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How Netflix’s Downfall Will Affect You

Since Netflix went public in 2002, the streaming giant has changed the way people all over the world access Movies and TV. Netflix has over 221 million subscribers in over 190 different countries. It gets over 10% of global internet traffic, has received 226 different awards and at one point peaked at a market cap of 314 billion dollars. Despite holding a monopoly over streaming services throughout the 2000s and 2010s, Netflix has begun to lose its control over the industry. 

Netflix’s revenue growth has averaged 33.2% every year, with an annual subscriber growth rate of 35.4%. In 2022 this pattern has shifted drastically. In Q1 of 2022, Netflix’s growth rate was just 2.1%, significantly less than its Q1 7.7% growth in 2021. Their decline doesn’t stop there; this year, the site lost 970,000 subscribers, its stock fell 35%, and​​ its market cap lost 50 billion dollars. 

Netflix began as BlockBuster’s biggest competitor as an online DVD renter. However, in the early 2000s, the site predicted the death of DVDs and invested 40 million dollars into creating the first online streaming service. In 2017, Netflix outspent all other streaming services by spending 6.3 billion on content. Their content portfolio consisted of 93.7% licensed content and 6.8% Netflix originals.

Unfortunately for Netflix, its raging success is ultimately the reason for its downfall. With Netflix’s rising popularity, established media sites like Disney and NBC lost typical cable viewership. As a result, the media companies decided they wanted a piece of the pie and began their own streaming services, causing Netflix to lose substantial licensed content. Now, Netflix is caught between a rock and a hard place with its business model relying on attracting consistent subscriber growth and a necessity to invest billions into new content to maintain viewership. At this point, with Netflix’s business model tied to growth, the site only makes money if newly produced shows attract new subscriptions. 

In order to address this flaw, Netflix has announced it will begin to crack down on password sharing, and it will be adding advertisements to all content.

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