We live in strange times as far as media consumption is concerned. As evidence, we offer the latest letter from Netflix to shareholders, released on January 17, 2019.
The letter mentions how many people have watched a movie produced by Netflix, Bird Box, and talks a lot about what a big hit it is. And a lot of people have watched it – but most of them haven’t liked it (See social media comments about Bird Box above).
Following the Amazon model of getting rich by losing money, Netflix is losing about $3 billion dollars a year, with no end in sight. Yet the stock is one of the best performings in the world. Is actually making money even part of capitalism any more?
Netflix loses so much money because it spends billions on developing new movies and TV shows. Despite the fact that there is an ocean of content, with Apple and Google, among many others, recently entering the business of creating original movies and TV shows. This despite the fact that, while glamorous, the vast majority of new content loses money.
Instead of talking about how much money it pays its stars, Netflix talks about how many new social media followers they get after appearing in a Netflix movie. Strange.
In discussing the company’s competition, Netflix sited not other streaming services or movie producers but the video game Fortnite and YouTube. So anything that can be done on a screen apparently competes with any other entertainment on a screen. Which means that all of the smartest, biggest tech companies have now apparently decided to enter a world where competition is basically infinite and profits very elusive. Hmmm, make sense to us.