London Daily

Focus on the big picture.
Thursday, Jul 24, 2025

Analysis: The sky is falling for Netflix

Analysis: The sky is falling for Netflix

Just like its comedy film "Don't Look Up," the sky may be falling for Netflix.

Netflix's (NFLX) stock has tumbled 41% from the all-time high it hit just two months ago. It's gaining subscribers at a painfully slow pace. Competition is heating up.

The company's answer to all that: It just raised prices on North American customers.

After surging to the top of the streaming mountain, Netflix is struggling to climb higher as its rivals gain more ground.

"It looks like they're hitting maturity," Michael Nathanson, a media analyst at MoffettNathanson, told CNN Business. "They keep raising their prices, and now in order to maintain a level of subscribers they have, they continually add more and more new content, and content is inherently a hard business to predict with peaks and valleys."

Don't look up
"Don't Look Up" was a buzzy hit for Netflix, but subscribers were still sluggish.


It wasn't that long ago that Netflix was a stock darling, but those days now feel like eons ago. The company's stock peaked just south of $700 in November, but has since dropped to around $400 on Friday.

Netflix ended 2021 with 221.8 million subscribers. That's significantly more than others in the streaming marketplace, including Disney, one of its closest competitors. Disney had 118.1 million subscribers as of October, and it grew subscriptions 60% between October 2020 and October 2021. During that same period, Netflix grew just 9%.

Disney hasn't yet reported its financial results for the last three months of 2021. But Netflix's growth slowed even further in the fourth quarter to just 8%. (And Disney's growth last quarter spooked Wall Street too.)

Netflix is struggling to find more people to sign up in the markets it has been playing in the longest — particularly the United States — noted Nathanson. The company is going to have to "start aggressively going after growth in developing markets," such as India and other Asian Pacific countries, to keep moving forward, he added.

The problem with relying exclusively on subscriptions for revenue is: after a while, you run out of people who haven't subscribed. That's bad news for Wall Street investors who are mostly concerned with companies' abilities to grow.

Zak Shaikh, vice president of programming at research-based media firm Magid, believes that Netflix's fall is more of "a Wall Street thing" rather than "something that reflects the business is in trouble."

"They still added subs, and they still have the same high usage and viewing metrics," he added. However, even Shaikh pointed out that in the long term, "Netflix (NFLX) will have to deal with the fact that you can't keep adding subscribers."

One way the company has tried to offset its slowing growth is by investing in other verticals, such as gaming. Another way is to raise prices, but that could prove difficult as fierce competition ramps up.

Netflix's red notice
"Red Notice" hit Netflix in November and became one of its most watched films.


Although price increases will probably help to offset its sluggish sign ups, they could also lead to more stagnation for Netflix.

For some consumers, price increases — even small ones — are a lot to ask considering that so many competitors are at Netflix's gates. Rivals like Disney+, Peacock and HBO Max from CNN parent's company, WarnerMedia, are also vying for a share of consumer's streaming budget. A dollar here or there matters to consumer's wallets.

Netflix admitted as much on Thursday saying that competition is "affecting our marginal growth some."

On the post-earnings call on Thursday, Reed Hastings, Netflix's co-CEO, also explained that there were many reasons for the company's tepid financial outlook, which included "ongoing Covid overhang" and economic hardships.

But he also conveyed confidence in the future of streaming, as well as Netflix's large market size and steady execution.

"For now, we're staying calm," he said.

But will Hastings still be calm at the end of 2022? Will investors?

"The intensity of competition is going to pick up in 2022," Nathanson said. "You have sports being rolled out on streaming. You have Lord of the Rings coming from Amazon (AMZN). You've got Discovery and HBO Max merging, so more content there. And Disney's backend content slate is coming."

Nathanson added, "I think 2022 is going to be one of concern about growth and competition for Netflix."

Newsletter

Related Articles

0:00
0:00
Close
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
×