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Netflix is in rough shape. This week will determine its future

36 points by t_mann 4y ago

TedDoesntTalk 4y ago
> 221.6 million subscribers It’s absurd to me that a company with this many active subscribers can be called in “rough shape” simply because they cannot continue to grow (there is an upper bound to the number of people worldwide who can and will subscribe to streaming)
ChuckNorris89 4y ago
I never understood the super high valuation of Netflix in the past. Sure, they had great CDN tech, and sometimes they had good content (in the US at least) but their business model was the most susceptible to disruption from all of the FAANGS since their tech would ultimately become a commodity and their content could be taken away, surpassed or both. They had no vendor lock-in effect like Apple, Microsoft or Google and no social media network efect like Snapchat, Discord, Meta that would guarantee their customer base to stay long term on the platform. They also couldn't monetize their users' personal data through ads as much as the other chat apps and social networks. And it was only a matter of time before juggernauts with valuable IPs like Disney, Warner, etc. would build their own streaming services to disrupt them. The moment their competitors with the desirable IP would jump in the ring, or their content was no longer addictive, or their customer base would feel economic hardship, or their VC money dried up, their service could be easily disposed of without a hit to quality of life to their users. Also, people could pirate their content basically for free, so there's also that, versus the likes of Disney, Warner, etc had other revenue streams besides just a streaming service.
- mschuster91 4y ago
  People hoped for and bet on an endgame similar to Spotify, which holds 33% of the market share for music streaming, followed by Apple and Amazon with ~12% each and no major shifts in the last years. Basically, a stagnant market that allows Netflix to pull in absurd amounts of money - and since there is almost no R&D costs on the tech side any more, all money that doesn't need to be paid out as royalties can be used to produce more content or distributed to the shareholders. For a long time, the general idea worked out. The problem was that the studios did manage to get their butts off the ground eventually - especially Disney removing all their stuff from Netflix and creating Disney Plus with a lot of the most popular cinema franchises (Star Wars, MCU, Avatar, all the "classic" Disney and Pixar films) was a real setback - and now combined with the aftereffects of pandemic lockdowns and work-from-home movie distractions going away, Netflix' future does seem a bit bad.
  - throwaway9870 4y ago
    Video production and distribution seems to be a very different model than music so I am not sure any comparison with Spotify was ever valid.
  - treis 4y ago
    Spotify makes sense because you're swapping out inefficient distribution (record stores & albums) to an efficient one. Netflix doesn't have a similar advantage. Media companies produced shows and Cable companies distributed them just fine before. The advantage they had in technology and being able to buy cheap media has evaporated. Their advantage of being able to burn money is now evaporating with it. They're left with trying to produce better media cheaper which they can't do because they're worse than legacy studios. Or distributing cheaper/better which they can do but there's not a 10+ billion dollar company there. Worse for them Apple & Amazon still seem to be happy burning money for a while. Not a lot of bargains out there buying media.
    - evandijk70 4y ago
      Do you mean cable television? To me, Netflix is the same to cable television as Spotify is to radio, so I'm not sure I see a big benefit of Spotify there.
      - treis 4y ago
        Cable had commercial free channels and on demand content before Netflix came around.
    - yodon 4y ago
      Netflix wasn't a cable competitor- it was a Blockbuster competitor. They started out as the king of the DVD rental market, putting essentially 100% of the competitors in that distribution-only industry out of business. They eventually reached a scale in the streaming category (which they essentially invented from a business standpoint, even though they did not invent the technology) where it made sense for them to produce their own content, both because it was more economically efficient generally and to prevent studios from starving them of content and shutting off their revenues. Their move into producing some fraction of their own content matched that of both cable companies and TV studios before them. Netflix's primary advantage, in both the DVD market and the early streaming market was 100% a radically disruptive distribution advantage. Eventually, in both cases, they became so dominant that they redefined their own industries. It's not that Netflix is a cable company, it's that cable were forced to become Netflix to stay alive and avoid the fate of Blockbuster and Netflix's original competitors.
- throwawaylinux 4y ago
  Streaming video and making a (really pretty mediocre) browsing interface for it is an absolute commodity. Clearly most value is in the content. What I'm surprised by is how long they were able to extract a large middle-man fee from studios and use that to fund a direct competitor to them. Took some chutzpah.
  - deleted 4y ago
    [deleted]
  - MereInterest 4y ago
    I think the advantage was in the convenience, not just in being a middle-man. When Netflix was the primary streaming platform, I could do a single search on Netflix. That if I wanted to look for Robin Hood (1973), Star Trek, The Matrix, 24, Glee, Doctor Who, John Wick, or Kill la Kill. Now, in order to find something that I want to watch, I would need to search for it on Disney+ (Robin Hood (1973)), Paramount+ (Star Trek), HBO Max (The Matrix/Doctor Who), Amazon Prime (24), Hulu (Glee), Peacock (John Wick), or Crunchyroll (Kill la Kill). Even if subscribing to all of the platforms were the same price, it would still mean that the convenience would be completely gone. Fun fact: In 2019, the DoJ decided that it would stop enforcing the Paramount decrees, because there's no way studios could lock out independent distributors in today's environment. Clearly, no way whatsoever. [0] https://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc.#Termination_of_the_Paramount_decrees https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic...
    - throwawaylinux 4y ago
      I didn't say being a middle man is worthless, by definition they provide value by making transactions more convenient. Netflix could have continued to focus on this actual advantage it had -- building its partners / clients (studios) to provide streaming services with a convenient single point with the customer and economies of size and scale. If they had charged a small price commensurate with the service being provided to studios, on reasonable terms, and had not attempted to fund a direct competitor to their clients, they quite probably could have continued being a great distribution service. But they didn't, they threw that away trying to fund a studio startup for some strange reason.
- lordnacho 4y ago
  I guess at some point it looked like all content was just going to be sent to Netflix, like a giant modern Blockbuster. Every movie that was no longer in cinemas, every niche classic from times gone by. It might have been a great business, if the owners of those movies had been happy to just get a small fee from Netflix. Unfortunately that's not how it turned out, for instance Disney decided they could both make their own tech and their own content, esp for such things like Mandalorian which takes a modern long-story format that is suitable for streaming. Basically it turns out content is king, which Netflix also realized as they went and tried to make their own stuff with limited success. What I don't get is why it's so hard to make the content. They've certainly thrown a lot of money at it, how come nothing sticks? By contrast everything Disney makes seems to be high quality.
  - dingleberry420 4y ago
    Indeed, and if things had turned out that way I would've happily kept my subscription and paid for such content to watch it legally. Instead they fragmented, and there is no way that I will be figuring out which of the dozen subscriptions I need any time I want to watch something, and I know I am not alone here. Piracy is king once again. It has all the content, and none of the bullshit.
  - draw_down 4y ago
    Mmm, I think Netflix made plenty of their own missteps in that department. They’re notorious for shutting down popular shows after a few seasons, for example. I’m sure they had numbers that convinced them that was the smart thing to do, but you do that enough times and people might wonder why it’s ever worth getting into your shows. This kind of thing comes from company culture too. I can’t speak to specifics, but presumably Disney and other studios who have been at the content game a lot longer than Netflix have a better understanding of how to cater to their customers and foster that relationship over time. Another way to put all this is simply that it’s a lot harder to build a content business than a CDN, especially now. So the existing content biz just built CDNs.
    - lordnacho 4y ago
- jsnell 4y ago
  The theory was one of economies of scale. For exclusive in-house content, you should have a positive feedback loop of "more users" -> "bigger content budget" -> "better or more content" -> "more users". And the theory was that with their headstart they could basically build such a large user base and content pipeline that nobody else could catch up. It was a solid theory, and honestly it still isn't obvious that it's failed. Netflix still has an much larger user base than any of the competing services, despite charging much higher prices. But other than the stellar job they did with international content, they certainly haven't executed on this as well as people imagined. It's quite amazing how badly they have been spending that massive content budget, and how long the mismanagement has been going on. (Their prestige "Hollywood movies at Hollywood budgets straight to streaming" projects are probably the most obvious example. Who the fuck greenlit Gray Man at $200M?)
- throwoutway 4y ago
  They should have sold their tech as a platform for other streamers to build on, which would have locked in a portion of those profits.
- urthor 4y ago
  I think the theory was that Hulu and Disney+ simply couldn't execute on streaming. Turns out, when billions are on the line, they could actually.
  - foxyv 4y ago
    When Netflix first started, it was an engineering challenge on the order of the Google search engine. High Availability was the newest thing and Big Data was just getting started. Now though, it is so easy you can use similar technology to host your cooking blog in AWS for $0.10/month. It's not terribly surprising that Disney+ was able to execute, probably for a bare fraction of what Netflix had to put in technically speaking.
- gary_0 4y ago
  Netflix was a brand. A household word for streaming, ingrained in popular culture. "Netflix and chill". They had absolutely no idea how to cultivate and protect that brand, and now they're giving up and selling ad space. It wasn't so long ago they were mocking Blockbuster for being out of touch, and now here we are.
  - jstarfish 4y ago
    They could recapture a lot of lost revenue by implementing IP address limiting. Just saying. Also by leaning into the "...and chill" idea by recommending users interested in hookups.
- 2143 4y ago
  > And it was only a matter of time before juggernauts with valuable IPs like Disney, Warner, etc. would build their own streaming services to disrupt them. Where I'm at, Disney is already cruising. Infact, all major production companies seem to have realised a while ago that they all can individually create their own streaming platform.
kaichanvong 4y ago
Has somebody written about netflix. As though Netflix were a bonsai tree?
louwrentius 4y ago
As a lay person, Netflix is just the victim of basic capitalism. You need to show endless growth no matter what the circumstances are. Fundamentally unsustainable. I don’t care about Netflix, I was never a subscriber. But I wonder if this is really about Netflix or about the absurdity of the larger system.
- ldjkfkdsjnv 4y ago
  Victim is the wrong word, more like loser
  - louwrentius 4y ago
    I would agree but the game is rigged / unfair so it’s victim.
    - ldjkfkdsjnv 4y ago
      The game is rigged against netflix? one of the most elite and well capitalized companies in the world?
- seibelj 4y ago
  Content creation is a hit making business. Video games, movies, tv shows, music, literature, etc. People are passionate and work in the industry because it’s a creative effort and you can make a lot of money. But as an investor you should value content businesses with low multipliers because it is difficult to repeat the success. This is also why sequels, formulaic stories, downloadable content, subscriptions, and all manner of solutions to derisking content is applied because of the inherently risky nature of hit making businesses.
- throwawaylinux 4y ago
  > Netflix is just the victim of basic capitalism. You need to show endless growth no matter what the circumstances are. Fundamentally unsustainable. What's basic capitalism? Is it bad that capitalism victimizes fundamentally unsustainable companies? And to whom does netflix need to show endless growth? Lots of people and even companies do not require or have endless growth, many are content (or at least sustainable) turning a relatively constant profit.
tmaly 4y ago
This article is all short term thinking. Netflix has more valuable data on user preferences that Hollywood could only dream of. If they add a good gaming platform, they will do well in the coming future.
drgoodvibe 4y ago
Netflix originally had a very healthy and diverse social ecosystem of reviewers. For some reason they decided to remove all comments and lengthy reviews for the thumbs up/down. Maybe it was because they didn’t want to hire mods but honestly it was a huge opportunity for Netflix to create a very sticky social media network that would be impossible to replicate and disrupt. Maybe because of hubris they thought that the studios would never catch up with the tech. I mean look at blackberry and Nokia - they never caught up to Apple but when you think of it as hardware vs software especially commodity cdn software after a decade it really comes down to either the content or social network effect. They missed on both.
- oneplane 4y ago
  We never had any useful reviewers. Only on the US version.
- phpisthebest 4y ago
  >>For some reason they decided to remove all comments and lengthy reviews for the thumbs up/down. The reason was / is pretty widely known, their customer base did not reaction "properly" with the "correct" opinions to the shift in direction of neflix original programming and comedy specials, coming to head with the widely panned Amy Schumer Special which most netflix customers responded negatively to and brought an end to the review and rating system
  - CoastalCoder 4y ago
    I agree this was a widespread suspicion, but I don't remember ever seeing corroborating evidence.
  - glenstein 4y ago
    Misinformation alert! I tried to track down an article substantiating the comment above, and what I found was news outlets reporting that alt-right trolls organized to artificially spam 1-star reviews of her special. https://www.dailydot.com/upstream/amy-schumer-netflix-alt-right/ https://www.dailydot.com/upstream/amy-schumer-netflix-alt-ri...
yuppie_scum 4y ago
We need to keep I Think You Should Leave on the air
- jstarfish 4y ago
  "Bozo Dubs Over Everything in the Netflix Catalog" would buy my loyalty for life.
arnvald 4y ago
This might be an overreaction, but for me it's kind of the end of Netflix as a tech company. For years, Netflix stock has been growing, Netflix has been hiring great software engineers, and people considered them a tech company. But the tech there is not a differentiator. I don't know anyone who will choose Netflix over Disney+ or HBO because of better tech. My brother hates the HBO app, but he uses it because it has content he likes to watch. Streaming still provides technical challenges, and people will praise providers for great UX, high quality video etc. but in this case, very clearly content is the king. Netflix has had a few years to catch up with competitors who have decades worth of content. It wasn't a lot of time, and they did what they could, but it seems this time is over now. Netflix is no longer the sole player, it's one of a few competitors.
- rightbyte 4y ago
  > I don't know anyone who will choose Netflix over Disney+ or HBO because of better tech. I don't think it is about tech choices but user hostility. Any streaming service could differentiate by allowing you to turn off autoplay or not have some pushy in-your-face "feed" berry your recently watched series list. But ye, in the end its probably all down to content, like you say.
  - IshKebab 4y ago
    That would only provide an advantage if all of the platforms had the same catalogue. I think people switch streaming music platforms based on UX differences because they all have most of the music, and it's rare that people want to listen to specific music. That doesn't seem to be the case with video unfortunately. I predict a resurgence of piracy.
- fullshark 4y ago
  The premise before streaming tech matured at least was Netflix's data pipeline was so great and ML algorithms so good they'd recommend films so effectively and produce films that users would crave. Feels like those two claims have failed, and at the end of the day content (IP) is king in the entertainment media world.
softwaredoug 4y ago
They famously said Netflix has to become HBO faster than HBO can become Netflix. Well now they have tried to become every channel and completely lost their brand identity. It used to be tied to more prestige TV (house of cards) etc. Now they try to produce content for everyone, and in the end their brand ends up standing for no particular kind of content. When you log in to someone else’s Netflix it’s like a completely different streaming service. Meanwhile streaming tech has become more and more of a commodity. And other brands are associated with better / specific content.
parkingrift 4y ago
I’m not sure if ironic is the best word, but I think Netflix suffers from way too much content. It’s honestly overwhelming to try and find something, and the suggestions are laughably bad. Maybe those two thoughts are more related than I think, but these days I almost never browse Netflix for something to watch. I used to.
bob1029 4y ago
I was wondering about the potential for a gaming play. They did hire that exec to be VP of their "game studio", but I haven't heard anything since. Netflix has sufficient capital & technology to cause trouble for the kinds of markets that EA and Activision-Blizzard operate in. I don't know if they have the requisite time or leadership to execute before the market eviscerates them though.
- phpisthebest 4y ago
  I think google's complete flop launch of their game system made them think harder on gaming and now Microsoft is the Disney of gaming, with Xbox Live being Disney+ of gaming
- lozenge 4y ago
  I've tried their games, they were all mobile shovelware with the IAP taken out. However, they are releasing Into the Breach next week, an acclaimed indie game from 2018. So maybe they're shifting their strategy.
  - jamesgeck0 4y ago
    The Into the Breach mobile launch coincides with the release of a bunch of new content on all platforms. I’ve wondered if the Netflix deal funded that. Netflix also recently released mobile GOTY contender Poinpy, developed by the Downwell guy.
- Ekaros 4y ago
  Gaming is very tight market. Valve with Steam is in nigh unsurmountable position. Just look at how EGS has be doing and consider could Netflix do any better? And then if you were to publish games you would need to compete with Microsoft. One way would be to buy someone with big enough catalog like THQ Nordic. They have been playing acquisition game for long time now: https://en.wikipedia.org/wiki/List_of_acquisitions_by_THQ_Nordic https://en.wikipedia.org/wiki/List_of_acquisitions_by_THQ_No...
lazyjones 4y ago
I don't really understand the tone of this article. Estimates are that they lost 1% of subscribers in Q2 while stock price is down 70% this year. Are they going broke? Apparently not. Is the stock price already very low? Yes, it appears to have priced in an even greater loss of subscribers than expected. What is going on here?
- itisit 4y ago
  Are we asking if the market is behaving rationally? Losing subscribers, laying off employees, and monetizing via ads aren't all that confidence inducing. Netflix has been overvalued for at least three years by many tens of billions. Sudden losses can be jarring, but they're not surprising, if that makes sense.
  - lazyjones 4y ago
    My point is that the tone of the article is "the company is doomed" when all that is doomed is perhaps the previous high stock valuation.
slim 4y ago
FWIW Netflix brand is big outside US thanks to piracy. Instead of focusing on clamping on password sharing which is literally free growth, they should focus on becoming truly international by overcoming currency issues like classic brands do (through franchise business model for example)
rcarr 4y ago
To me it seems a no brainer for Netflix to buy Spotify in a year or two at the peak of the recession and offer a dual service membership alongside its existing options. As it stands, if Spotify raises its prices again then it makes more sense for me to buy an Apple One subscription and putting up with the worse interface rather than forking out for Spotify. If more and more people start doing the same then it’s done as a service and its price is going to tank. At the same time, with more and more tv/film content being split across different providers, I’m most likely going to start rotating e.g 1 month Disney, 1 month Paramount, 1 month Netflix, with a yearly Prime membership and and Apple One subscription being my only constants. If Netflix had Spotify that would be a reason to ditch apple one and keep a year round Netflix subscription rather than demoting it to rotation. I’d also look at acquiring Criterion and A24. Netflix then becomes the home of independent cinema, auteur and classic cinema and original storytelling vs the other options which (HBO/Now TV excepting) all seem to rely heavily on existing franchises. I’d also look at upping the amount of stand up specials which it seems to be doing with the Netflix is a joke festival.
- rcarr 4y ago
  They could also potentially buy Peloton now whilst it’s struggling. Buy Dropbox and Substack as well and now you’re a full Apple One competitor. And valve for games. Market Cap (billion dollars): Netflix: 84.02 Spotify: 19.71 Dropbox: 8.17 Peloton: 2.86 Valve: 10 Substack: 0.65 A24: 2.5 Sounds doable looking at those numbers.
  - e3bc54b2 4y ago
    > Buy Dropbox and Substack as well and now you’re a full Apple One competitor. Good one. To be 'full' Apple One competitor, you'd need default app installs as well as built-in advertisements/notifications channel across macs/iDevices. Oh also, Valve is privately owned money printing machine. I doubt gaben would be interested in selling it.
  - Ekaros 4y ago
    Am I only one who thinks that 10 billion for Valve with past valuations for tech companies sound awfully low... I really wonder where they would be if they had VC money or were public.
tinyhouse 4y ago
First, let's put things in perspective. Netflix is still a successful and profitable company. Their amazing growth has indeed reached a platu. In my opinion they fell too much in love with the concept of keep doing the one thing you do well. We usually criticize companies that don't do it but sometimes it works the other way too, esp if you want to keep growing at the level that is expected from a FAANG company. They didn't really expand their service to other areas (beyond expanding to original content and international, both very successfully) like Amazon for example is doing with Prime. But they did keep increasing prices.
jsbisviewtiful 4y ago
Netflix keeps raising rates to pay for arguably worse quality shows and raising rates while also canceling good shows with followings out of the blue. Not sure what they really expected to happen.
tranchms 4y ago
Netflix has pretty terrible original content. It’s gotten worse over time tbh. It’s like cheap television. There are better streaming services with highly quality content. Amazon, HBO, Disney, to name a few.

36 points by t_mann 4y ago

> 221.6 million subscribers It’s absurd to me that a company with this many active subscribers can be called in “rough shape” simply because they cannot continue to grow (there is an upper bound to the number of people worldwide who can and will subscribe to streaming)

ChuckNorris89 4y ago

I never understood the super high valuation of Netflix in the past. Sure, they had great CDN tech, and sometimes they had good content (in the US at least) but their business model was the most susceptible to disruption from all of the FAANGS since their tech would ultimately become a commodity and their content could be taken away, surpassed or both. They had no vendor lock-in effect like Apple, Microsoft or Google and no social media network efect like Snapchat, Discord, Meta that would guarantee their customer base to stay long term on the platform. They also couldn't monetize their users' personal data through ads as much as the other chat apps and social networks. And it was only a matter of time before juggernauts with valuable IPs like Disney, Warner, etc. would build their own streaming services to disrupt them. The moment their competitors with the desirable IP would jump in the ring, or their content was no longer addictive, or their customer base would feel economic hardship, or their VC money dried up, their service could be easily disposed of without a hit to quality of life to their users. Also, people could pirate their content basically for free, so there's also that, versus the likes of Disney, Warner, etc had other revenue streams besides just a streaming service.

mschuster91 4y ago
People hoped for and bet on an endgame similar to Spotify, which holds 33% of the market share for music streaming, followed by Apple and Amazon with ~12% each and no major shifts in the last years. Basically, a stagnant market that allows Netflix to pull in absurd amounts of money - and since there is almost no R&D costs on the tech side any more, all money that doesn't need to be paid out as royalties can be used to produce more content or distributed to the shareholders. For a long time, the general idea worked out. The problem was that the studios did manage to get their butts off the ground eventually - especially Disney removing all their stuff from Netflix and creating Disney Plus with a lot of the most popular cinema franchises (Star Wars, MCU, Avatar, all the "classic" Disney and Pixar films) was a real setback - and now combined with the aftereffects of pandemic lockdowns and work-from-home movie distractions going away, Netflix' future does seem a bit bad.
- throwaway9870 4y ago
  Video production and distribution seems to be a very different model than music so I am not sure any comparison with Spotify was ever valid.
- treis 4y ago
  Spotify makes sense because you're swapping out inefficient distribution (record stores & albums) to an efficient one. Netflix doesn't have a similar advantage. Media companies produced shows and Cable companies distributed them just fine before. The advantage they had in technology and being able to buy cheap media has evaporated. Their advantage of being able to burn money is now evaporating with it. They're left with trying to produce better media cheaper which they can't do because they're worse than legacy studios. Or distributing cheaper/better which they can do but there's not a 10+ billion dollar company there. Worse for them Apple & Amazon still seem to be happy burning money for a while. Not a lot of bargains out there buying media.
  - evandijk70 4y ago
    Do you mean cable television? To me, Netflix is the same to cable television as Spotify is to radio, so I'm not sure I see a big benefit of Spotify there.
    - treis 4y ago
      Cable had commercial free channels and on demand content before Netflix came around.
  - yodon 4y ago
    Netflix wasn't a cable competitor- it was a Blockbuster competitor. They started out as the king of the DVD rental market, putting essentially 100% of the competitors in that distribution-only industry out of business. They eventually reached a scale in the streaming category (which they essentially invented from a business standpoint, even though they did not invent the technology) where it made sense for them to produce their own content, both because it was more economically efficient generally and to prevent studios from starving them of content and shutting off their revenues. Their move into producing some fraction of their own content matched that of both cable companies and TV studios before them. Netflix's primary advantage, in both the DVD market and the early streaming market was 100% a radically disruptive distribution advantage. Eventually, in both cases, they became so dominant that they redefined their own industries. It's not that Netflix is a cable company, it's that cable were forced to become Netflix to stay alive and avoid the fate of Blockbuster and Netflix's original competitors.
throwawaylinux 4y ago
Streaming video and making a (really pretty mediocre) browsing interface for it is an absolute commodity. Clearly most value is in the content. What I'm surprised by is how long they were able to extract a large middle-man fee from studios and use that to fund a direct competitor to them. Took some chutzpah.
- deleted 4y ago
  [deleted]
- MereInterest 4y ago
  I think the advantage was in the convenience, not just in being a middle-man. When Netflix was the primary streaming platform, I could do a single search on Netflix. That if I wanted to look for Robin Hood (1973), Star Trek, The Matrix, 24, Glee, Doctor Who, John Wick, or Kill la Kill. Now, in order to find something that I want to watch, I would need to search for it on Disney+ (Robin Hood (1973)), Paramount+ (Star Trek), HBO Max (The Matrix/Doctor Who), Amazon Prime (24), Hulu (Glee), Peacock (John Wick), or Crunchyroll (Kill la Kill). Even if subscribing to all of the platforms were the same price, it would still mean that the convenience would be completely gone. Fun fact: In 2019, the DoJ decided that it would stop enforcing the Paramount decrees, because there's no way studios could lock out independent distributors in today's environment. Clearly, no way whatsoever. [0] https://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc.#Termination_of_the_Paramount_decrees https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic...
  - throwawaylinux 4y ago
    I didn't say being a middle man is worthless, by definition they provide value by making transactions more convenient. Netflix could have continued to focus on this actual advantage it had -- building its partners / clients (studios) to provide streaming services with a convenient single point with the customer and economies of size and scale. If they had charged a small price commensurate with the service being provided to studios, on reasonable terms, and had not attempted to fund a direct competitor to their clients, they quite probably could have continued being a great distribution service. But they didn't, they threw that away trying to fund a studio startup for some strange reason.
lordnacho 4y ago
I guess at some point it looked like all content was just going to be sent to Netflix, like a giant modern Blockbuster. Every movie that was no longer in cinemas, every niche classic from times gone by. It might have been a great business, if the owners of those movies had been happy to just get a small fee from Netflix. Unfortunately that's not how it turned out, for instance Disney decided they could both make their own tech and their own content, esp for such things like Mandalorian which takes a modern long-story format that is suitable for streaming. Basically it turns out content is king, which Netflix also realized as they went and tried to make their own stuff with limited success. What I don't get is why it's so hard to make the content. They've certainly thrown a lot of money at it, how come nothing sticks? By contrast everything Disney makes seems to be high quality.
- dingleberry420 4y ago
  Indeed, and if things had turned out that way I would've happily kept my subscription and paid for such content to watch it legally. Instead they fragmented, and there is no way that I will be figuring out which of the dozen subscriptions I need any time I want to watch something, and I know I am not alone here. Piracy is king once again. It has all the content, and none of the bullshit.
- draw_down 4y ago
  Mmm, I think Netflix made plenty of their own missteps in that department. They’re notorious for shutting down popular shows after a few seasons, for example. I’m sure they had numbers that convinced them that was the smart thing to do, but you do that enough times and people might wonder why it’s ever worth getting into your shows. This kind of thing comes from company culture too. I can’t speak to specifics, but presumably Disney and other studios who have been at the content game a lot longer than Netflix have a better understanding of how to cater to their customers and foster that relationship over time. Another way to put all this is simply that it’s a lot harder to build a content business than a CDN, especially now. So the existing content biz just built CDNs.
  - lordnacho 4y ago
jsnell 4y ago
The theory was one of economies of scale. For exclusive in-house content, you should have a positive feedback loop of "more users" -> "bigger content budget" -> "better or more content" -> "more users". And the theory was that with their headstart they could basically build such a large user base and content pipeline that nobody else could catch up. It was a solid theory, and honestly it still isn't obvious that it's failed. Netflix still has an much larger user base than any of the competing services, despite charging much higher prices. But other than the stellar job they did with international content, they certainly haven't executed on this as well as people imagined. It's quite amazing how badly they have been spending that massive content budget, and how long the mismanagement has been going on. (Their prestige "Hollywood movies at Hollywood budgets straight to streaming" projects are probably the most obvious example. Who the fuck greenlit Gray Man at $200M?)
throwoutway 4y ago
They should have sold their tech as a platform for other streamers to build on, which would have locked in a portion of those profits.
urthor 4y ago
I think the theory was that Hulu and Disney+ simply couldn't execute on streaming. Turns out, when billions are on the line, they could actually.
- foxyv 4y ago
  When Netflix first started, it was an engineering challenge on the order of the Google search engine. High Availability was the newest thing and Big Data was just getting started. Now though, it is so easy you can use similar technology to host your cooking blog in AWS for $0.10/month. It's not terribly surprising that Disney+ was able to execute, probably for a bare fraction of what Netflix had to put in technically speaking.
gary_0 4y ago
Netflix was a brand. A household word for streaming, ingrained in popular culture. "Netflix and chill". They had absolutely no idea how to cultivate and protect that brand, and now they're giving up and selling ad space. It wasn't so long ago they were mocking Blockbuster for being out of touch, and now here we are.
- jstarfish 4y ago
  They could recapture a lot of lost revenue by implementing IP address limiting. Just saying. Also by leaning into the "...and chill" idea by recommending users interested in hookups.
2143 4y ago
> And it was only a matter of time before juggernauts with valuable IPs like Disney, Warner, etc. would build their own streaming services to disrupt them. Where I'm at, Disney is already cruising. Infact, all major production companies seem to have realised a while ago that they all can individually create their own streaming platform.

kaichanvong 4y ago

Has somebody written about netflix. As though Netflix were a bonsai tree?

louwrentius 4y ago

As a lay person, Netflix is just the victim of basic capitalism. You need to show endless growth no matter what the circumstances are. Fundamentally unsustainable. I don’t care about Netflix, I was never a subscriber. But I wonder if this is really about Netflix or about the absurdity of the larger system.

ldjkfkdsjnv 4y ago
Victim is the wrong word, more like loser
- louwrentius 4y ago
  I would agree but the game is rigged / unfair so it’s victim.
  - ldjkfkdsjnv 4y ago
    The game is rigged against netflix? one of the most elite and well capitalized companies in the world?
seibelj 4y ago
Content creation is a hit making business. Video games, movies, tv shows, music, literature, etc. People are passionate and work in the industry because it’s a creative effort and you can make a lot of money. But as an investor you should value content businesses with low multipliers because it is difficult to repeat the success. This is also why sequels, formulaic stories, downloadable content, subscriptions, and all manner of solutions to derisking content is applied because of the inherently risky nature of hit making businesses.
throwawaylinux 4y ago
> Netflix is just the victim of basic capitalism. You need to show endless growth no matter what the circumstances are. Fundamentally unsustainable. What's basic capitalism? Is it bad that capitalism victimizes fundamentally unsustainable companies? And to whom does netflix need to show endless growth? Lots of people and even companies do not require or have endless growth, many are content (or at least sustainable) turning a relatively constant profit.

tmaly 4y ago

This article is all short term thinking. Netflix has more valuable data on user preferences that Hollywood could only dream of. If they add a good gaming platform, they will do well in the coming future.

drgoodvibe 4y ago

Netflix originally had a very healthy and diverse social ecosystem of reviewers. For some reason they decided to remove all comments and lengthy reviews for the thumbs up/down. Maybe it was because they didn’t want to hire mods but honestly it was a huge opportunity for Netflix to create a very sticky social media network that would be impossible to replicate and disrupt. Maybe because of hubris they thought that the studios would never catch up with the tech. I mean look at blackberry and Nokia - they never caught up to Apple but when you think of it as hardware vs software especially commodity cdn software after a decade it really comes down to either the content or social network effect. They missed on both.

oneplane 4y ago
We never had any useful reviewers. Only on the US version.
phpisthebest 4y ago
>>For some reason they decided to remove all comments and lengthy reviews for the thumbs up/down. The reason was / is pretty widely known, their customer base did not reaction "properly" with the "correct" opinions to the shift in direction of neflix original programming and comedy specials, coming to head with the widely panned Amy Schumer Special which most netflix customers responded negatively to and brought an end to the review and rating system
- CoastalCoder 4y ago
  I agree this was a widespread suspicion, but I don't remember ever seeing corroborating evidence.
- glenstein 4y ago
  Misinformation alert! I tried to track down an article substantiating the comment above, and what I found was news outlets reporting that alt-right trolls organized to artificially spam 1-star reviews of her special. https://www.dailydot.com/upstream/amy-schumer-netflix-alt-right/ https://www.dailydot.com/upstream/amy-schumer-netflix-alt-ri...

yuppie_scum 4y ago

We need to keep I Think You Should Leave on the air

jstarfish 4y ago
"Bozo Dubs Over Everything in the Netflix Catalog" would buy my loyalty for life.

arnvald 4y ago

This might be an overreaction, but for me it's kind of the end of Netflix as a tech company. For years, Netflix stock has been growing, Netflix has been hiring great software engineers, and people considered them a tech company. But the tech there is not a differentiator. I don't know anyone who will choose Netflix over Disney+ or HBO because of better tech. My brother hates the HBO app, but he uses it because it has content he likes to watch. Streaming still provides technical challenges, and people will praise providers for great UX, high quality video etc. but in this case, very clearly content is the king. Netflix has had a few years to catch up with competitors who have decades worth of content. It wasn't a lot of time, and they did what they could, but it seems this time is over now. Netflix is no longer the sole player, it's one of a few competitors.

rightbyte 4y ago
> I don't know anyone who will choose Netflix over Disney+ or HBO because of better tech. I don't think it is about tech choices but user hostility. Any streaming service could differentiate by allowing you to turn off autoplay or not have some pushy in-your-face "feed" berry your recently watched series list. But ye, in the end its probably all down to content, like you say.
- IshKebab 4y ago
  That would only provide an advantage if all of the platforms had the same catalogue. I think people switch streaming music platforms based on UX differences because they all have most of the music, and it's rare that people want to listen to specific music. That doesn't seem to be the case with video unfortunately. I predict a resurgence of piracy.
fullshark 4y ago
The premise before streaming tech matured at least was Netflix's data pipeline was so great and ML algorithms so good they'd recommend films so effectively and produce films that users would crave. Feels like those two claims have failed, and at the end of the day content (IP) is king in the entertainment media world.

softwaredoug 4y ago

They famously said Netflix has to become HBO faster than HBO can become Netflix. Well now they have tried to become every channel and completely lost their brand identity. It used to be tied to more prestige TV (house of cards) etc. Now they try to produce content for everyone, and in the end their brand ends up standing for no particular kind of content. When you log in to someone else’s Netflix it’s like a completely different streaming service. Meanwhile streaming tech has become more and more of a commodity. And other brands are associated with better / specific content.

parkingrift 4y ago

I’m not sure if ironic is the best word, but I think Netflix suffers from way too much content. It’s honestly overwhelming to try and find something, and the suggestions are laughably bad. Maybe those two thoughts are more related than I think, but these days I almost never browse Netflix for something to watch. I used to.

bob1029 4y ago

I was wondering about the potential for a gaming play. They did hire that exec to be VP of their "game studio", but I haven't heard anything since. Netflix has sufficient capital & technology to cause trouble for the kinds of markets that EA and Activision-Blizzard operate in. I don't know if they have the requisite time or leadership to execute before the market eviscerates them though.

phpisthebest 4y ago
I think google's complete flop launch of their game system made them think harder on gaming and now Microsoft is the Disney of gaming, with Xbox Live being Disney+ of gaming
lozenge 4y ago
I've tried their games, they were all mobile shovelware with the IAP taken out. However, they are releasing Into the Breach next week, an acclaimed indie game from 2018. So maybe they're shifting their strategy.
- jamesgeck0 4y ago
  The Into the Breach mobile launch coincides with the release of a bunch of new content on all platforms. I’ve wondered if the Netflix deal funded that. Netflix also recently released mobile GOTY contender Poinpy, developed by the Downwell guy.
Ekaros 4y ago
Gaming is very tight market. Valve with Steam is in nigh unsurmountable position. Just look at how EGS has be doing and consider could Netflix do any better? And then if you were to publish games you would need to compete with Microsoft. One way would be to buy someone with big enough catalog like THQ Nordic. They have been playing acquisition game for long time now: https://en.wikipedia.org/wiki/List_of_acquisitions_by_THQ_Nordic https://en.wikipedia.org/wiki/List_of_acquisitions_by_THQ_No...

lazyjones 4y ago

I don't really understand the tone of this article. Estimates are that they lost 1% of subscribers in Q2 while stock price is down 70% this year. Are they going broke? Apparently not. Is the stock price already very low? Yes, it appears to have priced in an even greater loss of subscribers than expected. What is going on here?

itisit 4y ago
Are we asking if the market is behaving rationally? Losing subscribers, laying off employees, and monetizing via ads aren't all that confidence inducing. Netflix has been overvalued for at least three years by many tens of billions. Sudden losses can be jarring, but they're not surprising, if that makes sense.
- lazyjones 4y ago
  My point is that the tone of the article is "the company is doomed" when all that is doomed is perhaps the previous high stock valuation.

slim 4y ago

FWIW Netflix brand is big outside US thanks to piracy. Instead of focusing on clamping on password sharing which is literally free growth, they should focus on becoming truly international by overcoming currency issues like classic brands do (through franchise business model for example)

rcarr 4y ago

To me it seems a no brainer for Netflix to buy Spotify in a year or two at the peak of the recession and offer a dual service membership alongside its existing options. As it stands, if Spotify raises its prices again then it makes more sense for me to buy an Apple One subscription and putting up with the worse interface rather than forking out for Spotify. If more and more people start doing the same then it’s done as a service and its price is going to tank. At the same time, with more and more tv/film content being split across different providers, I’m most likely going to start rotating e.g 1 month Disney, 1 month Paramount, 1 month Netflix, with a yearly Prime membership and and Apple One subscription being my only constants. If Netflix had Spotify that would be a reason to ditch apple one and keep a year round Netflix subscription rather than demoting it to rotation. I’d also look at acquiring Criterion and A24. Netflix then becomes the home of independent cinema, auteur and classic cinema and original storytelling vs the other options which (HBO/Now TV excepting) all seem to rely heavily on existing franchises. I’d also look at upping the amount of stand up specials which it seems to be doing with the Netflix is a joke festival.

rcarr 4y ago
They could also potentially buy Peloton now whilst it’s struggling. Buy Dropbox and Substack as well and now you’re a full Apple One competitor. And valve for games. Market Cap (billion dollars): Netflix: 84.02 Spotify: 19.71 Dropbox: 8.17 Peloton: 2.86 Valve: 10 Substack: 0.65 A24: 2.5 Sounds doable looking at those numbers.
- e3bc54b2 4y ago
  > Buy Dropbox and Substack as well and now you’re a full Apple One competitor. Good one. To be 'full' Apple One competitor, you'd need default app installs as well as built-in advertisements/notifications channel across macs/iDevices. Oh also, Valve is privately owned money printing machine. I doubt gaben would be interested in selling it.
- Ekaros 4y ago
  Am I only one who thinks that 10 billion for Valve with past valuations for tech companies sound awfully low... I really wonder where they would be if they had VC money or were public.

tinyhouse 4y ago

First, let's put things in perspective. Netflix is still a successful and profitable company. Their amazing growth has indeed reached a platu. In my opinion they fell too much in love with the concept of keep doing the one thing you do well. We usually criticize companies that don't do it but sometimes it works the other way too, esp if you want to keep growing at the level that is expected from a FAANG company. They didn't really expand their service to other areas (beyond expanding to original content and international, both very successfully) like Amazon for example is doing with Prime. But they did keep increasing prices.

jsbisviewtiful 4y ago

Netflix keeps raising rates to pay for arguably worse quality shows and raising rates while also canceling good shows with followings out of the blue. Not sure what they really expected to happen.

tranchms 4y ago

Netflix has pretty terrible original content. It’s gotten worse over time tbh. It’s like cheap television. There are better streaming services with highly quality content. Amazon, HBO, Disney, to name a few.