Thomas K. Arnold

April 21, 2022

Let’s not overreact to Netflix’s bad quarter — and warnings of even greater subscription losses to come.

The flurry of critical news reports and analyses would make you think that Netflix is a sinking ship — and that at long last the streaming wars, triggered by the arrival more than two years ago of Disney+ and, in subsequent months, several more high-profile streaming services, are pounding Netflix to the point where its continued dominance is in serious doubt.

Sure, a 30% drop in stock price is nothing to sneeze at. And the press is sounding the alarm bells — particularly CNN, which happens to share the same parent as HBO Max, one of Netflix’s primary competitors. “Netflix’s collapse is a warning sign for stocks,” ready one CNN Business report. Another: “Future of Netflix looks grim as company value drops.”

Meanwhile, a good friend with a good stock market track record just sank a tidy chunk of his investment dollars into Netflix, buying “on the dip,” as they say on Wall Street. 

“It’s a no-brainer,” he told me. “I don’t personally know anyone who’s canceled their subscription, or is planning on doing so.”

Neither do I. I’m not going to go so far as to claim that Netflix is bullet-proof — nothing is, really — but I do believe the company’s stock will recover, and it will remain the dominant streaming service for the foreseeable future.

Netflix remains the leader in original content, the driving force behind SVOD platform growth. HBO Max just reported rosy sub numbers, but I believe that’s due, in large part, to its recent history of getting Warner Bros. movies the same day they open in theaters as well as HBO’s longstanding reputation as the place to go for quality productions. 

Content, after all, is king, and years of spending on top-quality series and even movies (although that’s been more hit or miss) has made Netflix a staple in most everyone’s entertainment diet.

Then there’s subscription inertia. The gym-membership model that Netflix introduced more than a decade ago, about a year after it began streaming content back in January 2007, has been an extraordinary success. Essentially, the concept is price something so low, and offer consumers unlimited use, that once they sign up they are unlikely to cancel, simply because it’s such a small blip on their monthly credit card statement.

True, the proliferation of streamers has made this model not as rock-solid as it once was. Consumer stacking of SVOD subscriptions has made the average monthly expense (factoring in Internet costs) exceed that of cable, according to a TiVo study, while according to Deloitte’s 2021 Digital Media Survey nearly 50% of respondents said they  are re-evaluating multiple streaming subscriptions, and 40% said they planned on canceling at least one service.

But while this “streaming fatigue” is a real thing, I don’t see Netflix as one of the casualties. Nielsen just reported that in March, Netflix increased its market share among streamers to 6.6% from 6.4%. Netflix may have lost 200,000 subscribers in the most-recent fiscal period ended March 31, but the subscription streaming VOD behemoth increased its market share to 6.6% among streamers in March from 6.4% in February, according to new data from Nielsen. And while Netflix no longer has a lock on the weekly streaming charts published by Whip Media, JustWatch, Parrot Analytics and others, the service continues to dominate them.

So let’s not write off Netflix. I tend to agree with Bob Chapek, who in an exclusive interview with Media Play News states, “I’m not sure how many players will be left standing, ultimately, in the streaming wars, as they call it, but I certainly think both Netflix and Disney+ will be among them.”