The popular digital streaming production company that is known as Netflix, finally started to see problems in the market this August and this could be a very big problem for the company. According to Yahoo Finance, Netflix saw a loss in stock market value by 15%. There are many reasons why this is the case.
One of the major reasons why they are struggling right now is Netflix reportedly lacked in consumer demand for a variety of shows. They are fond of using what the industry calls “licensed content.” This refers to shows or movies that are produced by 3rd party studios and aren’t Netflix originals. In fact, according to Business Insider, only 11% of Netflix entertainment is Netflix originals.
According to Forbes News, this is an issue for Netflix because roughly 70% of their viewing hours come from those shows and movies and they would need to pay an extravagant amount of money to keep these shows and movies. Netflix signed contracts with these shows which are scheduled to end late 2020- early 2021 and because of this, subscribers are reportedly ending their subscription because these shows accumulate a big portion of Netflix’s revenue.
Being one of the biggest media service providers in the world also means competition is inevitable. Netflix’s lack of entertainment at this time is a great opportunity for other companies like Hulu, Sling, and Amazon Prime Video to shine and have a chance to take over as the #1 Streaming site in America. These notable companies have gotten better in stock value and entertainment variety while Netflix has gotten worse.
Some of these other companies are doing things Netflix never even thought of doing. For example, Disney is adding TV bundles including things like ESPN+ and Disney+ all in one to attract more subscribers. Other companies are introducing things such as “Stream rewards” where if you’re on their streaming platform for a specific amount of time, you can get discounts on your next payment and because of this, many precious Netflix subscribers are regarding Netflix as traditional and old fashion, needing in change.
Out of all of these reasons why Netflix is however struggling, none of them have the biggest impact compared to Netflix’s pricing power. Netflix had to pay an immense amount of money in order to
maintain some of its content and because of this, prices for subscriptions went up dramatically. Subscribers were not happy about this and according to Morning Consult, 18% of subscribers terminated their subscriptions afterward.
Netflix struggling could potentially be a concern for SSM students. The majority of students at SSM use Netflix and the rest are using companies like Hulu and Sling. Netflix not doing well isn’t necessarily a major problem, if they improve content..
Many students are saying how most movies or shows they used to watch on Netflix have now disappeared and the new content is rather dry. They also indicated how most series are taking way too long to drop new seasons and others are inconsistent with what they released. These are all problems Netflix needs to fix in order to get back on top as the best. It might need to start with change in management, better financial expenditures and change in content.
Maxwell Stulz ’21 says, “I use Netflix from time to time. The company overall isn’t doing well and what they can do to fix this is add more diversity and put much more content for viewers.”
Joshua Adegborioye ’22 says, “I love using Netflix. It’s one of my favorite streaming services. Personally, I don’t see a problem with Netflix but it could be better. What they should do is reduce the monthly subscription price because compared to what it was years ago, it is ridiculous.”