Netflix's decline began when other streaming services, like Disney+, started to emerge. This caused Netflix to lose subscribers and fall behind its competitors. While it is still investing in content, its future is uncertain.
00:00:00 Netflix has been struggling lately, with its revenue and subscriber counts falling behind its competitors. Dr. Joel Meyer, who was the marketing director at Netflix from 1999 to 2007, provides some insight into why Netflix's DVD by mail business was never a long-term future. With streaming becoming the dominant way to watch television shows, Netflix shifted its focus to becoming a streaming first company. This strategy proved to be successful, as Netflix's reach and content offerings grew exponentially.
00:05:00 Netflix's success in the streaming market led to stock prices surging, revenue jumping, and subscriber growth skyrocketing. However, in the years 2018-2020, the legacy media companies - Disney+, NBCUniversal, Paramount, Global, Warner Media, etc. - decided to create their own streaming services to compete with Netflix. This led to the loss of 25 million subscribers for these companies, and as a result, Netflix had to prepare for a time when it would no longer be the most popular content on its platforms. In Q2 of 2022, Netflix announced that it had lost 1 million subscribers, but this was offset by the growth of Disney Plus. As Netflix loses subscribers and its competitors become more creative, it sits in an interesting place in the media universe.
00:10:00 Netflix lost its edge to Disney+ due to the dollar platforms that Disney has such as local news, ABC, Hulu, ESPN, and theme park tickets. Disney+ is able to bundle these things together and offer a myriad of services to the end user that Netflix simply cannot. In addition, Amazon and Apple are also offering a raft of different services as a bundle to the consumers. While Netflix is cutting jobs and spending growth until 2024, it still plans on investing an estimated $17 billion on content. If Wall Street is no longer valuing Netflix on pure subscriber growth, it may start valuing Netflix by other, more traditional metrics, such as net income or revenue or EBITDA margins or whatever it may be.