Netflix Is A Blockbuster

This Barron’s cover two months ago about Netflix going the way of blockbuster stuck with me as a very strong visual for how fast things are moving. I showed it to my company’s entire salesforce at a recent event to make the point about how we analyze and agonize to make the right technology decisions, but when a tech-driven entertainment company with 50 million paying U.S. customers can so easily be at risk of extinction, it says a lot about how hard these decisions are in this lighting-fast era. And now I’m posting it here for posterity.


As for what prompted this Barron’s cover: Netflix will spend $6b on content this year, $7b next year, and they need to make more money.

So this week they raised prices $1/mo on basic tier and $2/mo on premium tier, which will add $600m in revenue. Investors liked it and the stock rose. And I’m sure I’m in the majority saying that $1-2 per month won’t impact my decision at all given all of the joy my family gets from Netflix.

Still, while I think Netflix is a blockbuster entertainment company, things move fast, and they could go the way of Blockbuster at any moment with a content spend that large. That would be a shame for them, but the consumer will always win in the end because competitors will swoop in to fill the void. On that note, Amazon Prime gives most of us a Netflix-like TV experience built in—but they have a long way to go to win the hearts and minds of true creative talent in Hollywood. Here’s a great quote on the topic, and more links below that:

“I’m a huge fan of the company overall, but their entertainment division is a bit of a gong show,” said David E. Kelley, creator of ‘Goliath’ and hit shows including ‘Big Little Lies,’ ‘The Practice’ and ‘Ally McBeal.’ “They are in way over their heads.”

Netflix hiked fees, and at the perfect time (Marketwatch)

Netflix smartens up about money (Bloomberg)

Where Amazon failing to dominate: Hollywood (WSJ)

The Trouble With Netflix (Barron’s)