In spite of the recent return of hit show Stranger Things, it expects further declines subscriber losses. Photo / Netflix
Opinion
OPINION:
The days when Netflix was considered one of the five best-performing US tech companies are long gone. The streaming service's share price is down 71 per cent from its high point last year. That eclipses the sell-off at Apple, Alphabet, Facebook/Meta and Amazon — aka the other Faang stocks.
Netflix has announced job cuts and suggested ways to raise revenue by introducing advertising and charging for shared passwords. But reducing spending on content is a trickier problem. Total content obligations are now over US$22 billion ($33.9b), up from just over US$19b in the same period two years ago.
Content is the lifeblood of a streaming service. Lockdowns encouraged more users to sign up to entertainment subscriptions but that meant Netflix compressed years of expected growth into the space of a few months. Now numbers are falling. This year it reported its first subscriber loss in over a decade. In spite of the recent return of hit show Stranger Things, it expects further declines. Revenue growth is slowing.
Netflix remains the largest streaming service with close to 222 million members. But competitors with deep pockets are adding more users and expanding their offers. Amazon and Apple are moving into live sports while rivals like Disney use existing intellectual property to create new shows. To keep up, Netflix must continue to create its own IP.
