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Netflix has become a traditional media company

Netflix has become a traditional media company

New York (CNN Business) – Netflix 2022 was awful. And in April, she said that she lost subscribers for the first time since 2011. Her actions They have fallen Over 60% so far this year. However, his recent problems may not be the beginning of a downward spiral or the beginning of the end for the broadcast giant. Instead, it’s a sign that Netflix is ​​becoming a more traditional media company.

Originally priced as a big tech company, Netflix is ​​part of the Wall Street acronym, “FAANG,” which stands for Facebook, Apple, Amazon, Netflix and Google. Wall Street once valued the company at around $300 billion, a number equal to many of the big tech companies that Netflix’s business model ultimately failed to deliver.

“I think Netflix has been massively overrated,” Julia Alexander, chief strategist at Parrot Analytics, told CNN Business. “Unlike those companies that have different tentacles, Netflix doesn’t have a lot of tentacles.”

But Netflix has never been truly technology company.

Yes, it was based on subscriber growth like many companies in the tech world, but that growth was driven by owning and paying for movies and TV shows that people wanted to watch. It’s more like a Hollywood studio than a Silicon Valley tech company.

Netflix was more like a technology company than, say, Disney, Comcast, Paramount, or CNN’s parent company, Warner Bros. Discovery. But as those traditional media companies start to look a lot like Netflix, Netflix, in turn, is starting to turn a page out of its competitors’ playbooks: Post ads Some shows have been released over weeks and months rather than all at once.

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Netflix said the restriction on password sharing and a cheaper ad layer could come as early as next year. It is a partnership with Microsoft for its advertising business.

Netflix will release a new, cheaper version 0:49

“I think in many ways the moves Netflix is ​​making signal the 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 ads, a crackdown on password sharing, and high-profile shows like ‘Stranger Things’ experimenting with a rolling launch, we’re seeing Netflix become more like a traditional media company every day.”

Hare added that the broadcast giant’s previous business strategy, which was “once sacred, is now being thrown out the window.”

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

Hare noted that at Netflix right now, “a lot of these strategic moves are being made as it matures and moves to the next stage as a company.” This includes focusing on cash flow and revenue rather than just growth.

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

CNN Business’s Moss Cohen contributed to this report.