The free-spending days of Netflix, Inc. are likely over, after the streaming giant reportedly lost 200,000 subscribers in the first quarter of 2022, and could potentially lose 2 million more soon.
Citing a report from The Wall Street Journal, Netflix will soon implement substantive changes to future programming, emphasizing quality over quantity with new projects.
Netflix's seismic philosophical shift coincides with the deflating first-quarter results, announced earlier in the week.
The company lost subscribers for the first time in more than a decade, and revenue reportedly grew at its slowest pace in years — with shares plunging 35%, and Netflix's market value dropped by $54 billion.
"Well, it's a b***h," said Reed Hastings, Netflix chairman and co-chief executive, of the results during a Wednesday meeting with employees, according to the WSJ report.
Netflix's programming-based revenue problems likely cover multiple levels.
The company reportedly churned out 500 original programs last year, which might be great for the discerning consumer, but extremely costly on the business end.
There are reports of a single episode of "Stranger Things" from the fourth season drawing a staggering production price tag of $30 million.
And don't forget about "The Irishman," a 209-minute opus starring Leonard DiCaprio and Robert De Niro, which reportedly cost $225 million to make.
"We should right-size budgets depending on what the creative dictates, and what the size of the audience is," Bela Bajaria, the head of global TV for Netflix, said in a recent interview.
According to Bajaria, in its nascent days, Netflix felt obligated to overspend for high-profile projects, such as "House Of Cards," or overbid for syndication rights to iconic sitcoms, like "Friends."
"That was the cost of entry, the cost of doing business," Bajaria acknowledged.
Of course, reining in spending won't magically occur overnight. The WSJ reports that Netflix executives are still forecasting a yearly content budget of approximately $20 billion.
"We're always going to make great shows and have the amount of money needed for the creator's vision," said Bajaria.
In other words, "less spending" may be a relative phrase, since Netflix still leads all comers in streaming video with more than 220 million subscribers.
It was a bad week for streaming services, in general.
Shares-wise, Paramount Global, which operates the Paramount+ streaming service, fell 7% Wednesday.
Walt Disney Co., which owns Disney+, tumbled 5%.
Shares in Warner Bros. Discovery, owner of HBO Max, fell 5%.
And on Thursday, it was announced that CNN+ would be closing permanently, less than one month after raising the curtain on its own streaming service.
"If there is anything I would say is a fault of Netflix, it is that they are so insular. They may not see what's going on outside their walls, or they know and the hubris is so great they don't care," said Jeff Fierson, whose credits for Netflix include the movie "Sweet Girl" and the short-lived series "Daybreak."
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