In early 2010, CNBC’s Jim Kramer coined the acronym “FANG” and anointed a new class of tech powerhouses: Facebook (now Meta), Amazon, Netflix and Google that Wall Street would have to follow.
But on Wednesday, after Streamer revealed it had lost subscribers for the first time in a decade and predicted a loss of millions in the second quarter, Netflix’s reputation as the most successful stock took a hit. The company’s shares dropped more than 35 percent and schadenfreude continued in some parts of the entertainment industry, I told you, executives who expressed skepticism about the Streamer’s seemingly limitless growth potential were offered.
But the Netflix hangover also trumps other big entertainment and streaming deals. Rivals like Disney, Warner Bros. Discovery, Paramount and Roku were all down 5% to 8% when the market closed on Wednesday.
Until proven otherwise, Netflix’s slowing growth, coupled with its long-term low-margin outlook, is a negative for streaming rivals Walt Disney, Warner Bros. Discovery, Paramount, NBCUniversal (Comcast) and Starz (Lionsgate)-Morgan. Written Wednesday by Stanley analyst Ben Swinburne. “We expect strong quarters at Disney+, Paramount+ and HBO Max in Q1, respectively, but those businesses are years behind Netflix’s profitability.
The issues facing Netflix are shared by all streaming subscribers, however, as the biggest flagship service and with the highest expectations, Netflix seems to be ahead of the game.
The decline in subscriber numbers has had an impact on revenue growth, and aspects of Netflix’s distribution model, for example, watching single episodes rather than following a weekly release schedule, may need to be reconsidered, to remind subscribers for what they are and why they should continue. Payment for services.
“Netflix’s business model is a structural flaw that really leads its subscribers to wonder when finances are running low,” Michael Puchter, an analyst at Wedbush, wrote in his report on Wednesday. “By releasing all episodes of the new season at once, Netflix subscribers can skip the entire season and wait until next year.”
Netflix has raised prices, but now the most popular plan, the standard ($15.49 a month), is now the most expensive compared to competitors like Disney+ and HBO Max. Netflix executives defended the price increases on the April 19 earnings call, with CEO Gregory Peters noting that “we are also working to have pricing on plans with different features.”
Pachter noted that while “wealthy subscribers have no problem maintaining a four-to-five stream subscription,” those with lower-middle-income subscribers have a hard time continuing to pay for three different services, compounding Netflix’s problem last quarter when it lost 200,000 subscribers. Most come from the US/Canada region.
The 180-degree turn in Netflix advertising, which comes after Disney+ prepares to launch its own ad-supported subscription tier later this year, also marks the end of unlimited growth potential in the subscriber video demand space. from Netflix.
While other competing services have had success with ad-supported offerings, Lightshed Partners analyst Rich Greenfield is less optimistic about the overall impact on streaming. “It’s terrible if the only way to revive growth is to offer cheap products that make the customer experience worse, which is essentially more like a dying TV experience,” Greenfield said in a recent report.
But Greenfield added that SVOD is “certainly not as profitable as the legacy business being replaced by streaming.” That alone, added the analyst, “is not an incentive for investors in the sector.”
Source: Hollywood Reporter

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