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No, Netflix’s “desperate” crackdown on password sharing does not show me it might fail like Blockbuster.

In 1994, Viacom bought Blockbuster for US$8.4-billion. At its peak as a publicly traded company in 2004, it had a market cap of US$5-billion and revenue of US$5.9-billion. Even back then, investors were aware that reliance on physical infrastructure, operated by tens of thousands of employees, came with a valuation discount relative to revenue.

Netflix has a market cap of about US$150-billion and more than US$30-billion in revenue. Based on these numbers, it is not in the same league as Blockbuster. Ending password sharing, then, is not equivalent to having a business model that was eventually nullified by new technology.


To be clear: Netflix – a content producer and distributor that relies on less physical infrastructure, employs fewer people, has a higher market cap and generates more revenue than Blockbuster – isn’t going anywhere.

Originally published by Globe and Mail on February 22, 2023.

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