The result has been a wave of brutal selloffs, making Netflix the worst-performing member of the S&P 500 this year to date.
Here’s the data point that likely wiped out billions of dollars of value: A decade of seemingly perpetual growth came to a halt with the loss of some 200,000 subscribers.
So why has the market freaked out so much over a rounding error? John Authers explains that it’s likely a combination of the human aversion to loss of any kind and low confidence in valuations.
“Great competitors like Disney+, HBO Max, Apple and Amazon are putting out phenomenally good shows, so having a distinct place that has truly great shows is no longer a Netflix differentiator.
Just before the Netflix news broke, market research firm Kantar found that, in the U.K., more than 1.5 million people cancelled memberships to streaming services during the first quarter of 2022.
Still, Andrea Felsted writes that Netflix’s experience offers a warning: Though people are still purchasing beers and baby wipes now, if things tighten up even more, there’s a risk fancy condiments will be the first thing out of the shopping basket.
It could extend that model across verticals to create an entire app ecosystem, which some would call a “content fortress.” Meanwhile, David Wainer suggests it get over its aversion to live sports.
Is that a little too optimistic? Lionel Laurent writes that while there are points in Deezer’s favor, it’ll also have to overcome another challenge facing the industry: the attention recession.
With Covid fears receding and people exploring the world again, perhaps the real world will start competing more effectively for our time — and cash — again.
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