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The year 2022 has not gone exactly according to the script for streaming giant Netflix. For the first time since 2011, it reported losing subscribers in April; this year, more than 60% of its stock price has dropped.
However, the streaming industry giant’s current problems might not represent the beginning of a downward trend or the end of its existence. Instead, it rather indicates that Netflix is evolving into a more conventional media company.
The Wall Street abbreviation “FAANG” stood for Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix, and Google. And at one point, Netflix (NFLX) was seen as a Big Tech business (GOOG). Before its eventual failure, Netflix’s business plan had a Wall Street valuation of around $300 billion, which put it on pace with several Big Tech businesses.
However, Netflix was never truly a technology firm.
Yes, it depends on subscriber growth, just like many tech firms do, but its subscriber growth was based on having movies. And TV shows that people were interested in watching and were willing to pay for. That reminds me more of a Hollywood film studio than a Silicon Valley software enterprise.
Compared to Warner Bros. Discovery, Disney, Comcast, Paramount, and the parent firm of CNN, Netflix appeared far more like a digital company. But as those traditional media firms resemble Netflix more, it is beginning to imitate its competitors’ strategies. For example, it will soon begin serving adverts and has been releasing some series in installments rather than all at once.
According to Netflix, a crackdown on password sharing and a lower-cost ad tier may be implemented in 2019. For its ad business, it is collaborating with Microsoft (MSFT).
Netflix is entering the video games space
Netflix is speeding up its push into video games with ambitions to treble its selection before the year’s end. But, right now, few customers to the streaming behemoth are playing.
In order to keep fans interested in between episodes of shows, the business has been releasing the games since last November. Unfortunately, the games must be downloaded as separate applications and are only available to members.
According to Apptopia, an app analytics business, the games have received 23.3 million downloads and an average of 1.7 million daily players. Of Netflix’s 221 million subscribers, that amounts to less than 1%.
As the firm contends with escalating competition for users’ attention. Therefore, gaming may have become more crucial to Netflix’s overall strategy in recent months. After losing 200,000 customers in the first quarter, Netflix lost over a million subscribers in the second. Therefore, marking the first subscription decline for Netflix in over a decade.
In a letter to shareholders last year, Netflix listed TikTok and Epic Games as two of its top competitors for consumers’ attention
The firm has spent “many months and really, really, years” researching how games can retain users on the service. This was according to Netflix Chief Operating Officer Greg Peters, who made the statement last year.
The company currently offers 24 game apps spanning several genres and series, including “Stranger Things: 1984.” Several of them are based on well-known card games, such as “Mahjong Solitaire” and “Exploding Kittens.”
By the end of the year, the selection will include 50 games, including “Queen’s Gambit Chess,” a game based on the popular Netflix series.