The biggest news of the week (and the source material for Bryce’s most viewed TikTok ever) was Netflix’s net loss of 200,000 subscribers for the quarter. The streaming giant saw its share price fall 38% over a couple of days, bringing its fall to almost 70% from mid-October.
This article from Vulture contextualises the Netflix news of the week in the broader story that is unfolding. That is one of a hyper-growth stock, that ate Hollywood, cleaned up awards nights and changed the way we consume content, that is reaching the end of that S-curve. Netflix, even just a couple of months ago and despite a soft January quarterly report, was discussing their path to 500 million subscribers. Now, people are questioning if the streamer with 222 million subscribers today, will make it to 300 million.
There is no guarantee that Netflix is at the top of their S-curve and growth will slow or plateau. Nothing is set in stone. But the increased competition and low percentage of home-run, must-watch shows is having an effect on Netflix’s viewership. It is clear that Netflix’s co-CEOs realise this and this article discusses some of the internal changes they’ve made in response.
But our conclusion, at the end of the day, is that Netflix is no longer in the technology business. Streaming is a commodity. Netflix has no competitive advantage there. They are now in the content business. And that is a much tougher business to build a sustainable competitive advantage and continue growing. Although you’d be a brave person to bet against Reid Hastings and the Netflix team.
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