Those people impacted aren't simply going to go buy Netflix subs, they are going to use passwords from friends who have other services.Īnd it's unlikely that Netflix is going to get "help from above" again. Even something as simple as cracking down on password-sharing is going to do more harm than good for the time being. We knew the bubble was going to burst but just wasn't sure when it would happen.įor now though, yes Netflix is in for a world of hurt this year and investors looking at the short-term are not going to get any relief. Now part of that was because COVID lockdowns drove their bottom line up significantly, but we are now going back to where we were pre-pandemic. It's not that the pair were clueless about the situation, they were just subscribing to the "if it isn't broke, don't fix it" adage for too long. The problem is that eventually the holes got so big they were visible externally and fear set in.Īlthough Hasting and Sarandos know what they have to do - and that's why I'm not concerned about the long-run viability of the company. Hastings and Sarandos knew the ship was sinking and have been working on patching the holes for a while. It's easy to kick Netflix when it's down, but it won't do any good for investors. In a rare misstep, the streamer got into other areas (like the consumer products and gaming spaces) late in the game and we won't see the fruits of that labor for a while - but note they will come. That's why when Disney (NYSE: DIS) hits a streaming roadblock they can point to their booming parks business or when Apple TV+ was struggling in the beginning, Tim Cook could remind everyone of the success of its hardware lines. Netflix is not diversified across other sectors so all its eggs are in one basket. Here's the other problem - and the bigger one that gets more glaring after each report. They need to get more subscribers and going cheaper is one of their only real options. Now with Netflix being the most expensive streamer and the stock in freefall he doesn't have a choice but to change gears. Maybe that will change now, after all, opting for an ad-tier approach was something Hastings and team were always against citing " complexities" that took away the simplicity of the service. ![]() Going weekly has been a big help for Netflix's rivals but it still seems to be a bridge too far for the company. The truth is the lack of an ad-option and a blank check for content for the past few years are both problems inherently Netflix-specific, as is a stubbornly steadfast dedication to an "all-at-once" approach. And that's not even discussing offerings from the other big names in the space. ![]() Plus Discovery and WarnerMedia's (NYSE: WBD) new marriage is barely a week old and the final AT&T (NYSE: T) earnings report including them just came out showing gains for HBO Max. For example, Apple (NASDAQ: AAPL) is coming off big Emmy and Oscar wins, a new MLB deal and a number of big-name content partnerships. ![]() And just like that Netflix went from being the center of the universe to the outlier.īefore we write off streaming and move towards whatever "next" is…maybe we wait a quarter and see how the other big guns report out. Remember everyone thought the sky was falling after the last earnings report and then one-by-one every other streamer reported some level of stability or gains. The larger problem is Netflix's massive spending which has always been an issue.īut that's also the point, most of this is a Netflix issue, not a streaming industry issue. ![]() Yes, both of those will help right the ship down the road, but neither is a magic bullet, neither is a perfect solution and both are still far away from being implemented. Things like password sharing and an ad-tier option were right there front and center. Hastings noted he wanted to get back into investors' "good graces." That means all of sudden the topics that were taboo to these calls in the past were no longer off limits. Hastings and Ted Sarandos had to sell its investors the silver lining of this black cloud and they took a very un-Netflix (NASDAQ: NASDAQ: NFLX) like approach. He was more reserved and looking to give off the air of self-reflection. The usually more jovial Reed Hastings didn't show up in a Squid Game track suit or make a lot of jokes to lighten the mood this time per his usual approach to their earnings call. I don't need to get into the specifics but it took some big subscriber losses that shook the company to its core. And in this season's premiere, it got even worse. Let's get something out of the way right up front.Īt the end of the last season of "Netflix's Terrible, Horrible, No Good, Very Bad Day"- the series, the streamer was rocked by bad earnings.
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