The Future of Streaming Services

By: Neel Kulkarni

If you’ve turned on the T.V. or read the news, things are not looking bright for Netflix. Netflix’s stock has declined over 35% and lost $50 billion dollars in market cap after issues with their earnings report and password sharing have finally become publicized.

According to CNBC, Netflix announced a loss of about 200,000 subscribers in Q1 when it initially expected to increase its subscriber base by 2.5 million. This makes it clear that Netflix’s revenue growth has slowed down significantly since the company no longer has the competitive advantage it first had in the 2000s during its early launch. Almost every entertainment and media company like HBO (HBO Max) and NBC (Peacock) has created their own streaming service which provides customers with plenty of other outlets to watch a movie or T.V. show that Netflix may or may not have.

In a recent article on NBC News, Netflix also estimated about 100 million households across the world are sharing passwords, bringing light to the millions of dollars that Netflix has failed to convert into customer sales. More importantly, this statistic represents the fact that the incentive to create a new streaming service is dying. Consumers are prone to pirating content for free, watching with their friends who own a subscription, or sharing passwords that Netflix did not think would lead to such negative implications.

What does all of this mean for the entertainment and media industry? Streaming services need to prioritize innovation. With the world slowly coming out of the COVID-19 pandemic, box office numbers are making it clear that the theatrical experience is unbeatable. Netflix cannot expect to maintain substantial growth and compete with theaters by raising prices or adding new movies every month; these efforts are repetitive and do not change the customer experience at all. Ultimately, Netflix’s recent outlook is having repercussions on their competitors and making the entire industry rethink if their value proposition is worth the time and price.