Streaming stocks sold off on Wednesday, led by Netflix‘s
35% crash after reporting the loss of subscribers for the first time in a decade. Consider this another sign that the pandemic is coming to an end and a reminder to antitrust authorities that the streaming market is competitive and dynamic.
Netflix said it lost 200,000 subscribers in the first quarter and expects to lose two million in the second quarter. Covid lockdowns have boosted subscriptions across all streaming platforms. Americans had more money to spend and fewer things to spend it on because of pandemic transfer payments, so they spent it on home entertainment.
Now, freed from lockdowns, people are watching less TV. Inflation is also squeezing personal budgets, potentially making people more selective when it comes to subscriptions. Netflix’s strategy has been to develop original content for a niche audience, but that’s expensive. It recently raised prices, but some subscribers seem to have decided that its library isn’t worth the $15.49 monthly fee for a standard subscription. A flattering documentary about the Duke and Duchess of Montecito may cost more than it excites the masses.
A decade ago, Netflix had a streaming monopoly. But new streaming platforms – NBC’s Peacock, Paramount, Disney,
Amazon and HBO Max – have become more competitive in part by charging less and acquiring exclusive rights to classic shows and movies. Few markets are as competitive as streaming.
That’s a point we raised when Trump’s Justice Department filed a lawsuit against AT&T‘s
Acquisition of Time Warner to protect competing streaming platforms. Courts ruled in favor of AT&T. But the telecom giant canceled the deal last year amid pressure from investors who viewed streaming as an expensive distraction. Acquisitions don’t always pay off.
Now Progressives are urging the Federal Trade Commission to reverse Amazon’s acquisition of MGM Studios. The deal was finalized last month as FTC Chair Lina Khan lacked the votes to stop it. The agency is split 2-2 on partisan lines, but President Biden’s nominee Alvaro Bedoya would give Democrats a majority to block deals. Mr. Bedoya is expected to be confirmed soon.
New York Rep. Mondaire Jones, an associate of Elizabeth Warren, called the Amazon deal a “corporate power consolidation that will undoubtedly drive up prices, lower wages and lay off even more workers.”
Where’s the evidence? Progressives think big is inherently bad, but Netflix’s billing is a reminder that today’s giants are no guarantee of future success.
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https://www.wsj.com/articles/netflix-falls-to-earth-stock-plunge-streaming-federal-trade-commission-antitrust-11650488696 Netflix falls to earth – WSJ