The Fall of Netflix: Complacency compounds its Issues
Netflix’s streaming empire has evaporated as complacency and competition have devoured its market share. It now faces a difficult dilemma: continue with the same business model and hope the situation gets better, as it has in the past, or reinvent the company and risk alienating the loyal Netflix subscriber base. The company’s current solution lies somewhere in the middle, considering the proposed changes would take Netflix in a completely different direction, even though the changes are minuscule and model other streaming services, setting a worrying precedent for the future of the company.
Netflix is one of the only major streaming services to lose subscribers this year.
The streaming service’s days as an underdog of the entertainment industry are long over. Netflix original shows and movies are given extremely large budgets, as evidenced by the overflowing star-studded casts of Netflix’s most recent spy movies like The Gray Man (Ryan Gosling, Chris Evans, Ana de Armas) and Red Notice (Ryan Reynolds, Dwayne
Johnson, Gal Gadot). Netflix shows are also frequently garnering the attention of the notoriously antiquated Oscars, signaling a seismic shift in the validity of streaming service production quality. However, money is not the solution to everything. Netflix is bleeding subscribers, and more worryingly, it does not know how to stop the bleeding, as the company itself predicts to lose more subscribers in the coming years. Naturally, Netflix found a headline-grabbing scapegoat — password-sharing, when in reality, there are much bigger issues facing the streaming service.
Netflix has attempted to branch out into the gaming industry in an attempt to save its revenue stream.
Fundamentally, the issue boils down to pricing and the implied value proposition. Netflix was once a value king, charging just $8 for streaming and disc rentals, which represented phenomenal value. It is a radically different story in 2022. The streaming service is one of few to offer multiple plans instead of one unified option. However, that is not even the biggest issue. Netflix’s price-gouging is blindingly obvious. For reference, Disney+, Apple TV+, and Hulu are all priced around $10 a month, which includes 4K resolution. Netflix’s 4K plan costs an eye-watering $20 per month. The same $10 a month at Netflix is only good for a maximum of 480p resolution, worse than extreme nearsightedness.
Further complicating the issue is Netflix’s consistent price hiking. A simple chart reveals the horrifying truth. Netflix’s standard (1080) and premium (4K) plans have increased $8 since 2013. Even factoring for inflation, that is a terrible statistic. Netflix is also contending with a dramatic decrease in content. Yes, Netflix originals such as Stranger Things and Squid Games have done extremely well, but they are anomalies in the bigger picture of the streaming wars. Netflix has lost The Office and Friends to Peacock, and all Marvel shows left on Netflix have been moved to Disney+. The remaining content is leveraging higher licensing fees, which strains Netflix’s profit margins, which will eventually reach a breaking point. Additionally, the pandemic has significantly revived piracy, as most new movies became direct-to-streaming. Piracy is a risky business, but it is no longer consistently low resolution and virus-ridden.
Space Force, a Netflix original show featuring Steve Carrell and Jimmy O. Yang, was cancelled after two seasons, during which time it received middling reviews.
Netflix may be a large company, but it is desperately hanging on for life. With an unoptimized strategy and complacent executives, the company will sink ever further into obscurity. It needs invention and exciting ideas flowing through the company again. It is staring into a black hole of obscurity. The stamp of death is hovering over Netflix, and it may be that even dramatic action will not be able to save it.