Netflix is among the hardest hit S&P 500 stocks this year. Its shares are off nearly 70%. For years, the company was a darling of the stock market.
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The cause of the drop is well known. Netflix lost subscribers in the most recent quarter, which fundamentally was without precedent.

Netflix pointed out that one cause of the problem could be addressed. About 100 million people share their Netflix subscription credentials, and Netflix does not get paid. The company said this was an opportunity for the road ahead. “Another focus is how best to monetize sharing – the 100M+ households using another household’s account. This is a big opportunity as these households are already watching Netflix and enjoying our service.” What the company made less clear is that some subscribers will cancel if they are forced to pay for two or three subscriptions instead of one.

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Another way Netflix says it can increase revenue is through advertising-supported subscriptions. It is an approach foreign to most big streaming services. That is true for a reason. The success of streaming has long been coupled with commercial-free programming, which was pioneered decades ago by HBO. It is a habit that will be hard to break.

Finally, among the most obvious reasons for the Netflix collapse is the proliferation of streaming services. People will not subscribe to a dozen. Many will only subscribe to two or three. The field has become too crowded, even for leaders like Netflix and Amazon Prime. Amazon at least makes money on Prime beyond what people pay for content.

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