Okay, that’s a little premature but honestly not by much.
Not too long ago, Netflix was sitting at $400 a share as of this scribbling it has dropped to $308. This is not an aberration, if you’re into stocks this is not a bargain stock. There is very little reason to think it’s coming back.
I started on Netflix during a period where I had had to seriously tighten my belt. I could have internet or I could have cable but having both was out, so I picked internet. Dial up internet and yes, this was before YouTube.
My passive entertainment was provided by broadcast TV over a slashwire antenna that I’d rigged up. For movies I went to Blockbuster. One particularly egregious late fee that reduced me to surviving on Chicken in a Bisquit and Value-Rite Bean Dip for a week, ended my relationship with Blockbuster forever. I’d been burned by them before, they had always treated their customers like pure shit and now there was an alternative. A DVD by mail service called Netflix. What sold me almost instantly was their “no late fees ever” policy.
Mind you that policy wasn’t out of the goodness of their hearts. Since Netflix worked on a fixed monthly fee that was approximately equal to the cost of one DVD. It was in their interest for you to hang on to the disk for as long as possible. If you kept it for a month before returning it? Awesome, you just bought Netflix a new DVD. In fact Netflix would punish frequent-returners in those days by sitting on the next mail out for a day or two, after you had sent back a disk.
Blockbuster’s ogreish return policy combined with an industry-standard price drop on DVDs created a situation where it was a smarter option to buy a DVD then rent for a hot release, gambling you could get it back to the store in time. And if you didn’t mind waiting, Netflix would send a less new video right to your door. Then in 2007, long after my belt had been loosened up again and highspeed internet was back in my life, I noticed a tab in Netflix announcing an upcoming streaming service for existing customers. The monthly fee would be unchanged (heh).
Netflix streaming was the final nail in Blockbuster’s coffin and frankly I did not shed a tear when it shuttered its doors for good.
That’s not to say that my relationship with Netflix was without it’s hiccups.
When Netflix first started streaming it, effectively, owned 100% of the legal streaming market. At first the studios didn’t really care. It was just another revenue stream for them and not a bad one at that. The real money back then was in DVDs. In fact, the studios had begun to view ticket sales as a secondary source of income. So long as you didn’t give Netflix streaming access to your top tier DVD releases, all would be well forever and ever Amen.
Then in 2010 the DVD Boom revealed that it was not an eternal thing but simply an artificial market bubble created by the now nearly extinct Blockbuster Video and their savage late fees. The DVD market completely collapsed and the studios started shrieking, “oh my god, Netflix is eating our lunch!”
The studios got together and presented Netflix with a uniform industry price hike across the board. Netflix crunched the numbers and then did something very, very stupid. They doubled their monthly fee without warning their customers in advance.
Bad call on their part. For a company that looked like it could do no wrong, they did it wrong. And for the first time in their history lost a lot of customers.
After bumble fucking around for a bit they got their feet back under them and proceeded forward to complete market dominance in streaming, seemingly convinced that all would be well forever and ever Amen.
The thing is that Netflix’s biggest draws aren’t movies they are TV shows. That’s what people are binge-watching. And the problem is this. The most popular shows on Netflix, ain’t owned by Netflix!
All of the major studios have been gobbled up by super corporations or in the case of Disney became one themselves. All of them now have the financial wherewithal to start their own streaming services, which is exactly what they are doing. And all of them are about to pull their shows off of Netflix.
Netflix owned 100% of the streaming market, which means anyone getting into the streaming business is going to be cutting into Netflix’s market share. They just posted their first quarterly loss of customers since their price hike debacle and it wasn’t a small one. Disney, Amazon, Apple, Warner Media, MGM (yeah they still exist), YouTube Red, CBS and (now that Disney has muscled them out of Hulu), NBC-Universal will all have streaming services next year. And this isn’t even counting small fry streamers like Funimation and Shudder. Hell, there’s this guy who runs a far-right blog and he’s gotten into streaming with this thing called Unauthorzed.TV (Give the link a click. It’s worth a look, trust me on this point).
2020 is going to be a watershed year for Netflix… Or rather a customer shed year. Twenty-five of their top fifty shows are going to be gone and everybody is going to be eating their lunch.
Netflix is responding by buying up Korean dramas (which I admit I like) and spending a shit- ton on original content. Like sixty million to give Obama a platform to tell everyone how important his presidency was. And seventy million to Pluto Nash star Eddie Murphy to do stand up again because who doesn’t want to see young edgy comedy from a 58-year-old has been. In short Netflix is desperately throwing entertainment at the wall and praying something will stick. All of it guaranteed to have dudes kissing and lots of preaching on the importance of gender fluidity.
Netflix isn’t dead yet but it’s going to be the zombie of the streaming industry within five years.
However, I don’t think it will go out of business completely. Their DVD service has 100,000 titles as opposed to the measly 3500 that Netflix streams. Its revenue stream was 96 million in 2018 of which about fifty percent was pure profit.
If Netflix has a future at all, it will be in its past.