On March 10, 1998, the first DVD from a brand-new website called NetFlix.com was dropped in the mail. The movie was 1988’s “Beetlejuice,” from director Tim Burton with a cast that included a teenag…
.com was dropped in the mail. The movie was 1988’s “Beetlejuice,” from director Tim Burton with a cast that included a teenage Winona Ryder, who nearly 20 years later would be tapped to star in the series that has become one of Netflix’s signature original titles, “Stranger Things.” Last year, Burton directed the first four episodes of “Wednesday,” a hot property that turned Jenna Ortega into an overnight star.
Simply put, Netflix is at an inflection point, says Michael Nathanson, senior analyst at MoffettNathanson Research. He sees two overarching issues that will be key to the company’s growth in the short term. “It’s really about one thing: Can they re-accelerate revenue growth with the crackdown on password sharing and advertising,” Nathanson says.
The biggest problem Netflix had in its early days was the plastic discs coming back broken in the mail. “Now,” says Sarandos, “we have much more complicated problems.” On balance, the writers strike could wind up being good for Netflix, says Nathanson. “The company with the most content in the bank is going to win.”
A little over a decade ago, the idea that Netflix would become a Hollywood giant was met with outright scorn by some people. Exhibit A is the famous dis from Time Warner CEO Jeff Bewkes in 2010. “It’s a little bit like, is the Albanian army going to take over the world? I don’t think so,” Bewkes said in an interview with The New York Times about Netflix’s threat to the industry.
Still, the company will be flying into headwinds throughout the remainder of 2023. For starters, it must contend with a weak advertising environment, which could depress its nascent ad-supported efforts. Netflix is likely three to five years away from seeing advertising have a meaningful impact on the income statement, says BofA Securities media analyst Jessica Reif Ehrlich. “There’s a longer runway here, and it’s a business they really want to be in. It’s a long-term growth strategy,” she says.
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