Tesla’s Netflix Problem

Tesla is about to run into the same problem that Netflix is running into. Competition.


Paid net subscriber additions of Netflix worldwide from 2014 to 2nd quarter 2022 (Statista)

When Netflix started producing instead of just distributing content, it was a big risk, but it seemed to pay off. After they first produced House Of Cards in 2013, subscriber growth took off.

Producing content was a risk because this pissed their suppliers off. Netflix went from a place that distributed content for studios to another studio that competed with them. Shots fired.

Now the empires have struck back. Disney and ViacomCBS are pulling content and moving it to their own streaming services (Disney+ and Paramount+). Warner Bros Discovery is removing Friends (Netflix’s most popular show) and moving it to HBO Max. Places like HBO never fucked with Netflix in the first place, and Apple and Amazon Prime are streaming too.

Netflix now faces a war on multiple fronts. You could say that Netflix had to fire the first shots, but now they’re in a war with their former suppliers, old competitors, and new competitors as well. And it’s taken a toll.

Netflix subscriber growth has stalled out and is now in decline. This quarter they reported losing 200,000 subscribers, which is nothing to sneeze at. In truth, they lost 700,000 from the West’s collective punishment of Russian people, meaning the quarter would actually be a 500,000 gain. But those accounts are still gone, and the playing field has changed.

Netflix blames password sharing, but that’s presuming a world where Netflix was still the only streaming option and they’re not. Customers have many streaming options and only so much money. Indeed, Netflix’s innovation of binge-watching may now be causing problems. If you get into a show you need to keep your HBO Max subscription to watch the next episode. On Netflix, you can binge and depart.

Whatever the manifestation, the overall problem Netflix is facing is competition. While there’s still plenty of room for a sustainable business, tech investors like monopolies. They don’t like that competition shit at all, which is why Netflix’s share price is falling. Now let’s explore why Tesla has the same problem incoming, and is even more exposed.