Why I’m bearish on Netflix

Netflix-Old-LogoMy Netflix account is going up in price from $7.99 to $9.99. They had warned this was going to happen. I don’t use Netflix much, so I’ve wondered if I should cancel (I have Amazon video options through Amazon Prime too). I probably won’t do so now, as it’s really cheap. But I don’t have time to “binge watch” television shows, and never get around to watching movies. So who knows?

The New York Times magazine had a piece up recently, Can Netflix Survive In the New World It Created. It’s interesting, but I want to again highlight Netflix’s culture in relation to employment: they focus on ‘superstars’ and don’t have any loyalty nor do they expect loyalty. The person who pushed for this policy was herself let go:

One of my last interviews at Netflix was with Tawni Cranz, the company’s current chief talent officer, who started under Patty McCord in 2007. Five years later, McCord, her mentor, left. When I asked her why, she visibly flinched. She wouldn’t explain, but I learned later that Hastings had let her go.

As long as Netflix is riding high, its policy in relation to employees will return yields. The problem is when the first sign of trouble crops up literally every employee will be running out the doors. I think Netflix is basically like an asexual lineage. When it’s optimized for its environment, it doesn’t pay the “two-fold cost of sex,” and it enters growth phase. But these lineages are far less robust to environmental turbulence, as all their eggs are in one genetic basket. Similarly, Netflix has put all its eggs into the basket of ideal and high return skills for current market conditions. There is no reserve of loyalty or cohesion to push through tough times, when ‘rational’ employees with prospects, which all of its employees presumably have, would simply jump ship.

Posted in Uncategorized

Comments are closed.