Netflix is ​​trying to become a media company, analysts say

THE Netflix is having a terrible 2022. In April, it said it lost subscribers for the first time since 2011. Its shares are down more than 60% so far this year. However, its recent troubles may not be the start of a downward spiral or the beginning of the end for the streaming .

Rather, it is a sign that Netflix is ​​becoming a more traditional media company.

The company was originally priced as a major technology company, part of the acronym for Wall Street “FAANG”, which stood for Facebook, Apple, Amazon, Netflix and Google.

The North American market has already valued the company at about $300 billion, an amount equivalent to many large tech companies that Netflix’s business model has failed to deliver.

“I think Netflix was overrated,” Julia Alexander, director of strategy at Parrot Analytics, said when CNN Business . “Unlike companies that have different tentacles, Netflix doesn’t have many tentacles.”

But Netflix was never really a technology company.

Yes, its rise was based on subscriber growth like many companies in the tech world, but it was made possible by the movies and TV shows people wanted to watch and pay for. In other words, Netflix is ​​more like a studio in Hollywood than a technology company in the Silicon Valley .

Netflix was much more like a technology company than, say, Disney, Comcast, Paramount, or the parent company of Netflix. CNN , Warner Bros. Discovery.

But as these traditional media companies start to look a lot more like the streaming giant, Netflix, for its part, is starting to pull a page out of its rivals’ playbooks: It will start running ads and release a few shows at the same time. over years, weeks and months instead of all at once.

The company said its cheaper ad tier and password sharing restriction could arrive as early as next year. She is currently partnering with Microsoft for their advertising business.

“I think in many ways the moves that Netflix is ​​making suggest a transition from a technology company to a media company,” Andrew Hare, senior vice president of research at Magid, told CNN Business .

“With the introduction of advertisements, a crackdown on password sharing, prominent programs like Stranger Things experiencing a staggered release, we see Netflix becoming more like a traditional media company every day.”

Hare added that the streaming giant’s previous business strategy that “was once sacrosanct is now being thrown out the window.”

“Netflix once forced Hollywood out of its comfort zone. They brought streaming into the American living room,” he said. “Now it looks like some more conventional practices might be what Netflix needs.”

At Netflix now, “many of these strategic moves are being made as they mature and move into the next phase as a company,” Hare noted. This includes focusing on cash flow and revenue rather than just growth.

“In other words, old school business,” he said.