Netflix proved this week that while it’s possible to survive one horrific earnings call if you string back to back disastrous quarterly reports together, Wall Street will lower the boom.
Pow! Netflix saw $50 billion in market capitalization evaporate in a single day after they told the story about their terrible recent quarter. They also lost their status as Wall Street’s golden child, and the company may never fully recover.
The bigger question to ask and follow is what this means for streamers in general.
In the same week Netflix crashed, CNN+ burned to the ground, making the entire industry look at what might be coming next.
The boom that streaming services had with investors is gone. Netflix was the first to the party and didn’t have any real competition until Amazon jumped into the game, but now there is intense competition with Disney, Apple, Comcast, Peacock, and Hulu. And Warner Bros. Discovery Inc.
The pandemic led to huge subscriber numbers that were essentially fool gold and impossible to sustain. With the complete flameout of CNN+, the investment community is re-evaluating its next move.
Here’s what BofA analyst Jessica Reif said in a story on Marketwatch.com.
“We believe investors are now questioning the long-term market potential in streaming.”
The problems streamers are facing are plenty. For one thing, Amazon has to figure out how to solve the password-sharing crisis they face. More generally, customers of streamers are spending more time looking into how much they are spending on their services. A survey in December found that 43% of streaming customers are worried that they are spending too much for all they subscribe to.
This could make the route of advertising-based content for a lower price the next big play for Netflix.
An analyst for Morgan Stanley reported that the average household has 2.8 paid services compared with 2.5 just last year.
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