Netflix should have been spending its money buying legacy studios - Paramount for example and their god-awful 1990s production mentality (region locked trailers - really?), not to mention a massive backlog. £35b, it's a lot, but Netflix is worth 5 times that at least, even after yesterday's crash, let alone what it was worth a year ago.

Disney gets the new landscape. They give early access to tons of youtubers and you can't move on yourtube without bumping into the latest breakdowns, rections etc about an episode of moon knight or a teaser trailer, shows are released globally within hours, and they have a massive back catalogue.

Amazon bought MGM, bringing in things like Stargate and Bond, but it's dabbling, if their video service stops, it doesn't really cause the company to fail. Apple doesn't seem to know where it wants to go, it's not really in the game, but it's not their core competency either.

Netflix had an opportunity to secure their catalogues a couple of years ago, but just threw money at trying to create original content but not really knowing how (and certainly not knowing how to do it efficently)

It's almost that legacy industries actually do know things disruptors don't, and sometimes these things can come back at the disruptors. Like the way episodes of TV series used to be aired, weekly with defined timeslots. We went from that to making whole seasons available at once, and now back to weekly airings without a fixed timeslot for blockbuster series like everything Star Wars or Picard. It's almost like broadcasters had reason to air episodes weekly.

On the other hand the pathetic handling of global release for modern trek (Discovery season 4 being uplled 2 days before air led to a massive backlash, no Prodigy, Paramount are more concerned with differentiating international markets then driving more viewers, there's no attmept to engage with youtube 'influencers')

Paramount etc can make stuff, but they don't get the global media landscape in a way netflix and disney do, and I think similar can be said about other well established media companies.

I don’t think there One True Way to Release New Episodes that’s applicable for 100% of the cases.

Some shows worked better with entire season released at once, some didn’t. Streaming services will probably dabble with both.

For what it's worth, you might be overvaluing the impact of youtubers due to your own filter bubble. I've never watched an influencer breakdown/reaction/etc about a tv show on youtube and correspondingly the algorithm essentially never recommends or suggests such content to me.

I'm sure it's an important channel to reach certain demographics (gen z? I'm not sure who exactly) but most people aren't choosing a streaming service based on youtube reaction videos.

Netflix is doing just fine content wise, go look at the weekly streaming charts and you'll see they dominate the top 10 for tv and do well enough in movies as well. More people are watching more stuff on Netflix than just about any other service, consistently week to week.

Content isn't the problem, they just ran out of people willing to sub, they were always going to reach that limit at some point and when they did their tech unicorn valuations would reset back to something more realistic.

Content quality is the problem, like what happened with cable.

They are selling attention addiction like Facebook without caring about quality recently. Ex: Korean copycat shows and "documentaries", just because both categories tend to rate higher on imdb. Seems like a decision a PM will make, based on metrics to improve profit, not quality - i.e. give users what they want, even if it is bad for them (or the business) in the long term.

Don't forget also their strategy of buying 1st season hits then creating new seasons regardless of the story or quality just to capitalize on "safe bets" or the "money cow" loyalty/fan phenomenon. Ex: The Crown, Money Heist, Designated Survivor, etc.

PS: Disney is doing the same, but with brands instead.

I feel like FB / meta stock crashing after last quarter's earnings miss was the first warning, and today Netflix stock cratered after a miss as well. I'm not sure if we will see a crash or recession however I do believe all the factors you mentioned will set off a drop in valuations and hence the stock market.

Facebook just sucks all on its own, I don't think it's failing because of any larger market trend. Meta has only itself and overweening arrogance to blame for its failure. They've got enough money to make dying a long and tedious process.

Streaming is a funny one. I was led, as I'm sure others were, to think of streaming as new media vs. old media. The talk around the recent stock dip made me find out it wasn't the case. Now there's Disney+, Peacock, etc., and it turns out the old media's pretty good at streaming. We might not see any businesses solely based around streaming in the future.

It was never really clear what the disruptive innovation was supposed to be. It seems like the only 'streaming' company with an advantageous cost structure and differentiated business model is YouTube.

> It was never really clear what the disruptive innovation was supposed to be.

Unbundling TV/Movie content from Cable providers was the disruption.

You wouldn't need to pay for Cable TV just to get internet.

You wouldn't need to pay for Broadband, just to watch the show you wanted - assuming you had internet access some other way.

It also offered the promise of relaxing control of where/when/how you watched content.

Content on Demand used to be a premium feature, you largely had content delivered to you in channels, and only a limited range. You could record content to watch it later, but that required another device (or a Cable box capable of doing it)

Location was also tightly controlled - you could only watch certain content in one room, in one house.

Wanted to watch a movie in your Hotel Room? Buy it from the Hotel. At your friends' place while you're staying with them? Only if they had the right Cable subscription.

Yes, Cable companies offered streaming, and on demand, and all that other stuff - but largely only after Netflix had proven it out.

> Cable companies offered streaming, and on demand, and all that other stuff - but largely only after Netflix had proven it out.

In other words, they waited for Netflix to do the expensive and risky work of building out the market and refining the streaming infrastructure. Then they used the money they got from licensing their IP to Netflix and built out their own offerings. Sounds like good business.

Back in the 90s Blockbusters was considered a disruptive tech company, pioneering the then-novel VHS-on-demand model to disrupt the status quo of cinemas and broadcasters, making its market cap worthy of sky-high earnings multiples.

... Or maybe it wasn't, and Netflix shouldn't have been either. They're fundamentally solving the same problem and delivering essentially the same value, and Blockbusters had the advantage that first-sale doctrine meant they didn't have to strike expensive licensing agreements with studios in order to serve their content.

If Netflix can combine their streaming service with their DVD catalogue, and side-step licensing restrictions by streaming data from a physical DVD in their collection to paying customers, maybe they can win back that attention. But I assume that such an application has already been challenged in court.

There was nothing novel about Blockbuster other than scale. VHS-on-demand started in the 70's (but didn't really get rolling until the 80's) with mom-and-pop video rental stores (which Blockbuster itself started as in 1985) which grew into small local/regional chains. Blockbuster became a roll-up of the smaller chains and most successful mom-and-pops and specialized in raising prices and maximizing revenue via late fees.

>by streaming data from a physical DVD in their collection

Someone tried that a few years ago, using the position that they were renting out a DVD player and a very long cable. Courts didn't accept that argument and they got shut down.

It was the truly 'on demand' aspect of it. Before that, the best most people could do was get a Tivo and time-shift programming which the cable companies fought hard (and lost) to stop.[1] Cable TV's version of 'on demand' up to that point was for customers to tune in at the scheduled time your movie was airing and press the buy button. Then services like Netflix came along and said 'just come to our website and watch anything in our catalog whenever you want.'

[1] Anyone today with cable service might notice how you get your Tivo functionality from set-top boxes supplied by the cable company. That's the same thing they're trying to do with streaming. They're not so much against it as trying to buy time to build out their own services to compete.

My impression is that the disruptive innovation was literally just the fact that you’re using a new physical medium to get content onto people’s screens. “Old media” controlled the literal wires and airwaves that brought content into homes, until eventually enough people had access to these fancy new Internet wires and airwaves, so you didn’t have to be one of the few old media companies in order to sell content to people.

There was no disruptive innovation at all if a dozen companies all have a streaming service. Netflix was a car dealer for movie studios, only unlike car dealers they didn't write their position into law, and now the movie studios have had time to poach talent and eat their lunch. If netflix were truly savy they would have bought some legislation very early to make it illegal for a producer to distribute content themselves. Maybe they tried, I'm not sure.

It's hard to remember the talk from 5–10 years ago, but I guess it was the original productions. The word of mouth about House of Cards, for instance. In hindsight, nothing about that was unique to Netflix, but it was easy to get caught up in the hype.

Before the originals I think was even more of a netflix golden era. the streaming catalogue was really quite large. Producers were actually permissive with licensing deals. Netflix was like car dealer to them, providing and maintaining this digital distribution service so they didn't have to. Only netflix didn't protect themselves with law like car dealers did, and over time these producers opened up their own streaming departments and hired talent from netflix and began competing in this space instead of licensing content.

This exactly.

YouTube’s business model is so simple it’s phenomenal. Only reason Google will continue doing well for investors as they are no viable alternatives to YouTube in the near future

> I'm sure others were, to think of streaming as new media vs. old media.

I still think that's true. The fact that there is a maximum saturation level is unsurprising. Because internet speeds and availability equates to netflix availability, I was surprised Netflix saturation took this long.

This is especially true to people who get paid in RSUs or do ESPP through their employer. Even FAANG employees should not really sit on these to get the maturation of these stocks to cap gains, as they'll likely go down by a larger margin in a year.

This is gonna be a wild few years ahead of us one way or another.

My take on it is that every new generation has to learn this lesson the "hard way" if only because they are pumped by people saying "Yeah, this time it is different."

> Even FAANG employees should not really sit on these to get the maturation of these stocks to cap gains

Why do people always mention this? You pay income taxes at vesting as if the entire stock was income. cap gains is only for the difference between vest price and selling if you hold it for a year.

maybe because the vesting happens during a trading blackout, and by the time the window opens there have been gains which would be short term if sold immediately.

Somewhat lucky that in the UK it's no less tax efficient to sell straight away, which is what I always do.

I know of a non-zero amount of people though in the US hit by the low withholding on RSU's and then having a big tax bill, based on their value at vest before a stock drop.

there shouldn't be a low withholding on RSUs if your settings are correct, e.g. "I expect to make more than 400k this year". it shouldn't matter if stocks drop after vest since the withholding is taken out of the RSU vest amount.

Really? Mine defaults to 22% on morgan stanley and I have to manually withhold extra from my salary. It also does not withhold any for state taxes which I also have to do with my salary. I don't think I can withhold either from the RSU sale.

Yeah I think the standard is to sell some percentage of the RSU grant each time there is a distribution (to cover the taxes of getting it as income).

Unfortunately this is usually insufficient in most companies and one will likely still owe a big chunk of change to the IRS each year as a result.

One can ask for extra withholding, but it's a bit tricky to figure out until one has worked for a given company / comp level for a given year.

Yes - it's different in the UK, I have the full 47% sold before disbursment of stock (well, 48.25% from next vest).

I don't know, the two hardware As in FAANG, Apple and Amazon, are doing quite well on the stock markets. But yes, RSUs and stock options shouldn't be treated as part of your salary. Instead it's best to treat them as a bonus you don't necessarily need.

Amazon has traded sideways for a year and a half.

F, N are cratering, Amzn is sideways, Aapl is still way up yoy (seems vulnerable this earnings season though), MSFT has been good historically but worse this year and seems vulnerable. Google has had a good run recently but is weak this year, however P/E is already in a better place than its competitors so it has room to run I'd say.

Ha, didn't track my AMZN stock since I thought they might go down to around 1k early in the pandemic to rebuy some. They never did. Well, trading sideways isn't too bad, so, considering how other tech stocks developed.

> Even with content, users can sign up, binge, and quit after a single month.

This just made me realize the next big step is likely paying for monthly access to the service, then paying to unlock the content. Similar to games that hide features behind DLC.

I wouldn’t be surprised if resetting your unlocked content if you let your monthly payments expire was another step forward.

The best next step is canceling all the services and subscriptions except VPN and internet, then hoisting the jolly roger.

I'm done pretending the studios and content creators are good faith operators. I've paid over 6 figures in the last 20 years for movies, shows, books. I'm not paying any more, and I don't feel bad about it at all.

Netflix had a great library, but the industry caught up and licensing and copyright induced fragmentation made streaming platforms more or less equally shitty.

There's no more value add if the apps, content, and curation don't work, or if they start sneaking in advertisements or if the companies are engaging in regulatory capture or other malicious corporate fuckery.

Avast, mateys, time to keelhaul the bastards in charge (or their pocketbooks.)

Yeah, we went from illegal streaming to copyright owners providing easy legal access back to a clustered, region restricted system of legal streaming services. And region restricted, clustered environment was a large part (together with the absence of any legal services) why pirating content was a thing in the first place.

That way lies a resurgence of piracy as a social norm.

Paying for the content is what Apple TV is doing, isn't it? You can "rent" (one-time view) a video for a lower price, or "buy" the video at a higher price (which isn't the same as owning it, of course. It just allows you to watch it more than once). But you're still paying per individual movie.

> Now is probably a good time to shift your investments to things people need, not things they want. If you're in tech, I hope you've diversified your assets.

People should be investing in total stock market index funds like VTI anyway, individual companies crashing should not affect one's investing philosophy.

All these investments will have to go somewhere else- the only non ad involved company in FAANG is Apple

The investments would be going to companies other than FAANG, and there are plenty of software industries that aren't ad-propelled. The reduction of influence from adtech may even be a boon for practical software industries, where currently they are all competing for capital and talent against the VC and revenue of ad-propelled businesses.

I've long said tech wages need to come back to reality, so that the rest of the world can get back to building software for the rest of the world, not just the tech bubble compatible ventures. I think adtech and online advertising propping itself up is part of the problem.

> the only non ad involved company in FAANG is Apple

A good chunk of Apple's profit is the annual payment from Google.

Apple runs an ad network. https://searchads.apple.com/

That aside, all that money could go on non-tech things, or on debt servicing, or be left in the bank, etc.

I mean, their bread and butter business. They can easily do without it.

Apple sells ads.

https://searchads.apple.com/

At the risk of moving the goalposts, that surely can't make up any significant portion of their revenues.

Apple defaulting to Google search in exchange for tens of billions of dollars almost certainly suffices to declare them an "ad involved company" as per the original phrasing in this thread. And that is a very significant chunk of their net revenue bearing in mind that there is effectively zero cost to Apple for this deal.

Netflix doesn't sell ads, though it sounds like that is changing.

they do sell ads. there is a lot product placement in their original productions

What product placement is there in Bridgerton?

Lol, not a single foot visible in the picture they use to illustrate it!

Not directly, but movies are sort of covert marketing. Ex: for certain political and cultural viewpoints

In FAANG sure but Tesla also qualifies.

Not directly but with Bitcoin and other cryptos...it will also soon be involved with Elon's Twitter ownership

Don’t forget fed rate hike.

Any perspective on what this means for engineers who get paid comp in stocks? Seems like some pretty big dips in certain companies. Do they tend to just give out more shares when that happens?

>Any perspective on what this means for engineers who get paid comp in stocks? Probably accept that the situation where you could get paid 10-20x the median salary is coming to a close.

You deal with it or jump ship.

This is particularly painful for hiring managers, b/c companies give offers with higher RSUs than they are currently personally vesting for roles below them.

No, you deal with it or jump ship to get in somewhere else at current valuations.

You're only listing consumer product tech. There are other tech industries out there with plenty of room to make money.

Also question: Why would high interest rates expose Uber etc?

Uber afaik runs at a relative high loss at the moment. You'll find a bunch of articles on this topic by searching for their last quarters report.

As far as I understandincrease in interest rates could make them running at a profit hard/ very unlikely in the future because covering high-interest loans will become hard. Further, it potentially could limit their cashflow, which impacts growth etc.

Many other factors, such as new investemnts or a decrease in individual travel, could influence this too of course. Though for a growth-centric company a limit on credit seems to be one of the harshest limitations.

Also, high interest rate means investors can invest by buying bonds (and earning the interest) instead of investing in high risk growth companies. It's basically bad for stocks in general and particularly for growth stocks.

The higher interest rates are, the more income in the future is discounted. If you assign any income to them in the future you need to assign less, but their costs are immediate.

I don't think you need anything to expose Uber, I can't believe they still run at all. 20billion in loss and no end in sight, they've failed to create a moat and they've failed to dethrone the taxi industry.

Remember dot com? How the tech sector crashed and burnt , yet those very technologies established the foundation for the next generation of companies that dominates till today. So while I agree that companies like Netflix or Uber may take a hit in the short ten I will argue that in the long term they are not going to go anywhere and will grow bigger.

did that 6 months ago