World

Netflix is ​​not in deep trouble. It became a media company




New York
CNN Business

Netflix had a bad 2022. In April, they said they had lost subscribers for the first time since 2011. Their stock fell over more than 60% so far this year.

However, its recent struggles may not be the start of a downward spiral or the beginning of the end of the streaming giant. Instead, it’s a sign that Netflix is ​​becoming a more traditional media company.

Netflix

(NFLX)
originally rated as a major Tech company, part of the Wall Street acronym, “FAANG”, short for Facebook

(FB)
Apple

(AAPL)
Amazon

(AMZN)
Netflix

(NFLX)
and Google

(GOOG)
. Wall Street once valued the company at about $300 billion – a figure on par with many Big Tech companies that Netflix

(NFLX)
business model of the end can not survive.

Julia Alexander, director of strategy at Parrot Analytics, told CNN Business: “I think Netflix is ​​overvalued. “Unlike companies with different tentacles, Netflix doesn’t have many tentacles.”

But Netflix never really a technology company.

Yes, it relies on subscriber growth like many companies in the tech world, but its subscriber growth is built on having movies and TV shows that people want to watch. and pay. It’s more like a Hollywood studio than a Silicon Valley tech company.

Netflix looks more like a tech company than Disney, Comcast, Paramount or CNN, parent company Warner Bros. Discovery. But as those traditional media companies start to look more like Netflix, it’s Netflix’s turn to begin to diverge from its rivals’ books: It will start serving ads and it released several shows over the course of weeks and months instead of all at once.

Netflix has said that ad tiers are cheaper and that restricting their password sharing could come next year. It cooperates with Microsoft

(MSFT)
for myself advertising business.

Andrew Hare, senior vice president of research at Magid, told CNN Business: “I think in many ways, the moves Netflix is ​​making suggest a transition from a tech company to a TV company. pine. “With the introduction of advertising, the crackdown on password sharing, variety shows like ‘Stranger Things’ experimenting with an incredible release, we are seeing Netflix as more of a traditional media company. more every day.”

Hare added that Netflix’s previous business strategy, “once sacrosanct, is now out the window.”

“Netflix used to force Hollywood out of its comfort zone. They brought online to the living room of Americans,” he said. “Now it seems like some of the more traditional methods might be what Netflix needs.”

At Netflix right now, “a lot of these strategic moves are being made as they mature and move into the next phase as a company,” notes Hare. That includes focusing on cash flow and revenue rather than just growth.

“In other words, old fashioned business,” he said.

– CNN Business’ Moss Cohen contributed to this report.



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