The Death of Netflix

Picture of By Lea Teigelkötter

By Lea Teigelkötter

Netflix – a friend in lonely moments, a distraction in times of struggle, or a laugh on the couch. Whatever Netflix means to you, I’m sure imagining a life without the platform seems almost impossible, it definitely does to me. At the risk of sounding very old, I still remember  times when I was tired or out of pocket-money and started streaming series on shady online sites with disturbing advertisements, especially for a fourteen-year-old. I’m sure you know which sites. My parents found out and weren’t too keen on the idea of their daughter circumventing the law (little reminder, I am German and we like to follow the rules), so they decided to invest in a Netflix subscription. I used to think Netflix would accompany me for the rest of my life and a year ago I would have thought myself crazy for even thinking about writing an article titled “The Death of Netflix”. Nonetheless, recent developments threaten the streaming service’s well established number one position in the market.


Netflix – No longer a unique business model

While I’m sure that even back then Netflix wasn’t the only streaming platform on the market, it is safe to say that it was the most popular one on offer. But times change, companies evolve and by 2022 many tech giants have realized that building streaming services is an easy way to attract audiences. Popular platforms such as Disney+ and Hulu+ have reported significant growth over the past months. Not only does Netflix fear losing subscribers to competitors such as Disney+, Hulu+, or HBO, but recent developments in the industry suggest that accessing 3rd party content might become much more difficult in the near future. Movie producers are less willing to sell their licensing rights, as media executives are starting to conclude that hoarding licensing rights for their own online services may be the most profitable strategy. To name an example, Paramount announced that their streaming platform Paramount+ will become the only streaming outlet for all Paramount pictures theatrical releases starting in 2024. Back in 2019, Disney decided to pull all of its movies from Netflix and now revealed they will not be extending their contracts with Netflix for titles including American Horror Story and Daredevil.

Whilst the content on offer on each platform is growing, so is the price, and very few people are willing to pay increasingly more each month. In other words, they are more likely to use one platform that suits their needs best. In order to offer a competitive advantage, companies in general need to either offer consumers higher value or the same value for lower prices. So, what are Netflix & Co.’s options now that everyone is fighting for content?


What are Netflix’s options?

Warner Bros. attempted to take over the market by making all their films in 2021 appear on HBO Max on the same day as their theatrical release. Of course, this rather bold move elicited major controversy and the organization’s partner Roadshow filed a lawsuit for breach of contract. Roadshow, co-financier of the Matrix movies, accused Warner Bros. of destroying the value of the movie franchise. After all, what is the point of going to the cinema if movies are available to  watch online on the same day? Considering that cinemas are already victims of months-long closures due to COVID-19, the company should have chosen a wiser, more ethical strategy. 

One might say that if platforms struggle to obtain licensing rights from producers, why not produce their own content? Indeed, Netflix, HBO and Amazon Prime Originals are increasing and platforms are investing more and more in their in-house productions. But being your own producer comes at a price. Fan favorite Netflix original series Stranger Things alone costs the company 10 million dollars per episode. Before streaming was even a thing, media companies were limited to producing content around scheduled time slots, but new technologies have made endless forms of content possible which are made available anywhere at any time. That means in order to be a successful streaming service, new content needs to be pushed out more and more often and there is no real end in sight for the level of money to be invested in such efforts. And raising subscription fees to make up for expenses means risking the loss of viewers. 

Recent Wall Street reports show that Netflix Inc. shares have fallen by 25%, erasing around $130 billion in market value over the past few months. How Netflix will recover from this setback remains to be seen, but despite its recent losses, it will remain an important company in our daily lives for the next few years to come. After that, venturing into new markets, offering additional services or products will likely become necessary to survive the ongoing battle between streaming platforms. 

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