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Netflix’s problems pile up due to weak content flow

by LLB Editor
21st Apr 21 9:33 am

One of the biggest threats to Netflix in 2021 is the great outdoors. People are bored of sitting at home under lockdown restrictions and many will have exhausted all the classic films and boxsets on Netflix by now. The flow of new films to streaming platforms is currently weak and Netflix, in particular, is really suffering from having unappealing new content.

Cinema operators know that customers will only visit their screens if there are enticing films. The same applies to streaming providers – it’s all about content and Netflix’s proposition is diluted by having too many poor-quality shows. Disney Plus’s considerable success in the past few years has shown that quality rules over quantity.

Now that lockdown restrictions are slowly being eased, the appeal of signing up to Netflix is diminishing as there are alternative activities competing for individuals’ attention, namely pubs, restaurants, domestic travel and hopefully a greater range of leisure pursuits in time.

“The company is taking a calculated risk in clamping down on password sharing between friends and family, hoping those who have been getting it for free will become paid subscribers. That’s not a given unless the content is worth paying for,” said AJ Bell’s Russ Mould.

“Its decision to buy back shares is odd. Companies often buy back shares when they have nothing better to spend the money on. Those shares typically get cancelled, which pushes up the earnings for each of the remaining shares. That can be beneficial to shareholders in the short-term as it can improve the share price, but is it really the best use of the money? One would have thought Netflix would have been better off using that cash to bolster its content.

“Competition is heating up in the streaming space and Netflix cannot afford to make any mistakes at this juncture.”

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