Many entertainment executives, tired of playing catch-up to a Silicon Valley interloper, have been waiting for the comeuppance of Netflix. But this may not have been the way they hoped it would happen.
Netflix said this week that it lost more subscribers than it signed up in the first three months of the year, reversing a decade of steady growth. The company’s shares nose-dived 35 percent on Wednesday while it shed about $50 billion in market capitalization. The pain was shared across the industry as the stock of companies like Disney, Warner Bros. Discovery and Paramount also declined.
Netflix blamed a number of issues, ranging from increased competition to its decision to drop all its subscribers in Russia because of the war in Ukraine. To entertainment executives and analysts, the moment felt decisive in the so-called streaming wars. After years of trying, they may see a chance to gain ground on their giant rival.
But Netflix’s stunning reversal also raised a number of questions that will have to be answered in the coming months as more traditional media companies race toward subscription businesses largely modeled after what Netflix created. Is there such a thing as too many streaming options? How many people are really willing to pay for them? And could this business be less profitable and far less reliable than what the industry has been doing for years?
advertising-supported tier in the next year or two. Netflix also said it would crack down on password sharing, a practice that in the past it said it had no problem with.
“We’ve been thinking about that for a couple of years, but when we were growing fast it wasn’t a high priority to work on,” Mr. Hastings said. “And now, we’re working superhard on it.”