Netflix Is Rising Up Against Classic Hollywood Movie Studios

Netflix is rapidly gaining new viewers while network television and other streaming services are losing them.

By Robert Scucci | Updated

If you were thinking about canceling your Netflix subscription after they decided to crack down on password sharing, then you might want to reconsider. CNBC took a detailed look at the numbers, and it looks like Netflix is back on the upswing, while legacy media companies like Disney, Warner Bros. Discovery, Paramount Global, and Fox are much worse for wear at this point in time.

To put it simply, despite the initial push-back Netflix saw over password sharing, their revenue-boosting strategy has been proven to work, as they’ve seen more new subscribers in the past week than they have in nearly five years.

Not only is Netflix coming back with a vengeance with a deluge of new subscribers, but we’re also seeing companies like Disney, Warner Bros. Discovery, and Paramount continue to struggle with their efforts to cut costs through restructuring and downsizing after seeing a particularly brutal 2022 fiscal year that they have yet to recover from.

To make matters worse, the ongoing Hollywood writers’ strike will ultimately result in the above-mentioned major players eventually running out of scripted content. But even though the well of content could possibly run dry if the strike doesn’t come to a resolution soon, companies like Netflix, YouTube, and TikTok have a competitive advantage due to the prevalence of international content they host.

Meanwhile, Disney and Warner Bros. Discovery are still trying to free up cash flow, even after laying off thousands of employees, and they’re purging content through impairment write-offs faster than viewers can get a chance to watch it. It’s becoming clear that these cost-cutting measures haven’t been as effective as initially thought by executives, who seemingly keep getting in their own way.

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While investors are salivating to jump on Netflix’s surging share value, they’re right to err with caution when it comes to companies like Paramount, who can’t seem to hold onto subscribers if their life depended on it.

The problem that legacy cable companies are currently facing is that they still haven’t found a tried and true way to turn their assets around in a way that’s profitable. Despite their massive layoffs, over-investing, and subsequent write-offs, viewership is at an all-time low, and shares are steadily losing value.

And when viewership numbers decrease, it only makes logical sense that ad revenue will also take a beating.

All things considered, it looks like Netflix truly had a finger on the pulse when the decision was made to crack down on password sharing for users not sharing the same household. It may have seemed like a bold move when they first introduced their new policy, but the numbers don’t lie.

The streaming giant is also seeing success since offering a cheaper, ad-supported tier for viewers who don’t want to throw down all of their cash for a full subscription. As the media landscape continues to shift toward on-demand streaming, it’s evident that Netflix already has a steady foothold in this sector, and their strategic measures are likely the subject of many closed-door conversations at legacy networks that would certainly like to emulate their success.