Waterloo Region Record

Netflix thought too big and too fast

NAVNEET ALANG NAVNEET ALANG IS A TORONTO-BASED FREELANCE CONTRIBUTING TECHNOLOGY COLUMNIST FOR TORSTAR. FOLLOW HIM ON TWITTER: @NAVALANG

Do you share a Netflix account with someone close to you? Oh, you do? In that case, the $200 billion collapse of Netflix’s market cap is your fault.

At least, that’s what Netflix CEO Reed Hastings tried to imply recently when the company announced it had dropped 200,000 users — the first time it has lost subscribers in a decade.

Hastings said that, along with the war in Ukraine, it was passwordsharing that accounted for Netflix’s woes. As a company that seemed forever on the way up suddenly seemed vulnerable, the stock tumbled, down from an all-time high of $700 to now just hovering at under $200.

Now, I personally would never, say, pay for a Netflix account and then let my parents and sibling also use it at their homes. Heaven forfend. I believe in the sacrosanct nature of a completely unnecessary fourth season of “Stranger Thing.”

But even if one were to do such a heinous thing as share a password for an increasingly lacklustre service, it doesn’t explain why Netflix has fallen so far and so fast.

To the contrary, beyond passwords, the problem with Netflix is that it has spread itself too wide and too thin — all the while failing to tackle the problem it created itself: there’s just too much content, and not enough of it is good.

When Netflix first emerged, its appeal was obvious. At eight bucks a month, it was cheap, and it had a good stable of old TVs and movies with which one could while away the time. The app itself was also fast and seamless, making it a no-brainer for most people.

But as the media world began to shift to streaming en masse, Netflix had to defend its turf. It took on scads of debt to pour $15 billion into original content. Netflix went from convenient service to a machine designed to throw series and movies at the wall in the hopes something would stick.

Some of that content was good — “Sex Education” and the first season of “Stranger Things” come to mind — but much of it was merely filler. Now, Netflix is full of content and it often feels like there is little one actually wants to watch. Though it has had some buzzy reality shows like “Selling Sunset” and breakout hits like “Squid Game,” the simple problem is that it’s getting harder to justify paying for a Netflix subscription.

The elephant in the room is, of course, Disney. Its streaming service has already amassed over 130 million users on the strength of an enormous back catalogue of Disney classics, “Star Wars” movies and series, not to mention the enormous pull of the Marvel franchise.

Meanwhile in Canada, Bell’s Crave service has the draw of both HBO and Showtime’s catalogue, and that sort of halo television is something that Netflix has by and large not been able to replicate.

If that weren’t enough, Netflix has also run into some PR troubles. When controversy erupted over transphobia in Dave Chapelle’s specials on the platform, Netflix’s reaction — which was basically, “if you don’t like it, lump it” — was less than stellar. And now that it is suffering financial headwinds, it is also cutting staff, and made the strange decision to slash those parts of the company most made up of marginalized folks.

So now Netflix has competition, few hits among a mass of lacklustre content, and has lost its progressive, forward-looking sheen — but is also now more expensive. While it started out as a great deal, you are now seeing up to $25 a month on your credit card bill. With people looking to cut costs in a period of rising inflation, it’s clear why Netflix began to lose subscribers.

What then is the company supposed to do?

First, it has to acknowledge that it cannot compete with Disney headon in terms of a back catalogue. That means focusing on high quality, grown-up material that Disney itself won’t touch.

Second, the binging on debt to try and somehow land on a binge-worthy show has to be pared back. Netflix produced too much content too quickly, and quality has clearly suffered. It needs to focus, particularly on finding halo shows that please viewers and critics alike.

Finally, the company must find a balance between its balance sheet and the value proposition it offers consumers. While a cheaper, adsupported plan is on the way, the pushback to price hikes clearly shows Netflix misjudged how much people are willing to pay.

The simple fact is that it’s not password-sharing that is the cause of the company’s woes — it’s that it has been badly mismanaged and squandered its early lead. And rather than blaming its own users, Netflix’s leadership need only look in a mirror to see the cause of its decline.

BUSINESS

en-ca

2022-05-21T07:00:00.0000000Z

2022-05-21T07:00:00.0000000Z

https://waterloorecord.pressreader.com/article/282252374140282

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