Netflix And The Terrible, Horrible, No Good, Very Bad Day

So on Tuesday April 19 Netflix’s stock closed at almost 350 USD and on Wednesday April 20 Netflix’s stock opened at over a hundred dollars less. Almost a 30% drop. And then it continued dropping. At the time of writing the stock is under 220 USD.

And I’m just left with a major sense of deja vu. Because the reason for the stock crash is because Netflix said they lost users. And this just happened to another company literally 2 months ago.

It’s easy to criticize Facebook. I simply do not think their business plan is very good and no one really likes Facebook that much.

Remember that time when Facebook said they might have to leave the EU if some new law is passed and then the EU was like: good riddance?

Awkward. But Netflix’s fall is different. Let’s talk about it.

The Fall Of Netflix

The truth is Netflix’s stock has been falling for a while. It grew a lot in the pandemic with a lot of other companies but recently it has all come crashing down.

If you had bought Netflix stock on January 3rd of this year you would have lost over half your money.

And I don’t think the stock price is ever recovering. And the reason is competition. When Netflix offered streaming movies it wasn’t like anything else on the market. And it took off like a rocket.

But now every company and their grandma has a streaming service. Wikipedia has a list. There’s Amazon, Apple+, BBC, Curiosity Stream, Disney+, ESPN+, there’s an entire alphabet soup of streaming services.

And we’re seeing these services slowly eat away at Netflix’s market share.

Content Wars

Plus to add insult to injury companies are removing content from Netflix to put on their own streaming services.

Sure, we’re seeing custom TV shows come to Netflix. But, honestly, they’re not that good. I mean I have a weird taste in TV shows. I like TV shows where things actually happen. Shocker, I know.

And I just don’t think Netflix’s shows are that ambitious. Now I’ve only watched a few but I always get bored a few episodes in.

Combined with them losing content and it looks like Netflix may not be #1 for long. I suspect it will soon be replaced by Disney+ because they have Marvel. And people really like Marvel.

Conclusion

The drop in the share price of Netflix signals more than just trouble at Netflix. It signals a giant shift in the streaming industry. And probably not for the better.

There is evidence that Netflix has led to a drop in piracy due to people being able to find what they want easily. Now that there are like a million streaming services piracy is going to go back up.

It’s like a tragedy of the commons situation. Sure, many companies will probably benefit a lot. Especially Disney, with the benefit of hindsight that Marvel acquisition was a really good idea, but the total size of the pie will also shrink.

It’s unfortunate. But oh well, that’s business.

Wait. Before you go why not give this article a clap or two.