September 27, 2022

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Netflix isn't in much of a problem.  It has become a media company

Netflix isn’t in much of a problem. It has become a media company

However, its recent struggles may not be the beginning of a downward spiral or the beginning of the end for the streaming giant. Instead, it’s a sign that Netflix is ​​becoming a more traditional media company.

Netflix (NFLX) Originally valued as Big Tech, part of the Wall Street acronym, “FAANG,” which stands for Facebook (FB)And the apple (AAPL)And the Amazon (AMZN)and Netflix and The Google (The Google). Wall Street once valued the company at around $300 billion — a number on par with many of the big tech companies that Netflix’s business model ultimately couldn’t meet.

“I think Netflix has been very overrated,” Julia Alexander, director of strategy 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 has depended on subscriber growth like many companies in the tech world, but subscriber growth has been built on having movies and TV shows that people want to watch and pay for. This is more like a Hollywood studio than a Silicon Valley tech company.

Netflix looked more like a tech company than Disney, Comcast, Paramount, or CNN’s parent company Warner Bros. Discovery, for example. But as those traditional media companies start to look a lot like Netflix, Netflix, in turn, has started taking pages out of its competitors’ playbooks: Start showing ads Some shows have been released over weeks and months rather than all at once.
Netflix said the category of cheaper ads and a crackdown on password sharing may come next year. It’s a partnership with Microsoft (MSFT) for him Advertising business.

“I think in many ways the moves that Netflix is ​​making signal the transition from a tech company to a media company,” Andrew Hare, vice president of research at Magid, told CNN Business. “With the introduction of ads, a crackdown on password sharing, and highlights such as the ‘Stranger Things’ experience of an amazing release, we’re seeing Netflix feel like a traditional media company every day.”

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Hare added that Netflix’s previous business strategy, which was “previously 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.” “It now appears that 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 school business,” he said.

CNN Business’s Moss Cohen contributed to this report.