Netflix is ​​not in deep trouble. It is becoming a media company

But its recent struggles may not be the beginning of a downward spiral or the beginning of the end for the streaming giant. Rather, it’s a sign that Netflix is ​​becoming a more traditional media company.

Netflix (NFLX) It was originally valued as a Big Tech company, part of the Wall Street acronym, “FAANG,” that stood for it Facebook (FB), Apple (AAPL), Amazon (AMZN)Netflix and Google (GOOG). Wall Street once valued the company at about $300 billion—a number on par with many Big Tech companies that Netflix’s business model ultimately could not sustain.

“I think Netflix was overvalued,” Julia Alexander, director of strategy at Parrot Analytics, told CNN Business. “Unlike those companies that have different tentacles, Netflix doesn’t have many tentacles.”

But Netflix never was Seriously technology company.

Yes, it relied on subscriber growth like many companies in the tech world, but its subscriber growth was built on having movies and TV shows that people wanted to watch and pay for. That’s more like a Hollywood studio than a Silicon Valley tech company.

Netflix looked more like a tech company than, say, Disney, Comcast, Paramount or CNN, Warner Bros. Discovery, parent company. But as those traditional media companies start to look a lot more like Netflix, Netflix in turn is starting to take a page out of its competitors’ playbooks: It will start serving ads and some shows are releasing it over the weeks and months. rather than all at once.
Netflix has said that its cheaper ad tier and limit on password sharing could come next year. It is partnered with Microsoft (MSFT) for his advertising business.
HBO Max and Discovery+ are coming together next year

“I think in many ways the moves that Netflix is ​​making indicate a transition from a technology company to a media company,” Andrew Hare, senior vice president of research at Magid, told CNN Business. “With the introduction of ads, cracking down on some passwords, marquee shows like ‘Stranger Things’ experimenting with staggered releases, Netflix is ​​looking more like a traditional media company every day.”

Hare also said that Netflix’s former business strategy, which was “once sacrosanct, is now being thrown out the window.”

“Netflix forced Hollywood deep out of its comfort zone once. They brought streaming to America’s living room,” he said. “Now it seems that some more traditional practices may be what Netflix wants.”

At Netflix right now, “many of these strategic moves are being made as they mature and move into the next phase as a company,” Hare said. This includes focusing on cash flow and income rather than just growth.

“In other words, old-school business,” he said.

— CNN Business’ Moss Cohen contributed to this report.

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