Can Netflix become a multi-trick pony to flourish?


Photo:

Andre M. Chang / Zuma Press

Netflix named many culprits for its miserable first quarter: a war in Ukraine, the world’s recovery after Covid is home, competition from new streamers, password sharing – almost a third of Netflix viewers apparently steal the service.

At the same time, paying customers seem to be disappearing at an accelerating rate. After losing 200,000 in the first quarter, Netflix expects to lose another two million in the second. No wonder the stock crashed – there are no other words for it – down 35% on Wednesday, continuing a dive that began in January and triggered a similar gap here.

The nagging question remains: Is pure-play, lowest common denominator streaming a business model built to last?

A challenge remained unmentioned in Netflix CEO Reed Hastings’ Tuesday mea culpa, but was raised a few weeks earlier by Disney‘s

outgoing chairman. Hesitantly, as if embarrassed to quote it, Bob Iger pointed to competitors who do not have to make money streaming. “There is no doubt that technology companies with deep pockets, Apple is a good example, Amazon is another … I do not want to suggest their [streaming affiliates] are loss-making companies, but they are in these companies for other reasons. “

In fact, he wanted to suggest that they are loss leaders. And the challenge will be especially evident in the next big battle for sports rights. Apple and Amazon are said to be leading candidates for DirecTV’s all-encompassing NFL Sunday Ticket package, a long-ball game for audience share. Apple recently began streaming baseball Friday night, especially showing ads between innings, which confused any hope that Tim Cook would instead speed up the game. Amazon has been streaming NFL games Thursday night since 2017, which also gives it control over its ad inventory.

Mr. Igers Disney is in itself a diversified entertainment conglomerate with many ways to make money that Netflix lacks, from its theme parks and merchandising to its ad-supported cable, streaming and TV networks.

Gloomy news for Netflix is ​​also gloomy news for the newly formed Warner Bros. Discovery,

created when AT&T wound up its short-lived Time Warner merger, whose valued asset was the streaming flagship HBO Max. Under Ma Bell, when it could be bundled with broadband or wireless service, HBO Max had at least one strategy for one of streaming’s deadly puzzles, how to reduce the churn or headaches of subscribers who jump out of the service after watching the current hit show.

Due to its unique focus on streaming subscriptions, Netflix was always destined to get particularly confused by churn. In response, management spent too much on content in hopes of creating a steady stream of irresistible hits. Even after this week’s stock market debacle, Netflix only said it would try harder not to spend its $ 20 billion annual programming budget on so many bad shows.

Compare this to an Apple or Amazon or AT&T before unloading its Warner properties, which use streaming as a sweetener for their much larger companies, allowing them to be more selective and economical in their content investments and (let’s see it in eyes) do not create the very algorithmic trick like “Red Notice.”

Which brings us to Netflix’s big surrender on Tuesday. After rejecting the idea for a decade, Mr. Hastings world by saying the company will consider launching an ad-supported version of its service in hopes of restoring subscriber growth and helping pay its gigantic content bill.

Mr. Hastings’ ad submission is likely to be the first of many submissions of things that made Netflix a shining brand and consumer favorite. Password sharing must disappear. The replay of new seasons will have to stop – as shown in the decision to divide the latest season of “Ozark” into two installments to be delivered at monthly intervals. It will probably become the norm to resort to lowball introductory offers, discounts, bundling and other forms of marketing gamemanship known to smaller angel industries. Can a Netflix-branded credit card be far behind?

When a service that had an integrity – a word I would use with advice, to mean wholeness, simplicity, straightforwardness and lack of duality in its proposal to consumers – finds itself resorting to gimmicks, A) it is not alone : Think of bait-and-switch deals, hidden fees and cancellation barriers used by cable TV to bolster its revenue model when the original and unalloyed blessing of perfect reception plus many more available channels became old hat for users.

And B) it also means a permanent downgrade of its image and reputation among customers. That means it just becomes another unclean, conflict-ridden brand that users snarl at even when they feel compelled to consume it. Is Netflix ready for it?

Moments after he assaulted Chris Rock on stage, the actor received an ovation from the Hollywood audience. Photos: Zuma Press / Reuters Composition: Mark Kelly

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Published in print on April 23, 2022.

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