The Fall of a Titan

For over ten years, Netflix has not had a net subscriber loss. Even with the space getting crowded, they have had some level of growth, until now. A moment of reckoning has fallen upon the shoulders of this titan. How they react is going to be critical considering their past actions on trying to combat the new business threats put them in this predicament.

Vox put out an article outlining the how and why of the subscriber loss attributing it mostly to the increased competition. Netflix no longer has plentiful cheap catalogues of shows they can draw from. Their foothold in this space was born out of the wasted back catalogs of big studios. Now that all the studios know people are willing to pay for their content on-demand, they're trying to cash in and capture the magic that Netflix used to have.

Before Netflix, shows had two main revenue streams once the went off-the-air, cable syndication and/or physical releases. The former is tricky since lineups needed to appeal to broad viewerships to justify advertising costs. The latter means lots of overhead and work for something that could just sit in a warehouse and not sell. Popular shows will keep earning while the majority fall into obscurity hoping to one day reach cult status in some niche community. When Netflix's platform hit, studios were thrilled that someone was willing to pay for content that had never made a dime prior. Netflix got content on the cheap, studios could collect on stale shows, and users got a plethora of choices at a great price. They were able to bring digital binging into the public space, something that had been reserved for those with the technical knowledge to pirate.

Of course this streaming Eden couldn't last forever and the people who were once eagerly willing to sell rights to old shows now hunkered down and started developing their own platforms. As competition grew and more streaming services became available, libraries shrank. Consumers now have to subscribe to multiple platforms to get the same amount of content. Streaming was once lauded as the cable killer but with growing services and subscription costs, it's getting harder to stick with that claim.

Increased competition and tighter budgets are certainly large factors in folks fleeing but Netflix shouldn't be off the hook itself. With costs increasing, an influx of subpar fare, and crackdown on password sharing, few of the original reasons to have the service remain. Even now, Co-CEO Reed Hastings wants to eventually add an advertisment filled version. If that happens, they'll be turning their backs on the binging utopia so many fell in love with.

Of course it would be great to have our cheap ad-free utopia forever but having it crumble isn't surprising. Extra costs are either subsidized through ad sales or increased fees, something has to give. One thing that seems ripe for change though is the massive budgets. Moving away from high budget productions means more money to invest in ready-made content and smaller productions. Honestly it could very well be too late, Netflix has lost a lot of it's appeal and it doesn't seem to have any real advantage over the competition except name-recognition. Much like Cronos taking a sip of Zeus's wine, this titan is in trouble.