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.
“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.
“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.