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Sharon Harris
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Hello, corporate professionals! Netflix, once the darling of Wall Street, has seen its stock plummet by nearly 70% since its peak. With a loss of $216.8 billion in market cap, the streaming giant's future seems uncertain. Let's explore the reasons behind Netflix's downfall and what it means for the company and the streaming industry.
Netflix's decline isn't just a result of market volatility. While the S&P 500 is down about 9%, Netflix's 70% drop points to fundamental issues. The biggest challenge? Stagnant subscriber growth. Netflix recently lost 200,000 subscribers and warned of more losses, signaling that this isn't just a temporary setback.
Netflix's subscriber growth has been dismal. Even if we give them the benefit of the doubt and account for the 700,000 Russian account suspensions, their growth rate is still less than 1% year-over-year. This pales in comparison to mature companies like Apple and Google, which post 20-30% growth rates.
Netflix has been losing premium content while increasing subscription prices. This has led to a decline in their value proposition. For instance, Disney+ offers arguably better content at a lower price, making it a more attractive option for viewers.
Netflix has some licensing deals that could potentially save them. They have a deal with Disney to license movies released between January 2016 and December 2018, but they can't stream these until 2026. This gives competitors ample time to eat into Netflix's customer base.
Netflix's model of releasing entire seasons at once has led to binge-watching but also makes it easy for customers to subscribe for just a month and then cancel. This is detrimental to customer retention and long-term profits.
Netflix is not just competing with other streaming services but also with social media platforms like TikTok and YouTube, which have perfected their content recommendation algorithms. The rise of short-form content and decreasing attention spans pose a significant threat to Netflix's long-form content model.
Looking at Microsoft's history, we see that it took them 16 years to recover from a 66% drop during the dot-com crash. Netflix could face a similar long-term struggle unless they pivot into new sectors, which is easier said than done.
While Netflix's innovative spirit is still alive, pivoting into new sectors will take time. Given the oversold nature of the stock, a short-term recovery is possible, but making new all-time highs could take years.
In October 2018, Lion Air Flight 610 crashed in Indonesia 13 minutes after takeoff, resulting in the death of 189 people. Five months later, Ethiopian Airlines Flight 302 crashed six minutes after takeoff and killed 157 people. Both planes were Boeing 737 Max models. The causes of both crashes were disputed for several years, and Boeing was quick to lay blame on the pilots, saying the two tragedies were due to human error.
However, the recently released documentary on Netflix alleges that the crashes were caused by flawed designs in the Boeing 737 Max planes and that executives of the company were aware of the faulty designs but still decided to send the planes into the air. After watching the documentary, online commenters were quick to voice their anger and concerns, as well as to plans to boycott all Boeing flights.
On Twitter, pop culture critic Isaac Feldberg wrote, "DOWNFALL: THE CASE AGAINST BOEING (Netflix, this Friday) is enraging. An expos of late capitalism in all its corporate greed and malfeasance, damning not only of Boeing but also the federal agencies that cut the airline a sweetheart deal after 737 MAX crashes killed 346 people."
One user wrote that Muilenburg should be in prison, "as should every single other board member @Boeing who opted to cover-up design flaws in favor of higher profits and no negativity. Our greed will be our downfall as a species."
The planes that went down in 2018 and 2019 had an anti-stall system known as Maneuvering Characteristics Augmentation System, which was implicated as a cause of both crashes. MCAS had acted on faulty sensor data, forcing the planes' noses down. The pilots in the Lion Air crash had no idea MCAS even existed within the flight system, according to NPR.
"I expected them to be deeply apologetic, to ground the planes immediately and commit to figuring out what's wrong with them," Kennedy said. "They took 346 lives. But instead, it seemed like Boeing was focused on blaming the pilots for what happened."
A Boeing spokesperson told Newsweek, "We remember those lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302. Since the accidents, Boeing has made significant changes as a company, and to the design of the 737 MAX, to ensure that accidents like those never happen again. We have full confidence in the airplane's safety.
Emma Mayer is a Newsweek Culture Writer based in Wyoming. Her focus is reporting on celebrities, books, movies, and music. She covered general news and politics before joining the culture team and loves to cover news about new books, films, Taylor Swift, BTS, and anything else she might be obsessing over at the moment. Emma joined Newsweek as a fellow in 2021 and came on full-time in January 2022 after graduating from Colorado Christian University in December. You can get in touch with Emma by carrier pigeon or by emailing e.m...@newsweek.com. Languages: English.
50 Cent, hip-hop artist, producer, and the founder of G-Unit Film & Television, added further fuel to the fire in December 2023 when he announced that his production company would be producing a documentary on the allegations that were levied against Combs and all proceeds would be donated to victims of sexual assault.
Thanks to the scale of public interest, the bidding war for the documentary Diddy Do It was massive. Multiple television networks and streaming platforms vied for distribution rights, and Netflix ultimately won.
The day after the lawsuit was filed, Ventura and Combs reached an undisclosed settlement, and the lawsuit was dismissed. However, within a week, two alleged victims came forward and filed further lawsuits against Combs, which included further sexual assault allegations and revenge porn.
After publicly defending himself against the allegations on multiple occasions, his downfall was all but confirmed on May 17th, 2024, when CNN published CCTV video footage of Combs assaulting his former girlfriend, Cassie Ventura, at the InterContinental Hotel in Century City, Los Angeles, on March 5th, 2016.
At the time of writing, there is no confirmed release date for Diddy Do It. Production is reportedly ongoing, and as more details surface surrounding the allegations made against Combs, G-Unit Film & Television will be hard at work trying to squeeze all of the details into the docuseries.
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