Netflix Stock Crash: Chickens Coming Home To Roost

People would stop believing in God if you could make him bleed. The sharks will come and there will be blood in the water. All I have to do is watch as the world consumes you.

According to shareholder reports, the company lost 200,000 subscribers over the previous quarter, causing its stock price to plunge 25%. Password sharing will be cracked down and a cheaper subscription tier will be offered. Putin's invasion of Ukraine has caused a 200,000 subscriber drop in Russia. The company expected to lose two million subscribers in the current quarter. With a lot of big-money competition muscling into the ecosystem it more or less invented, it's no longer doom-and-gloom. There is a sea of streaming platforms.

In terms of total subscribers, it's still the leader with over 200 million. Wall Street overvaluing the stock by treating it as a tech company instead of an entertainment studio, and giving little quarter to the notion that subscriptions to any and all streaming platforms surged in 2020 and 2021. Disney+ hit their five-year projection in the first 16 months after the Covid-19 pandemic caused subscriptions to go up 55 million.

The question is whether or not it still rules when it isn't the danger that it used to be. Judged as not the ultimate disrupter, but rather a streaming platform that costs more than the competition, it is now known as that. It's telling that Bridgerton season two just became the most watched English-language television show of all time, ahead of Bridgerton season one. Disney+ has Pixar and Star Wars. What do they have?

While they have their share of winning television shows, a few only blew up on the internet after airing elsewhere. Their habit of canceling shows for underrepresented demographic means that viewers get it. The year-end awards slate is beyond reproach. Red Notice, Bright, Project Power, and other attempts at imitating Hollywood blockbusters still carry a whiff of straight-to-Blockbuster inferiority. Their huge subscription base can guarantee huge audiences for non-IP star vehicles, which is how you create your own franchises. The films are generally mediocre.

Quality is one thing to trade for convenience when you are the only game in town for at- home convenience. It's one thing to sell your favorite movie stars in films that are 50- 70% as good as their theatrical offerings, when you're just one of a half-dozen major streaming platforms. This could be a paradigm shift where the same playing field is found for all of them. It will have to face a new world where it is the most expensive streaming platform with the least must-watch content. It is the best service, by a healthy margin, in terms of nuts-and-bolts user experience, and one can subscribe to many of its rivals, including AppleTV for $5, Disney+ for $8, Paramount+ for $5-$10, and Peacock for $5.

It is inevitable that everyone will try to copy the success ofNetflix and that studios will use third-party content for the sake of boosting their platforms. Skydance's The Tomorrow War was one of the genuine winners that the streamers were able to get quick cash for. I don't think it's a good idea to give or take the first look deal with Sony that was tied to their blockbuster first window pay-TV deal. Netlflix-specific content will eventually become more dependent on Netflix.

My issues with the streaming giant are not good or evil, but how they played by different rules, where each film or television show was automatically a success. The investor class and media punditry convinced the rest of Hollywood to transform its entire business model by chasing the inflated stock earnings of Netflix. I've warned everyone for years that staying at home and streaming stuff all day long might not be a permanent change in consumer behavior. Hollywood spent the last half-decade chasing an inflated myth. Now what?