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It’s been a rather torrid week for Netflix.

For years, analysts have been saying a bubble is set to burst and have been largely ridiculed for those predictions. Subscriber numbers kept growing, the share price ticked over nicely, and all seemed well with the streaming giant.

Until last week, when the 2022 first-quarter numbers came out and Netflix actually lost subscribers for the first time in more than 10 years.

In total, they lost around 200 000 members in the first three months of the year. This sparked a collapse in share price, reports Bloomberg, and sent Netflix to the bottom of the S&P 500 Index:

The streaming-video giant is down 64% this year after a shockingly weak subscriber outlook triggered a 35% drop in Wednesday’s session — its steepest one-day loss since 2004…

But the company has experienced a number of slumps over its lifetime, notably in 2011, when it was accelerating its transition into streaming.

Despite the recent crash, those that bought shares way back in 2002 are still laughing. Over the two-decade period, the share price has risen about 20 000%, which is far higher than the S&P 500 Index, up less than 500% over that same period.

The first graph looks at the ups and downs over that period:

As you can see, since 2011, 2014 was the only negative year until now.

Unsurprisingly, COVID-19 keeping us all locked up inside was good for business:

In 2020, shares gained nearly 70% over the course of the year.

The bullish run has now been ended and the share price is down almost 70% from its November 2021 high:

How bad is that compared to other companies on the S&P 500 Index? It is the worst by a comfortable margin:

Ouch.

That’ll hurt even more than having Apple come out of nowhere to beat Netflix to a first Best Picture Oscar.

Speaking of Apple TV+, which is just one of many new players to enter the market, here’s The Conversation with more on Netflix’s struggles:

The launches of Disney+ in 2019, HBO Max in 2020, and Paramount+ in 2021 has seen these US-based entertainment companies step into streaming. There are a growing number of players in the market. Every major studio that launches a platform means less content Netflix can distribute – when the major studios launch they remove their content from Netflix…

Global streaming platforms have also made inroads with popular originals. Severance on Apple TV+, Halo on Paramount+, and Raised by Wolves on HBO Max have all been popular with audiences. This success is no doubt forcing a more savvy approach from consumers increasingly hit with the reality of high monthly bills when paying for all services.

Clearly, the problems run deeper than just password sharing.

In 2021, Netflix made 99,4% of its income via subscription fees but that model may now have to change.

Along with a crackdown on password sharing, the company is talking about offering a “lower cost, ad-supported subscription tier”. There’s been an uproar on social media about mass cancellations but those hardly ever pan out.

Still, these are very worrying times for Netflix and something’s gotta give.

[sources:bloomberg&conversation]