3 min read Innovation

Netflix Rethinks its Business after Subscriber Loss

Streaming giant Netflix is forced to cut jobs, trim expenses, and produce fewer programs after losing subscribers for the first time in a decade.
Netflix Rethinks its Business after Subscriber Loss

Netflix, the streaming icon with more than 220 million subscribers, continues to make changes to its business practices amid the fallout from its first quarter earnings, in which its revealed it had a loss of subscribers (many of them long-standing members) for the first time in a decade. Undermining investor confidence in the future of the streaming market, the company's shares dropped by as much as 37% last month.

The subscriber and revenue loss has pushed Netflix to trim its expenses through layoffs, cutting 150 jobs just this week. And by Netflix’s own account, the pain is far from over, as the company forecast to lose an additional 2 million subscribers next quarter, according to Fortune.

Things are getting desperate for Netflix, and, after years of disrupting the traditional movie and television industry, it might be turning into the very thing it once came so close to destroying by reportedly considering major movie premieres, and adding commercials to their streaming business model.

After disrupting TV and upending Hollywood, Netflix could be looking more like a cable network and movie studio (Fortune)

Excerpt from Fortune: Netflix is considering letting the movies it produces run in theaters for up to 45 days before moving them to at-home streaming. Analysts say that prolonging the amount of time Netflix movies are shown in theaters makes sense for the company, as it resolves one of the streaming service’s biggest issues: visibility for its blockbusters. "In the era of streaming, the cinemas have the potential to help all content owners, including streaming platforms like Netflix, highlight their best content and essentially market their platforms to their core audience," said Dimitrios Mitsinikos, founder and CEO of film industry analytics firm Gower Street.
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According to the Wall Street Journal, for Netflix Inc., the era of carefree spending is over. The streaming giant ran up a huge bill over the past several years as it expanded across the globe and produced a mountain of programming, prioritizing growth over cost efficiency. Now the company is imposing more financial discipline, according to senior executives.

Netflix, Facing Reality Check, Vows to Curb Its Profligate Ways (Wall Street Journal)

Excerpt from the Wall Street Journal: The shift comes as competition from an array of streaming rivals begins to take a toll. After churning out over 500 original programs last year, Netflix is looking to add fewer new titles, with a greater emphasis on quality, people familiar with the company’s strategy said. It is revamping production deals to limit its risk, and prioritizing programs with the biggest return, not the greatest reach, the people said. A key internal metric: the ratio of a program’s viewership to its budget.
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As for another possible revenue opportunity, the Washington Post reports that Netflix has also been betting big on gaming. After announcing its intentions to explore the video game space last July, the streaming service hired multiple executives to significant positions on its gaming vertical over the past few months, while releasing mobile games like "Stranger Things: 1984."

Amid losses, Netflix bets on a bold strategy around video games (Washington Post)

Excerpt from the Washington Post: Netflix is looking at content opportunities around video games from every direction. The platform's latest move is to turn the show-to-video-game pipeline on its head, announcing it will take popular tabletop card games and produce both a TV show and a mobile game. Video games have grown more prominent on the streaming service, whether it's with a TV show turned game, like "Stranger Things," or a video game turned TV show like the "Arcane" animated series based on "League of Legends." Netflix has also delved into third-party game development and original games, though the timeline for releasing its own games is much further out.
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