Netflix’s Post-Crash Identity Crisis

Reed Hastings
Photo by Sylvain Lefevre/Getty Images
Matthew Belloni
April 22, 2022

“It’s an orgasm of Schadenfreude.” That’s how a veteran producer described to me the feeling around town this week. Hollywood people revel in failures—in a business where nobody knows anything, everyone knows they’re better than the guy who just flopped—but this is different. A Netflix Nosedive, The Great Netflix Correction, a “bitch,” as co-C.E.O. Reed Hastings described the situation at a town hall yesterday, I’m told. Whatever you call it when your growth engine sputters and your stock chart resembles the White Cliffs of Dover. Walking to and from a table at Tower Bar on Tuesday, I was stopped by three separate people I know, all of whom conveyed some variation of “Sucks to be Netflix!” It’s a sickness, people. 

And it’s not just the headline news—that Netflix’s first subscriber loss in a decade, and its projection to lose another 2 million subscribers in the next quarter, gruesomely deflated its share price—that is prompting that revelry. Nor is it the fact that Netflix’s market cap has shrunk from $300 billion in November to less than $97 billion. To many, this day was a long time coming. 

Because Netflix had swagger. It had sneaked from Los Gatos to Hollywood inside a Trojan horse made of red envelopes and straight-to-series orders, then won 220 million paying acolytes. Hastings, co-C.E.O. Ted Sarandos, and the algorithm behind the curtain declared they knew better than everyone else. Netflix, and only Netflix, could successfully go direct-to-consumer, overpaying the best artists to work at the company, all while eliminating the backends that made them truly rich. Netflix, and only Netflix, could use data, not silly executive taste, to select the right projects, even though nobody remembers most of them 10 minutes after watching. Netflix, and only Netflix, could delight the customer by dropping all episodes at once, rather than stringing them along (and, incidentally, keeping them subscribed) week-to-week. Netflix, and only Netflix, could avoid accountability by refusing to disclose meaningful consumption data, then convincing the media to cover self-serving “reveals” as news. And, of course, Netflix, and only Netflix, could scale the business globally by running up huge debts, and make traditional Hollywood (with its theatrical windows and syndication sales and profit margins) seem downright analog in the process.