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Netflix has no serious problems. Becoming a media company

New York (CNN Business)Netflix had its worst year in 2022. The company's stock has fallen more than 60% so far this year.

But recent struggles may be neither the beginning nor the end of a downward spiral for the streaming giant. Rather, it shows Netflix becoming a more traditional media company.

Netflix (NFLX) was originally a Big Tech company, part of the Wall Street acronym was evaluated as Facebook (FB),Apple (AAPL),Amazon (AMZN)Netflix and Google (Google). Wall Street once valued the company at about $300 billion. That's on par with many big tech companies whose business model ultimately failed to keep up.

"I think Netflix was hugely overrated," Julia Alexander, director of strategy at Parrot Analytics, told her CNN Business. "Unlike companies with many tentacles, Netflix doesn't have many tentacles."

But Netflix was not a true technology company.

Yes, like many companies in the tech industry, it relied on subscriber growth, but that subscriber growth is the movies people want to see and pay for. and TV shows.It's more like a Hollywood studio than a Silicon Valley tech company.

Netflix looked more like a tech company than, say, Disney, Comcast, Paramount, or CNN parent company Warner Bros. Discovery. But as these traditional media companies look more like Netflix, Netflix is ​​starting to break away from its rival's strategy: start serving ads,and release some shows. doing. Courses of weeks or months rather than all at once.
Netflix says cheaper inventory and a crackdown on password sharing could come next year. Microsoft (MSFT) partners with advertising business.

"In many ways, I think the move Netflix is ​​making signals a shift from a technology company to a media company," said Magid's senior vice of research at his President Andrew Hare told her CNN business. “Every day we see Netflix looking more like a traditional media company with its introduction of advertising, its crackdown on password sharing, and its experimentation with staggered releases of marquee shows like Stranger Things.” 84}

Hare added that Netflix's former business strategy "is now thrown out the window".

"Netflix pushed Hollywood out of its comfort zone once. They brought streaming into America's living room," he said. "Now it seems that what Netflix needs may be a more traditional practice."

, many of these strategic moves are taking place,” Hare said. This includes focusing on cash flow and earnings, not just growth.

"In other words, old-fashioned work," he said.

— Moss Cohen of CNN Business contributed to this report.