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The year 2022 has been tumultuous for streaming giant, Netflix. It claimed to have lost subscribers for the first time since April 2011. This year, more than 60% of its shares have been lost.
However, the streaming giant’s current problems could not signal the beginning of a downward trend or the end of its days. Instead, it’s evidence that Netflix is evolving into a more conventional media company.
The Wall Street moniker “FAANG,” which stood for Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix, and Google, first valued Netflix (NFLX) as a Big Tech business (GOOG). Wall Street once gave the company a value of around $300 billion, on pace with many Big Tech firms, which Netflix’s business plan eventually couldn’t meet.
However, Netflix was never truly a tech firm.
Yes, it depended on subscriber growth like many tech firms do, but its subscriber growth was based on having movies and TV shows that people wanted to watch and pay for. That reminds me more of a Hollywood film studio than a Silicon Valley software firm.
Compared to Disney, Comcast, Paramount, or CNN parent firm Warner Bros. Discovery, Netflix appeared to be much more of a tech corporation. However, as those traditional media firms resemble Netflix more, it is beginning to imitate its competitors’ strategies. For example, it will soon begin showing adverts and has begun releasing some series over the course of weeks and months rather than its usual one-time release.
According to Netflix, a crackdown on password sharing and a lower-cost advertising tier may be implemented in 2019. It has a partnership with Microsoft (MSFT) for its advertising business.
Netflix is changing course with videogames
Netflix is speeding up its push into video games with plans to treble its selection by the end of the year, but as of right now, few of the streaming giant’s members are playing.
The business has been releasing the games since last November as a method to keep customers interested in between episodes of shows. Only subscribers get access to the games, which must be downloaded separately as applications.
According to Apptopia, a provider of app analytics, the games have received 23.3 million downloads and an average daily user base of 1.7 million. That amounts to less than 1% of Netflix’s 221 million subscribers.
As the firm contends with escalating competition for users’ attention, it is arguable that the importance of games to Netflix’s overall strategy has increased in recent months. In its first subscriber decline in more than ten years, Netflix lost over a million customers in the second quarter after losing 200,000 in the first.
In a letter to shareholders last year, Netflix listed TikTok and Epic Games as two of its main competitors for consumers’ attention.
However, Netflix Chief Operating Officer Greg Peters stated in 2017 that the firm was “many months and actually, really, years” into discovering how games can retain users on the site.
The company’s current selection of 24 gaming applications spans a number of genres and Netflix series, including “Stranger Things: 1984.” Many of them are based on well-known card games, such as “Mahjong Solitaire” and “Exploding Kittens.”
According to a company official, the collection will increase to 50 games by the end of the year, including “Queen’s Gambit Chess,” based on the popular Netflix series.