset a firm would want to have to sell ads. Amazon can sell ads to firms knowing every single item purchased by the subscriber watching content via their streaming service. Amazon could limit the ad to one per show or maybe three for a movie, and charge rates that would be akin to a show worth of commercial breaks. You might hate the ridiculous head meds, viagra and beer ads on network shows, but Amazon can make sure that you get specific ads that match up exactly with what you have bought for your entire Amazon shopping life.
This is the predicament that Netflix finds itself in currently. The content is weak. The competitors are stalking them. The reliable shows and movies people watch on Netflix are being returned to the studios. Let analysts talk of 10-20% drops in the next year. Netflix has nowhere to go but zero once the rest of the Hollywood machinery has caught up.