The days when Netflix was considered one of the five best-performing US tech companies are long gone. The streaming service’s share price is down 71 per cent from its high point last year. That eclipses the sell-off at Apple, Alphabet, Facebook/Meta and Amazon — aka the other Faang stocks.
Netflix has announced job cuts and suggested ways to raise revenue by introducing advertising and charging for shared passwords. But reducing spending on content is a trickier problem. Total content obligations are now over $22bn, up from just over $19bn in the same period two years ago.
Content is the lifeblood of a streaming service. Lockdowns encouraged more users to sign up to entertainment subscriptions but that meant Netflix compressed years of expected growth into the space of a few months. Now numbers are falling. This year it reported its first subscriber loss in over a decade. In spite of the recent return of hit show Stranger Things, it expects further declines. Revenue growth is slowing.