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Posted on 07/18/2026 6:56:42 AM PDT by Chickensoup
Interesting Graphs at source
That’s because savvy investors on Wall Street now grasp what’s really going on. They fear that the root cause of Netflix’s woes portends the collapse of the dominant business strategy in tech today.
This is hugely important—and not just for investors or technocrats. All of us will be impacted by how this plays out. And I have a strong hunch that what is bad for Netflix might just be good for you and me.
That’s because Netflix’s failed strategy is audience capture. And you and I are part of the audience it wants to keep in captivity.
More on that below—but let’s start by looking at damage done to Netflix’s stock. When I warned about it in June, the price had already dropped 45%....
The Honest Broker
The Collapse at Netflix Signals the End of Audience Capture The most popular strategy in the tech world has stopped working. That's good news for all of us. Ted Gioia Jul 17, 2026
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Please support The Honest Broker by taking out a premium subscription (just $6 per month). Type your email... Subscribe A few weeks ago, I warned about problems brewing at Netflix (and other streaming platforms). In just the last few days, these problems have gotten worse, much worse—and the situation has reached crisis proportions.
Even more revealing—the crisis is now spreading through the tech world like a wildfire. It’s no exaggeration to say that Netflix dragged down the entire NASDAQ today, after the release of its disappointing quarterly results.
Source That’s because savvy investors on Wall Street now grasp what’s really going on. They fear that the root cause of Netflix’s woes portends the collapse of the dominant business strategy in tech today.
This is hugely important—and not just for investors or technocrats. All of us will be impacted by how this plays out. And I have a strong hunch that what is bad for Netflix might just be good for you and me.
That’s because Netflix’s failed strategy is audience capture. And you and I are part of the audience it wants to keep in captivity.
More on that below—but let’s start by looking at damage done to Netflix’s stock. When I warned about it in June, the price had already dropped 45%.
But today, shareholders woke up to this.
Source After today’s debacle, Netflix will have wiped out the entire last two years of stock price gains.
This is usually where I take a victory lap, and point out that I warned of the danger three weeks ago. But there’s bigger story here that must be told.
The disappointing revenue report yesterday is just the tip of the iceberg. The company’s reluctance to provide viewership numbers is an even more revealing sign of how bad things really are.
Netflix once bragged regularly about its growing user base. But yesterday they refused to share updated viewership numbers until 2027!
Source Yet even without those metrics, I’ve seen evidence of a coming corporate collapse—but only if you dug into the numbers.
Last week, for example, we learned that Netflix’s audience is skipping the second season of the platform’s hottest offerings.
Source: Flowing Data That’s scary stuff for Netflix. But it gets worse. The audience is also losing interest in the platform’s brand new series.
Source The situation is so dire that even Netflix’s biggest new series of the second quarter failed to get renewed. But if the platform can’t count on its new hits, will anything save it?
Source Netflix doesn’t want to tell us about users canceling their subscriptions. But just go over to Reddit and other platforms where people say what they really think about the company. You will get an earful.
This is typical:
Funny I was talking to my wife about how Netflix has practically nothing left we want to watch and maybe it was time to move on. If this price increase goes through that would be the final straw. I suspect a lot of others are getting close to that limit….
Another frustrated customer didn’t even make a comment—just shared some numbers. But the numbers paint a dismal picture.
Source Netflix got into this mess by pursuing a simple strategy: (1) Reduce the number of new scripted series (which peaked in 2022), but (2) Raise subscription prices.
That is the “audience capture” strategy mentioned above. The idea is that the audience got captured years ago with cheap subscription prices, and now the platform can squeeze them mercilessly—offering less and charging more. Netflix has been pursuing this agenda for several years now.
Ah, but Netflix isn’t the only company building its future on audience capture. It’s getting used at almost every streaming platform. And even companies outside of the media space are practicing variants of it. You see it at Google, Meta, X, Apple, etc.
It’s shocking how many companies have learned this technique. The entire printer and toner business is now built on audience capture. The same is true of the software industry—don’t even get me started on my Microsoft Office subscription fiasco. And, of course, all those customer loyalty programs (variants on the frequent flyer gimmicks that started this craze years ago) are examples of the same stale strategy.
Even the AI world is turning into an audience capture business—both for itself and its customers. This is one of the key reasons for my frequent criticisms of AI slop. It feeds into step one of the strategy outlined above. The companies use AI to reduce the cost of content, thus boosting margins while reducing their dependence on human creators.
Audience capture has always existed, but never to this extent. When I consulted at BCG we called it a milking strategy, where you raised prices and reduced capital investment in a business—which was now your cash cow. You squeeze all the money you can from it, for as long as you can.
But back then we realized that milking only worked in the short term. Eventually you killed the cow. And the risk is the same today with “audience capture”—which is just a new name for that poor old bovine.
Sooner or later, the audience refuses to be held captive. And that’s happening now at Netflix—hence the stock sell-off.
But it’s happening elsewhere too, although few are paying attention. Look at the share price at Spotify or Disney for ther examples.
Did you know that Mark Zuckerberg’s social media empire has stopped growing? In the first quarter, Meta saw a decline in users for the first time in the company’s history.
Source: Social Media Today This is not just a coincidence. Meta is the king of audience capture, and when it starts losing that audience, other tech companies ought to pay attention.
You should expect to see more problems of this sort at audience capture corporations. And that’s bad news for the technocracy, because this manipulative strategy is everywhere. If it stops producing results, they will need to take drastic steps.
But their nightmare is our blessing. That’s because the end of audience capture means tech companies will need to return to serving customers, not holding them in bondage.
They aren’t ready to take that step—not now, at least. Pleasing customers is hard work. Milking cows is a simpler business. But they won’t have a choice. The cattle are finally resisting. They might even stampede!
Moo, moo, moo!
Sometimes even cattle fights back (Source: Paul J. Everett) I give the leading audience capture companies 12-18 months at most before the worst consequences of their overreach hit their financial statements. And it may happen even faster.
If they were wise, they would start acting now. But whether they fix the root cause of their audience capture mess now or later, the end result will be the same. That captive audience will find itself liberated.
If I’m right, this may represent the biggest shift in the consumer economy of our time. So check back here for updates—because this will be a bumpy rodeo ride for all parties.
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Anyhow, you may have seen that Comcast recently announced that it is spinning off NBCUniversal, Peacock, the theme parks and assorted other entertainment properties into a standalone entertainment business. Comcast is giving up on it's great streaming experiment, which turned out to be a money losing snipe hunt for synergies that never appeared.
My guess is that the entertainment spinoff is destined for quick sale for a bigger streamer as the industry continues to consolidate. I wouldn't be surprised if the good shows on Peacock are sold off or cancelled to raise some free cash and slash costs on the way out the door. What Peacock HAS spent money on in recent years seems mostly to be sports.
I am starting to again by physical media of movies that I really like because I don’t trust Big Tech to keep things avaiable and not to edit them.
I also buy good movies online, preferably from the studio itself just to cut out the streamer.
But first and foremost, I’ve been trying in recent years to get out to the theater a lot more. I’m happy to buy a ticket and support the makers of a good film. I’m happy to pay a cut to the theater for providing the space, although I don’t want to pay for a lot of frills; I’m happy going to very old fashioned, bare bones theaters which are often much cheaper than the multiplexes.
Yup, that’s about right.
Everything disappoints. We had Netflix shipped to our house, then streaming, then goodbye. We had Hulu, goodbye. We have Prime, but I am planning my goodbye.
Speaking of Disney (Hulu), I’ve long suspected that Disney’s original cartoon content has been deep-sixed for ideological reasons. Maybe I’m mistaken.
I don’t mean some Disney cartoons; I mean ALL Disney cartoons. I think Classic Disney would have a market.
They’re trying to do the same thing with law firms, except there are clear rules here in Texas about the unauthorized practice of law and multi disciplinary practices are illegal.
Wanna talk audience capture?
Quickbooks is the King.
I have been their prisoner for years now. One of millions.
“Netflix should have never appointed the Obamas to the executive board.”
~~~~~~~
THAT, and their sick “Cuties” pursuit ended Netflix for me long ago.
Not only do I admire your satire, but I also respect your commitment to the bit.
true dat.
I got hooked on “Landman.” I’m glad it’s relatively low on the sleaze factor.
It’s not on Netflix is it? I’ve watched both seasons and I know it wasn’t on Netflix because I haven’t had that since they added the Obamas to their board.
Yea.... Landman is an awesome show... I liked Season 2 even better than Season 1
Wife and I used to get Netflix DVDs in the mail but when that ended so did our association with Netflix. We cut the cable years ago and have no broadcast TV available in our area so our TV set hasn’t been turned on in years.
I hate having to weed through thousands of foreign language movies and shows. They also take too much time delivering new content.
We go months without watching, not because we don’t want to, its because it seems there is nothing new to watch.
Then they change the way the app works and it takes a toll.
I have caught several, but now need to catch the others!
You described these well, and I was able to mark nearly all of them in my Roku app for future viewing.
I cut the cord after Fox helped steal the 2020 election and haven’t looked back. Between Prime free YouTube and Rumble I’ve got all the content I’ll ever want.
And 3) Make every show even more woke or gay.
Streaming has turned most entertainment into less than “straight to video” quality programming - because they could. They get their money with subscriptions whether people watch a lot, a little, or none at all. It has also affected over the air television as this is all propped up by subscription services to the corresponding streaming services, which is in addition to the carriage fees they get from services that carry their networks - and they get those even if no one watches. Therefore, it has become no longer necessary to produce programming that is only profitable if people are actually watching in order to get ratings and corresponding ad revenue.
I agree.
I was looking at an enormous 85 inch TV the other day. Only $600 and change bucks. Makes you think.
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