Netflix stock tanked to the tune of a loss of $50 billion in market cap. What does that mean–if anything–for streaming as a technology?
If you compare Tesla and Netflix, one big difference difference is marketing spend. Tesla doesn’t exactly let the car sell itself, but kinda. Not so with Netflix. Tesla puts the marketing spend into the product. Still a car company selling cars, but not a streaming company thinking it’s in the ooh-la-la of production. Kind of like Spotify getting into podcast production and the ooh-la-la of having your name plastered on a football stadium.
Most of the promoters of streaming, the true Chamber of Commerce hoorah crowd, have an answer for whatever signal the market may be sending about growth in streaming.
But ask yourself this–do you really think that streaming will go on forever as the configuration of choice for consumers? Has that ever happened before? Not really.
Netflix has actually run its business very well and managed its subscription prices, and yet…
After shares tanked earlier this year because of concerns over its subscriber growth, the streaming leader said that it lost subscribers when it reported first quarter earnings on Tuesday.
Netflix (NFLX) now has 221.6 million subscribers globally. It shed 200,000 subscribers in the first quarter of 2022, the company reported on Tuesday, adding that it expects to lose another two million in the second quarter. The service was expected to add 2.5 million subscribers in the first three months of the year.
Is it too early to tell if streaming as a configuration is just in a “gully”? Maybe, but it’s time to start drilling down at greater unit economic depth on companies like Spotify than we’ve probably ever seen. Spotify has its own problems and may have already had its Netflix moment as measured by stock performance.
Is it time for everyone feeding at the streaming abattoir to start asking themselves whether they should be thinking about the Next Big Thing? Why is it that Spotify still can’t be profitable yet their top executives are beyond rich? Why do artists and songwriters despise the company so much? Why are there government investigations into the entire streaming ecosystem? How long will Spotify be able to get away with payola before there’s a full blown government investigation into that? And how much longer will TikTok be used to feed underage drivers to cartels in the border states who can barely drive to school much less survive a high speed chase with law enforcement–but the platform bears no responsibility?
There may come a day when artist say they want no part of Silicon Valley’s addiction capitalism and turn to something far more organic as their configuration of choice. Arguably that’s happening right now with vinyl.
So has streaming jumped the shark?