Netflix Layoffs Just The Start as Streamer Stages Rebound: ‘It’s Time to Be a Real Company,’ Says Media Exec

A cost-conscious approach

"Because the company was valued so high, Netflix could pay its staff considerably more than traditional providers," said Jon Christian, co-founder of OnPrem, a tech company that works with big entertainment networks to improve their performance.

"For this reason, they were able to employ talented professionals and lure them away from the traditional media businesses."

"But now we are in a new period where business is struggling, and now it is time to be a real company," said the executive. "Netflix needs not only to rethink its content acquisition strategy but also to adjust its payment structure to make it more cost-effective," he noted.

"Netflix must be smart," the executive said, adding that the risk-reward model from previous years is no longer reliable given the absence of box office backing.

"Netflix is going to use a more sophisticated strategy when it comes to determining which titles it will greenlight and how much it will pay for them," he predicted, adding that the company will focus on "quality of content."

"Content is the key to success, and that is absolutely true," he stressed. "High-quality content always succeeds."

Franchises bring fans

In addition to a more cost-conscious approach, Christian suggested that Netflix should also update its library.

"Certainly, they must concentrate on franchises, and franchises come with fans," he pointed out.

He mentioned the upcoming Amazon Prime Video series The Lord of the Rings: The Rings of Power (for which the streaming service paid an estimated $465 million), as well as Disney+'s formidable Marvel and Star Wars brands.

"This strategy is all about gaining passionate fans who will buy consumer goods, merchandise, and more. This is another method for diversifying revenue streams.'

The executive speculated that as more franchise films get more box office success, Netflix might start to reconsider its stance on cinemas and expand its cooperation with theater networks to promote content.

"Besides subscriptions, theatricals offer you the chance to earn a lot of money that could even cover the cost of some franchise tentpoles," he added.

The potential of the advertisement-based subscription model

The company's upcoming ad-supported plan and the crackdown on password sharing could also relieve money pressures, Wedbush anticipates, adding that it could lead to significant additional revenues. Не recently revised his company rating from Neutral to Outperform.

Netflix will be able to grow and gain new subscribers and customers through this ad-based model, as well as make "a lot of money" and gain bigger user numbers, analysts anticipate.

"We will see companies offer ad-based subscriptions at lower prices all across the board," according to Christian.

As a technology company, Netflix is no longer being treated as the leader it once claimed to be.

"In the current environment, it is valued in a similar manner to all of the traditional media companies out there," explained Christian.

"But let's be honest, maybe you have to adopt a few of their ways if you plan to survive."