What a difference a few years can make, right?
It seems like yesterday that online streaming giant Netflix was sitting on top of the world…
Taking a nice chunk of the bite that FAANG stocks were taking out of the markets.
While the rest of the FAANG Gang may still be going strong (well… except for the Facebook (META) – the rest are doing alright)…
Somebody took a file to the eye tooth that was Netflix – as its had a rough go of late.
The worst part?
The issue it’s having has nothing to do with its business model or content…
It actually comes down to the one thing it can’t fix – market saturation.
That’s right, competition has been whittling away at the Netflix empire…
But while things may look bleak for the streamer – there is hope.
It seems that help comes from the STRANGEST places…
I know, I know…
I used a pun – and I hate puns – but I just couldn’t help myself.
For those who don’t know, Stranger Things is one of the Netflix’s (NFLX) most popular original shows…
And it may have just pulled the streamer’s fat from the fire – as the company reported BETTER-than-expected results last Tuesday.
This is good news…
Especially coming from the one of the company’s most recent quarterly updates in which it posted a fall in paid subscribers for the first time in over a decade.
This wasn’t unexpected…
Netflix revealed months ago that it was expecting to lose 2 million subscribers last quarter.
But it had hope…
The release of the newest season of Stranger Things was in the hopper – and maybe the popularity of this show could change the tide.
Well, it did…
The company lost just 970,000 subscribers last quarter.
That smaller drop in combination with higher membership fees helped push profits up by a better-than-expected 7% last quarter versus the same time last year.
So, while the company DID give a worse-than-expected subscriber growth outlook for this quarter – the fact is investors were happy with the gains…
And it sent Netflix’s stock up 8% after the news came out.
Netflix’s non-existent subscriber growth means it’s more important than ever for the streaming giant to make the most of its existing customers.
So, it’s been trying to do just …
First, it’s been rolling out extra charges for some of the 100 million accounts that share accounts with other households – something that is sure to affect its membership even more – but could also make it a little more money in the long run.
Second, instead of dropping a season of show all at once so people can binge…
Netflix has been drip-feeding episodes of shows over the course of a few months in order to keep subscribers hanging on – rather than binging and canceling.
And finally, rumors are circulating that the streamer has been toying with the idea of about licensing its older TV shows to outside networks in order to generate a little cash.
Not a bad plan…
But there are other ways that the company may still make money.
There is already a plan set in motion to roll out a new cheaper version of its streaming platform…
Just with commercials.
The ad-supported offering is in the works to be unveiled later this year…
And the company even announced last week that it was partnering with Microsoft for the tech and sales expertise it needs to build it out.
The rub is…
It doesn’t want to draw away too many of its full price paying customers – but grabbing advertisers shouldn’t be a problem.
So, while Netflix is technically down…
It’s definitely NOT out.
It’s the hand we’ve been dealt with this market…
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But even if you don’t – keep your eye on Netflix to see what it has up its sleeve.
It may just get back the sharpness of its bite yet!
“Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.” – Franklin D. Roosevelt