Is tom nash and let me tell you a story when i was 17 years years old. My parents went away to germany. They went on a long trip and my buddies decided to throw a massive three day party at the house. We went absolutely crazy all the friends came over we had a lot of alcohol.

A lot of food things were spectacular and for three days. We didn't go to sleep. We absolutely put the house in the air but on day three we went to bed. We wake up in the morning and the only thing i can remember is the throbbing headache.

I've never had a headache so powerful and the realization that the entire house as i know it is no longer there the walls are covered in what seems to be vomit and coke like the coke you drink not that kind of coke basically food all over the place weird things in my parents bedroom. The entire kitchen is upside down massive damage throughout the house basically i understood that my life as i know it are going to change once my parents get home because there's absolutely no way we're going to be able to fix this on time and even though in real time this was an emotionally scarring event for me. Nowadays i look at it and i laugh. I think it's just hysterical.

It's hilarious. It's very very funny. But that is not the reason i bring up this story. The reason i wanted to share this with you is because i think netflix is going through a very similar process they're waking up they're getting this awakening moment.

Understanding that everything has changed and they're left. Holding this massive bag the viewers are going away. They're not staying the costs are going up and they're on the road to nowhere they have to reinvent themselves i think netflix faces a massive identity crisis and it needs to figure out now and in this video. I'm going to look through possible solutions netflix might actually apply.

Including some they already spoke about some they haven't i'm going to give you my opinion as far as what the future holds for netflix. So the streaming industry started as a cheap alternative for broadcast tv. You know you pay for less. And you know you don't pay for cable.

And you get more more content. More options now historically netflix was the they had virtually no competition. And they were always ahead of the curve dvds to your home streaming services. Allowing you to binge.

Watch right away. Nobody thought of that not to mention the fact that red hastings was a genius this dude. Convinced studios and broadcast that he's not their competitor in fact he's a completing product and they can make a lot of money by actually licensing their content to him to show this platform. Now obviously they figured out the but for many years.

He actually made a lot of money. Convincing them that he's not competing now. The problem with this strategy was that you know netflix simply never had incentives to develop its own content and while it provided content across a broad sweep of genre. It kind of never had its own kind of you know wheelhouse its own content.

Which it owns. I think about it this way like disneyplus. They own family and kids right espn plus or espn. In general by the way also owned by disney they own sports.

Now what does netflix own red notice god help them if that's the case. Oh okay to be fair you know they bought up seinfeld for 500 million. Which is not a bad buy they had the squid game they had stranger things. But it's just kind of too little too late and the problem is that with the rise of these multiple streaming services.

The whole aggregation of content model. Which netflix relied on is gone. Netflix has no way to make any more money unless. It generates its own original content.

Which means. It actually has to spend an obscene amount of money to do something. It has no experience in no expertise in and to compete with people who have been doing this for decades. Not a good strategy now look the company actually saw its first user decline in these first two quarters of this year.

And the share price also dropped accordingly about 60 at 200 billion of value loss for the company the truth is look it's simple you know viewers they do not want to pay 10 different streaming services and to click between 10 different apps to watch the show. It's just too expensive and too inconvenient. So therefore you know pretty much every streaming service. Mainly netflix has to create some sort of an attractive value proposition.

That can you know retain existing clients and actually acquire some new ones. Something they haven't done in six months. As i mentioned before the call with party of the streaming services is no more you know they have to reinvent themselves netflix disney plus they have to start kind of looking for new revenue streams and the solutions. So far were less than brilliant for example going for passwords cracking down on passwords.

That's your genius move. I mean not the most you know inventive of solutions. But let's let it slide. Now netflix is actually thinking about the next step better now god help them with this crackdown.

They're actually launching an ad based option through a partnership with microsoft which is very interesting and i think it's an impressive move but the big question here can this pivot actually save netflix beyond the fact that it is impressive you see the biggest strength with this move is that with microsoft and netflix. This platform would be able to offer addressable ads like in contrast to what you get on broadcast. Which is completely linear that means like if you and i are watching the same show. We're getting a different ad like on youtube.

That's a very very lucrative business. Ask google. But it's also the keyless heel of this whole business since this put netflix right away in a collision course with google who own youtube. Now google and youtube are the kings of these taylor video based ads and it's going to be very interesting to see netflix compete with that now this would probably i think serve as the main reason why netflix didn't partner with google for this platform.

Because that would make the most amount of sense. So microsoft was the second best option given the fact they're about to go head to head with google. And even though microsoft is no slouch. Having google as your direct competitor is quite alarming.

Now look. The first question is basically you know how invasive are these ads going to be because you know there's a very delicate balance in order not to antagonize viewers. You know disney already said that their platform. The ad based platform that they will actually launch is going to have four minutes of ads per one hour of content and netflix still didn't give us any details on that and i think that would be a critical element.

Now the other part here to question is will netflix be able to not cannibalize their existing paying customer base with this launch of this new cheaper option. It's pretty tough to say think about it if they give too good of an option for free with ads or for cheaper with ads. They might actually end up cannibalizing a lot of the paying subscribers. Now one thing is for sure here is you know netflix cannot cannot absolutely cannot keep paying 20 billion dollars per year on making and buying content and this failed policy was so horrible.

I mean because it assumed two things that were literally impossible to maintain they no longer have the growth to justify that and number two. They don't have the pricing power. Because of the competition. Now ad.

Based content is a good idea. But i do think there's another move. Nobody's talking about i think the next move for netflix may be to go after sports now historically netflix couldn't go after sports due to technological infrastructure limitations. I mean nowadays you can stream in 4k easily right the other problem was that you know if i'm the nfl or the mlb or whatnot or the nba.

I don't want to put my content my games on the platform that only a small portion of people see i wanted to have a far reach. But netflix now has 200 million subscribers. They're wide enough to host these things and for the leagues to be happy now we're seeing this with amazon getting some nfl content basically is going after espn. I think netflix following right after is inevitable.

It's kind of a no brainer now sports strategy is very very tough and i think this is what ultimately will decide netflix. I don't think. It's gonna be the ads as much as their ability to get some sports on their platform. Now obviously i don't know what's gonna happen i don't have a crystal ball.

But you guys do apparently every time i say something there's so many experts in the comments comment below let me know what you think about netflix in the future. Let's talk about in the comments. I'll see you in the next video.