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Netflix stock took a huge tumble last week as news of 200,000 subscribers defected.  It dropped a whopping 35%.   You knew at some point the bubble was bound to burst just as it did for the dot.com industry.  The only question was when?  The possible end of the pandemic with people longing to get outside and resume their lives is certainly a factor.  Damn those vaccines and masks!   

And there is way more competition now.  But they’re not flying high either.

Other streaming services also suffered losses.  Paramount Global Shares, Warner Brothers Discovery and Disney all were down from 11% – 4%.  

But Netflix was really reeling.  Their solutions: crack down on password sharing and start adding ads.  First off, these are not quick fixes.  They will take time to roll out and implement.  Secondly, both make Netflix even less attractive to subscribers.  With so much competition, there’s only so much a consumer will spend.  Who wants to pay $100 a month for seven or eight streamers?  You’ll live without BARRY or TED LASSO or certainly WINNING TIME.  

Services like Netflix are in a bind because they only keep subscribers if they provide good new content.  Once you’ve binged-watched THE WEST WING you’re not paying to possibly watch it again.  So they can’t cut back on the number of new series and specials.  To do so would cause more defections.  What I suspect they’ll do is be more selective in what they buy, but that’s a trap because you never really know what’s going to hit.  SQUID GAMES anyone?   My fear is they’ll become more like networks and start hedging their bets with established stars and safer choices.  This too is not without large risks.  

I’ll be curious to see how they weather this storm and whether other streamers face similar fates.  

And then there’s CNN+.  What an utter disaster that is.  150,000 subscribers in the first month?  Kasie Hunt left NBC for this?  With so many 24/7 news services, why would people want to pay for another one?  It is shutting down on Saturday after only a few weeks.  CNN+ is officially the QUIBI of streamers.  

Streamers are the future, but they’re not licenses to print money.  There will be bumps in the road and refinement as they lead the way.  Mistakes will be made that are COSTLY mistakes.  But the Wild West is ever thus. 

Source: Ken Levine

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