Are investors worried the streaming wars are about to get ugly?
"Netflix Inc. shares dropped as much as 25% Friday after the company reported its slowest growth since 2015, and forecasted its worst start to the year in at least a decade. Netflix shares have now dropped 43% over the last few months, wiping out almost $130 billion in market value."
It's a variation of the old "200 channels and nothings on" issue cable faced just before cord cutting became a real problem for the cable companies. Except now subscribers can do their own version of a la carte. Netflix was the darling of cord cutters at first but now people have many options - Amazon Prime, Disney+, Hulu, YouTubeTV, Paramount+, and HBO Max to name a few.
The problem was summed up in one sentence in the article, "They [Netflix] need to give customers a new reason to pay every month, and that is both hard and expensive." Netflix's competition faces the same problem but to a much lesser degree. I have Amazon Prime because I signed up for the free shipping - the video service is a bonus. Disney+ can release a new Marvel or Star Wars series on a regular basis and add in the newest Marvel or Pixar movie while they're at it.
People don't need all of the services - they don't have time to watch them. So they can drop a service and MAYBE come back if there's a compelling reason. Netflix may be number one right now but their foundations may also be built on sand.
It doesn't help that they raise prices all to often.
ReplyDeleteThat's a big factor. You can't keep raising the prices on people who have choices.
ReplyDelete