Yet its recent struggles may not be the start of a downward spiral or the beginning of the end for the streaming giant. Rather, it’s a sign that Netflix is becoming a more traditional media company.
“I think Netflix was extremely overvalued,” Julia Alexander, director of strategy at Parrot Analytics, told CNN Business. “Unlike those companies that have different tentacles, Netflix does not have a lot of tentacles.”
But Netflix was never really a tech company.
Yes, it relied on subscriber growth like many companies in the tech world, but its subscriber growth was built on having films and TV shows that people wanted to watch and pay for. That’s more a like a studio in Hollywood than a tech company in Silicon Valley.
“I think in many ways the moves Netflix are making suggest a transition from tech company to media company,” Andrew Hare, a senior vice president of research at Magid, told CNN Business. “With the introduction of ads, crackdown on password sharing, marquee shows like ‘Stranger Things’ experimenting with a staggered release, we are seeing Netflix looking more like a traditional media company every day.”
Hare added that Netflix’s former business strategy, which was “once sacrosanct is now being thrown out the window.”
“Netflix once forced Hollywood deeply out of its comfort zone. They brought streaming to the American living room,” he said. “Now it appears some more conventional practices could be what Netflix needs.”
At Netflix right now, “a lot of these strategic moves are being made as they mature and move into the next phase as a company,” noted Hare. That includes focusing on cash flow and revenue rather than just growth.
“In other words, old school business,” he said.
— CNN Business’ Moss Cohen contributed to this report.
