Even an industry giant like Netflix can’t easily weather a $54 Billion loss in stock price, as we’ve seen horrifically displayed over the last two weeks. After disappointing Q1 results that, among other downturns, saw them lose the entirety of their previous quarter’s subscriber gain, Netflix took a series of heavy punches on the stock market and in public opinion. Entertainment attorney Brandon Blake from Blake & Wang P.A unpacks the news for us.
A Costly Lesson for the Streaming Model
At the heady heights of the pandemic, we saw many major studios completely overhaul their business model to focus on streaming first. While the lure of what looked like free cash on paper is understandable, there can be no doubt that the initial heady days of streaming equaling churning profit and booming subscriber numbers might have been a little presumptive. 
 As streaming platforms at all budget levels have proliferated, one thing has become clear- fast growth doesn’t last forever. Many of the initial markets, the U.S domestic one key among them, have quickly become saturated. Households won’t support endless subscriptions just to chase a show here and a film there. And economically, times have gotten tough. Cuts, not gains, are the theme of 2022.
 For Netflix, this sharp subscriber loss is the first in a decade, losing 200,000 subscribers since the end of 2021 to leave them at 221.64M subscribers globally. Far from the heady 2.5M new acquisitions projected for this period! Even more telling, they’re expecting to lose another 2M in the Q2 period, although 700,000 of these will stem from their shuttered Russian operations.
Netflix: Time for Reinvention
Of course, let’s not blame it all on the overall business model. While subscriber growth has slowed across platforms, we’ve seen other Q1 results post modest gains in the same period. We can write a little of it off to over-optimistic Wall Street predictions for Netflix, too. But the massive stock dump wasn’t just over subscriber losses. 
 Netflix’s revenue was up less than 10% from last year, with earnings per share falling by 6%. We’ve also seen a market turn against tech stocks, and Netflix simply doesn’t show the growth potential it once did. While this loss- brushing close to 50% of the stock’s value- was massive, it’s also not the first in recent times. Last year, the stock lost about 20% in Q1, and never really made its way back to its peak.
Disney, Warner Bros Discovery, and Paramount Global have all ridden the upward trend to become serious competitors for Netflix, and Netflix has been slow indeed to respond. Unwisely so. There’s only so long you can ride on a name and brand reputation. Earning bad press for their threatened shared password crackdown, failing to adapt to the demand for new original content, ignoring the rise of other competitors, and scorning the surprisingly successful AVOD model other platforms are using to eke out new subscribers all count against them too. Of course, while more understandable, their decision to close their Russian market has left a mark too.
Streaming has become a major, and competitive, driver for the entertainment industry, and it’s inevitable we will lose some of the worst-performing platforms with time. Despite the heavy hit, this is unlikely to spell the end for Netflix as one of the best-known streamers in the world, but without some serious attention to details they’ve been ignoring for all too long, it’s no longer looking as impossible as it once did. It will certainly be interesting to see how they respond to the challenges of a market they no longer dominate.

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