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.
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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.
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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.
Pummeled Netflix Will Not Come Back
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
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