As Competitors Chase Profitability, Netflix Makes Good on 2022 Stock Losses, Plots Course Toward Greater Windfalls
As Competitors Chase Profitability, Netflix Makes Good on 2022 Stock Losses, Plots Course Toward Greater Windfalls
Warner Bros. Discovery surprised just about everyone when its second-quarter earnings report showed that its streaming platforms Max (then HBO Max) and discovery+ had amassed a small profit of $50 million. WBD spent most of 2022 slashing and burning its way through its streaming libraries, sparing only the titles users turned on most often.
WBD’s relentless pursuit of profitability has paid dividends in a shorter time than anyone thought, and most of its competitors are still hoping to hit peak losses in the coming months. That’s true of Paramount+ and Peacock, while Disney is seemingly following Warner CEO David Zaslav's playbook to the letter, in the name of simply slowing down streaming losses that continue to amount to hundreds of millions of dollars quarterly. The only company that isn’t swimming upstream against these currents? You guessed it: Netflix.
On Friday, June 16, Netflix’s stock price opened at a hair over $446 per share. That surpasses the high the streaming stock had in January 2022 when it traded at $435. That’s also when Netflix began a cycle that didn’t end until the third quarter of the year, which saw the company lose more than a million global subscribers. Share prices sank 60% in that time, erasing tens of billions of dollars in the company’s valuation.
Netflix now sits at 232.5 million subscribers, and the future looks bright indeed. Deadline reports that market analysts are projecting the stock to jump even higher over the next year. Bank of America revised its 12-month price target of Netflix’s stock from $410 to $490, and other firms are projecting even loftier heights. Analysts are giving a fair amount of credit to Netflix’s password-sharing rules and its ad-supported tier, which are both expected to generate billions in additional revenue for the company.
Frankly, the fact that Netflix’s rules against password sharing have produced thus far encouraging data regarding user cancelation is something of a surprise, especially considering how the service seemingly fumbled the roll out of those guidelines. In January, The Streamable was the first to report that Netflix had posted rules against account sharing on its American Help Center page. The page included a passage that indicated users who attempted to access their account away from their home internet might be blocked from using Netflix.
The company quickly backtracked as user outrage on social media reached a fever pitch. The rules were posted incorrectly on the American page, they said, and were only being enforced in Chile, Costa Rica, and Peru. But preparing its users for what the password-sharing limitations might look like months in advance, and showing them guidelines that were somewhat more restrictive than the rules that were actually enacted no doubt helped soften the ground for Netflix when it dropped its actual domestic password-sharing restrictions in May.
Commercials were a longtime no-no for Netflix, which had dared to go ad-free in the early 2010s to give users a true alternative to pay TV. But 2022 saw a reversal of attitudes in that philosophy as well, as the service launched its new “Standard with Ads” plan back in November. Some analysts think the company could make an additional $600 million from the new plan this year alone, as ad-supported streaming more efficiently monetizes users than ad-free plans do.
Sports are finally in the company’s future as well, or so it was reported this week. After a failed attempt to secure Formula 1 rights last year, the world’s largest streamer is ready to get back on the sports horse. Netflix is attempting to create a celebrity golf tournament that it will present live sometime this fall, whose field of players will be pulled from the sports docuseries “Full Swing” and “Formula 1: Drive to Survive.” If Netflix can put its past issues with livestreaming behind it and pull off that event, the sky is the limit for its future in the sports media world.
Perhaps leadership changes had something to do with these philosophical shifts, though many of them were made before the game of executive musical chairs got underway. In January, Netflix co-founder Reed Hastings stepped down from his longtime role as co-CEO. Former COO Greg Peters filled the role, and despite some outward bumps in the road, the financial data makes clear the company is in good hands.
So while everyone else in the streaming world is looking for profitability like a beach comber with a metal detector, Netflix will keep on keeping on. It can hardly be argued that 2022 was the service’s best year, but it rebounded from a wild and wacky 12 month stretch, and can now look toward building its lead on its competitors in the streaming industry.
Netflix
Netflix is a leading subscription-based video streaming service that offers on-demand access to an extensive library of over 3,000 movies, 2,000+ TV shows, and a growing collection of acclaimed Netflix originals. Renowned for producing groundbreaking content, Netflix has become a cultural powerhouse with hit originals like “Stranger Things,” “Wednesday,” “Squid Game,” “The Crown,” “Tiger King,” “Bridgerton,” “The Witcher,” and “Black Mirror.”