Capitalism is a boxing match. Like boxers, companies need to show strong resilience, adaptation, and swiftness. Without these traits, they will be beaten to a pulp by fierce competitors. Netflix has been in the ring for two decades. Until just recently, they enjoyed unprecedented success for most of those years. You may have read Netflix has begun to lose subscribers and laying off hundreds of employees, but now it seems things will only worsen for the current subscription video on-demand (SVOD) heavyweight. Despite still possessing high numbers of active subscribers, the sudden change in growth and subsequent decisions cannot be ignored as they may signal the beginning of the end for Netflix.

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The coming years would see the young Netflix bulk up considerably, adding thousands of movies to their library.

In 1999, a severe blow was dealt to Blockbuster when Netflix changed its model, dropping return dates and late fees for all DVD rentals. Blockbuster, a known late-fee juicer, generated $800 million in late fees alone in 2000. High on its own supply and making bad choices, Blockbuster rejected an offer to buy Netflix for $50 million that same year.

Then in 2007, Netflix dealt the coup de grâce with its “Watch Now” online streaming feature. Now people did not even need to walk to their mailboxes for video rentals. They could watch their favorite content on virtually any device from anywhere. This coincided with the simultaneous release of smartphones with such capabilities. Only a few years later, Blockbuster, the former heavyweight of over 9000 stores, 84,000 employees, and billions of dollars, came crashing down, vanishing entirely, save for the sole remaining location in Bend, Oregon, which denied them a dignified death.

Netflix successfully disrupted the market, changing how hundreds of millions of people consumed media. As the years went on, Netflix got stronger and stronger. They were a seasoned phenom, destined for stardom. They began to receive major awards and nominations in the Oscars, Emmys, and Grammys for their homemade productions like Stranger Things, House of Cards, and The Crown. Netflix’s stock had exploded from its IPO of $15 a share in 2002 to nearly $700 in November 2021. Coupled with the pandemic-caused lockdowns, Netflix was on top of the world.

More Streaming Competitors Emerge

     Disney+

The ring began to turn into a sort of Royal Rumble. More competitors sprang up – all of which came from very rich parents. Walt Disney’s SVOD, Hulu, entered the ring with a very attractive free subscription plan as well as a premium plan that allowed early access to the latest television episodes.

Netflix & Politics

     Netflix

Of course, the absolute mess of U.S. politics also found its way into the SVOD ring. And because they are only capable of causing derision and anger these days, Netflix has found their decisions to create controversy and strife for themselves. They very infamously drop-kicked a very angry bee’s nest. Additionally, they joined over a thousand other companies in the mass boycott of Russia due to the invasion of Ukraine, resulting in the termination of 700,000 Russian memberships.

Netflix’s longstanding success has granted them tremendous influence, and wielding such power improperly is a speedy way to achieve failure. Even if Netflix were able to avoid all politics altogether and stay silent, they would still find themselves in a catch-22 and still be in the wrong for not acting. Netflix is not blind to these rising issues. They’ve said as much in a letter to shareholders in April 2022. This has prompted the company to announce new measures in an effort to remedy its slow growth and increase its margins, but it may be actually hurting them instead.

Netflix’s Crackdowns & Fee Updates

Netflix announced an unpopular crackdown on account/password sharing, the action of multiple individuals using the same account (pretty much everyone). Not only should you expect to get an alert that your account is being shared with someone else, but Netflix will require you to pay a fee in order to continue doing so. This comes after Netflix again raised the price for their basic, standard, and premium plans in March 2022, up to $20 a month.

The new fee is already being tested in Chile, Costa Rica, and Peru, where compliant users can share their accounts with up to two people. These fees equate to between $2-3. Last month, Netflix Co-CEO Ted Sarandos confirmed the arrival of a new plan featuring ads that would become available in the coming years. His partner, Hastings, was once adamantly against this idea, but with their current issues, has come around. Hastings believes those who cannot afford Netflix’s plans will opt for the low-cost plan with a side of ads.

Netflix’s next challenge occurs on July 19, 2022, for their second-quarter earnings report, and the company is estimated to have lost an additional 2,000,000 memberships.