Netflix Finally Faces Competition, Tries To Pretend Otherwise
from the nothing-to-see-here dept
Netflix had a pretty good run there for a long while. Thanks to low prices and an innovative streaming system, the company simply hoovered up streaming video subscribers as the cable TV industry stumbled around in the dark, busy pretending the cord cutting phenomenon either wasn't real or would end once Millennials started procreating. As a result, there was a big long window where Netflix's only real competitor was a bunch of fairly terrible "me too" half assed offerings from the traditional broadcast and cable sector.
That was then, this is now. With cable giants finally figuring out this whole streaming thing (Comcast's Peacock, Dish's SlingTV, AT&T's HBO Max) after numerous face plants (Verizon's Go90, AT&T's HBOMaxUltraExtreme), and numerous movie studios and broadcasters going direct to consumer (Disney+, AppleTV+) Netflix is finally started to see its market share slowly eroded. In fact the company's latest earnings report indicates Netflix lost 430,000 subscribers in the US and Canada. Like clockwork, Netflix now has to turn from innovation to turf protection.
And like the countless companies before it, part of that process involves pretending that things aren't changing under their feet. During the company's earnings call for example, Netflix executives tried to pretend roaring competition wasn't the primary reason for the subscriber dip:
"In the past year and a half, Disney, Apple, WarnerMedia, Comcast and others have launched streaming platforms, and there are more than 100 streaming services for consumers to choose from, according to data company Ampere. Yet on a call for investors, executives dismissed the idea that competition was behind the weaker figures. “Does HBO or Disney... have a differential impact compared to the past? We’re not seeing that in the [data] we have,” said Reed Hastings, Netflix co-chief executive. “That gives us comfort.”
Sure, some of the headaches could stem from COVID-related chaos, but it's hard to just brush off the impact Disney+ and other popular services have had on Netflix growth. Hastings' denial amusingly parallels the cable industry's "nothing to see here" approach of the last decade. However interesting it is to watch startups try to disrupt a sector, I've always found it just as interesting to watch companies gain popularity and critical mass, then inevitably pivot away from innovation to protectionism, timidity, and turf protection (Microsoft in the early aughts, Google over the last five years).
Seeing whether Netflix has the chops to maintain supremacy in the face of competent competition should prove entertaining, starting with the company's foray into video game streaming. There's still a lot of obstacles for Netflix to overcome, including a flood of studio/broadcaster direct to consumer offerings, and telecom giants that are not only starting to field competent streaming competitors, but remain eager to use their monopolies over broadband to erect unfair and arbitrary competitive barriers (see: pointless broadband usage caps).
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Filed Under: competition, streaming
Companies: disney, netflix
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Sadly, this kind of doublethink is practically required in the corporate world. Any negativity, however slight, could result in the stock price crashing.
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Re:
What options do they have? And how vested are they? If they cash out early, they can just walk away.
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Understand that strange think, about corps.
Arnt they supposed to BUY BACK the stocks, in the end? Other wise they are a Long term loan, with very low interest.
If the stock exchange were to ACT like it was supposed to. They would be required to Buy back shares.
So, a Drop in the price of shares would be a welcome thing, NOT the stock going up to make MORE profit for those in the top wages, in the company when they SELL the stock.
Its all a game.
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Re: Re:
The preferred model is that they pay dividends to stockholders at regular intervals. A company which makes a lot of money should be able to pay bigger dividends. The bigger the dividend, the more the stock is worth.
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Not really. Some shareholders prefer that. For others, it could be a headache in terms of bookkeeping and taxes. Capital gains are often more tax-efficient for them than dividends (although the company kind of has to pretend it may pay dividends some day, to be considered an investment under some tax laws).
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No, the goal isn't for companies to perform stock buybacks. In fact, until regulatory changes during the Regan era, stock buybacks were considered illegal market manipulation. Corporations can borrow money using the market but they generally do that by issuing bonds that pay a set amount of interest annually until their maturity when the corporation is supposed to pay whoever holds them their face value.
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If those other companies would have been smart...
If those other companies would have been smart, they would have pooled all their offerings into one competing streaming service and completely steamrolled Netflix by now. But greed wins out. Market segmentation is king, and VPN services along with piracy, is going to have a robust year.
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Re: If those other companies would have been smart...
Really, all the major studios had to do is licence out content to whoever wanted it, any and every service. Let the services compete on reliability, functionality, etc., then no matter which service the customer used they'd get the same cut. But, they had to be greedy and fragment the market, and now Netflix is not only the best streaming experience for so many people, they're a competing movie/TV studio as well.
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Re: Re: If those other companies would have been smart...
That would have been a great option too. I could see hesitancy in doing that, as Netflix would have been [more of] an industry juggernaut. (And my skepticism says the government would have ultimately bitched. "ANTI-TRUST ISN'T ALLOWED, OUTSIDE OF TELECOM!")
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Re: Re: If those other companies would have been smart...
The thing is the studios and the services are more or less the same thing now. Its a Prisoner's Dilemma. The market as a whole would benefit from everyone cooperating, but each service individually is always better off keeping their own content exclusive. If you don't have exclusives you don't have customers. Everyone would go to another competitor that has all the stuff you do and then some.
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Re: Re: Re: If those other companies would have been smart...
On a consumer level, the best case scenario is " we pick a single venue and we get everything from that one place no matter who produced it".
On a producer level, the best option is "if you want X, you have to come to us"
In the real world, there will always be a battle between the two factions. The studios decided that the latter was more important, which is a shame because we almost got to that point, as we almost did with books, music, etc.
"If you don't have exclusives you don't have customers. "
An annoying fallacy, for sure.
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Re: Re: Re: Re: If those other companies would have been smart..
Yes, but the thing is even if we did get to that point, it wouldn't stay that way. The incentive would still be for studios to make something exclusive. To be able to say, "we have everything the others have, plus X."
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Re: Re: Re: Re: Re: If those other companies would have been sma
That's a certain way of thinking, but one that inevitably comes with incentive to piracy because people don't want to pay 2x what they usually pay to get the same plus one title. The market has already indicated they will stand for people paying 2-3 services to get what they want, if studio greed causes this to collapse or for their preferred partners not to rise to the top, that's on them
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Re: If those other companies would have been smart...
Netflix= 1 company with lots of material to watch.
'insert name here' is one company supplying ONLY that 1 companies material.
As was mentioned, IF' all those other companies had worked together(wont happen in this life), they would Still have to compete with the prices Netflix has. ANd probably not work together in the end, ask Apple itunes, sat radio, others how many different contracts they deal with.
Spending $?? on each channel, WONT kill Netflix. Belonging to 1 site that has it all, is great. Belonging to 2,3,4+ different systems, can be a real pain, UNLESS netflix does not have those videos.
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Re: Re: If those other companies would have been smart...
Netflix started as a company with basically everything available. Unfortunately, once they switched to streaming and couldn't bypass objections via the first sale doctrine, we got the current situation where licence vagaries rule the day.
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Re: Re: Re: If those other companies would have been smart...
If the corps get together again, they can get a few reg's changed and force Netflix out. but then we still have to deal with $10 here and there and the other place per month, when cable gives about 1/2 of it for 1 price, IF you can find it on the cable/sat.
Cable/sat has the BIG problem. Being able to show programs Someone wants to watch and NOT repeat all the garbage over and over.
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Re: If those other companies would have been smart...
There was an attempt at that, it was called Hulu. Well it still exists but I think of it in the past tense. By having a bunch of owners, it didn't have the impetus to really compete.
Disney was one of the owners, yet when it got serious about streaming, it launched Disney+. It's trying to buy Comcast's share of Hulu but by the time that's completed, Hulu will be even more of an afterthought. Never did go global, did it? How can it get anywhere by being domestic only?
Companies don't play well with other companies until they are bought by other companies. Fox cooperates very well with Disney since Disney bought it.
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Re: Re: If those other companies would have been smart...
"Never did go global, did it? How can it get anywhere by being domestic only?"
Outside of the US, they've basically made another section called "Star" where it costs a couple of euros a month more and that's where they store the stuff that wouldn't be on the main Disney section, much of it stuff that would have been on Hulu in the US. Better to do that than try to expand the Hulu brand on its way out domestically.
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Seems to be a but overhyped to me, all things considered. They can't possible grow forever, no matter the demands of the market, and they did actually grow on an international level - many of which countries have the same competition from Disney, at least.
"Seeing whether Netflix has the chops to maintain supremacy in the face of competent competition should prove entertaining"
I'd rather see them not obsess over "supremacy" by flailing to retain a crown they held for so long because there was no competition, and concentrate on continuing to deliver a quality service. The company won't be #1 forever, but it seems like a major folly to obsess over a #1 spot that they only retained for so long due to there being little meaningful competition, rather than focus on how they deal with that competition - even if that innovation isn't necessarily enough to stay #1 on its own.
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I had an ex-wife that worked for Comcast. That first year they had a subscriber dip... LAYOFF. Hope Netflix doesn't follow the same path.
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Re: Re:
There's a lot of issues behind Comcast and their business practices among many different industries. Netflix are more narrow in their scope, but honestly you don't get to that size without someone thinking somewhere that the way to improve is to reduce overhead (which usually means staff). The saving grace here is that Netflix haven't actually had a subscriber dip, they actually increased internationally. But, I don't know enough about the way they're organised to tell if that affects people on the ground.
Either way, the fact that other companies they used to licence content from have decided to join the streaming industry that they said would not be viable and then bullied their way into with exclusive licencing does not necessarily reflect badly on Netflix. What they do to combat the obvious fact that they have to compete against juggernauts who won't let them have the titles used to bully them is another question. I think it's too early to say yet, but in an industry where most customers will only pay for 2-3 options in a market where everyone's trying to section off their viewer base, the next innovation might be crucial.
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I'm not exactly sure how cable companies removing their most popular shows on Netflix and creating another monthly subscription fee is competition that is good for customers. This is the same problem as the EPIC store. The businesses are not competing on who can provide a better streaming platform, they're just trying to make people pay $10 a month to watch the show they yanked from Netflix. People are only going to get more frustrated as the amount of subscriptions need to watch or read what they want grows endlessly. Why waste time subscribing to 17 streaming services when it's just as easy as ever to borrow things.
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The ongoing cableification of the streaming market.
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Fortunately, there are free ad-based streaming services (e.g. The Roku Channel, Tubi, Vudu Free, Peacock, etc.) which offer content without the need to pay.
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"Fortunately, there are free ad-based streaming services (e.g. The Roku Channel, Tubi, Vudu Free, Peacock, etc.) which offer content without the need to pay."
This might be an interesting aspect of the situation. Sure, people might decide to pay premium prices, but does everyone need them? Some people might decide they need the monthly subs, others might decide that there's enough things to see on the free services. Not everyone needs the latest titles, some might decide they need to catch up on Cannon's back catalogue or that they were happy with ads so long as they weren't asked to watch them on cable subs they paid full price for.
People might just get used to the idea that if they wait a year it's basically free, with the fact that they have that choice being the key decider.
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How long did it take Netflix, to setup everything, and understand the WAY things are on the net? YEARS.
WHO among the Cable/ISP's understands the WHOLE story of what has been done to get Netflix working and running around the world?
Only 1 group has that knowledge, the SERVER PROVIDERS, AROUND the world.
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NetFlix makes stuff now
I would have dropped it a year ago, but others in the household have gotten hooked on some of their home-grown shows. If I were in showbiz I wouldn’t count them out.
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smaller oli here we come
loved their Marvel stuff
hated their pedo stuff - and dropped them because of it
In the end, these streaming services will all boil down to a smaller oligopoly of options owned by Comcast, Disney, and Elon or something.
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Re: smaller oli here we come
"hated their pedo stuff"
You mean that single movie from France they added that was uncontroversial in its home country but got a lot of bad press due to a woefully misjudged ad campaign?
"In the end, these streaming services will all boil down to a smaller oligopoly of options owned by Comcast, Disney, and Elon or something."
The options might be reduced due to competition, but I think that competition will continue. Also, I am laughing slightly at the idea that Musk would go into something as trivial as streaming video. There's nothing for him to attach his ego to, and it's an established space.
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Re: Re: smaller oli here we come
He'd buy into an existing service and pay the actual founders to pretend he was there all along.
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Or not, given the abysmal material they've been putting out for quite some time now. Honestly, what BS won't they greenlight?
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Yeah, that's why I rarely watch anything new on Netflix. On the one hand, they take chances; on the other hand, to them "taking chances" means "throwing everything at the wall and seeing what sticks".
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"to them "taking chances" means "throwing everything at the wall and seeing what sticks""
I'm finding there's a good amount that sticks, and the stuff that does wouldn't have been produced by a "normal" network 20 years ago. Then, the beauty of the current situation is that nobody's forcing you to stick with them if you decide another service is better for you.
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I completely agree with this.
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It's the main saving grace here. the industry standard is that you're not suckered into regular payments and you can cancel even after a free trial, which many allow you to do over and over. If there was any restrictive contract it would be problematic, but if people want to cancel Netflix one month then return when the show they want to watch is on, so be it. I won't understand that narrow form of taste, but go for it.
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"Or not, given the abysmal material they've been putting out for quite some time now."
I'm always intrigued by comments like this. I've been unable to keep up with the stuff they've been adding. Maybe it's because I have a love for random genre cinema and I don't mind it if something is not in English? Even when something doesn't hit the mark (looking at you, Resident Evil: Infinite Darkness), I can understand why it was there and that I'd prefer that to season 378 of some "reality" show.
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Yeah, the evergreen comment that "Netflix has shows I don't want to watch" is a strange non sequitur. At best it is an odd way to aim for and miss the thought that "Netflix does not have shows I want to watch" but that isn't what it says.
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Yes, I'll never understand this mindset. The point of a service like Netflix is surely to explore and discover, not to access the exact couple of shows/movies you already want to watch? If you are that sort of person then sure Netflix might not be for you, but you're missing out. I despair at your experience of the video rental era being only to go in and pick up that week's new release rather than exploring the shelves for new experiences as I did.
I see that same attitude elsewhere. Game Pass recently announced that GTAV was leaving again, and the comments are full of people whining that it's the only reason they pay for Game Pass. Seriously? You're paying up to $17.99/month for a rental service specifically to access one game, you never explore the hundreds of other titles and you do that instead of paying $20-30 or whatever to buy that one game outright? What the hell is wrong with you?
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the crunch is on
The average household supposedly has 3-4 paid streaming services. I think they're starting to realize that 1-2 is perfectly sufficient, and if they want variety, they can churn around.
So the whole streaming field will hammer down to just a handful of big winners with the second tier falling by the wayside (and being acquired). Netflix should end up one of the winners but this is the first indication of the squeeze. I think Disney's explosive growth is hitting a wall too.
Hulu will end up absorbed by Disney, HBO Max may survive under its new owners, Amazon and Apple will do their own thing but Paramount+, Peacock and lesser contenders won't make it.
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Netflix isn't in competition with them
Not in my house. Netflix is affordable, gives a wide range of shows/movies to watch.
Subscribing to 6 other streamers at $15/month does not compete against their $9/mon.
No contest at all.
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Storm in a teacup
430,000 in US and Canada. It sure sounds like a lot but in reality it really isn't. In Denmark, a country with 5.8 million citizens, a bad re-design of a local weather site (DMI.dk) caused it to nosedive to ~450.000 less daily users. 430k in US and Canada is almost outside measurement for Netflix.
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Prime?
I’m not so sure the effect is directly these new services, but the ability to package them.
One thing that makes this a problem for Netflix is Amazon prime. Along with Apple TV and Google’s YouTube you can plug another “channel” directly into your basic use service for the same, or even less, than grabbing another service.
Discovery+ exploded when it was offered on Prime. So did HBO.
Maybe it’s time Netflix bite the bullet and creat a sub channel for other services?
I know there’s licensing issues but I wonder… how many people would pay $2.99 for just the Netflix Originals?
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Re: Prime?
"I’m not so sure the effect is directly these new services, but the ability to package them."
I'm not sure how this is a negative. It's also not true. I currently have Netflix and Disney+ supplied through my ISP bill package.
"how many people would pay $2.99 for just the Netflix Originals"
Define "Netflix Originals". Some are produced in-house, some are licenced from other countries and released under that banner in countries. For example, outside of North America, Star Trek: Discovery is a "Netflix Original"
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Re: Re: Prime?
“ I'm not sure how this is a negative. ”
I’m not saying it is.
I’m saying prime, and to a lesser extent Apple and Red, have been the saving method for some streaming platforms.
When it comes to services I love that we’re near death, adding a Prime deal saved then. scream, Fear Factory, Arrow…
Discovery+ was blah in the US, until they went to Prime, the second or 3rd week. Bam, 3mil new subscriptions in 2 weeks.
My thought is, if Netflix were to join these consolidated platforms they’d likely not just maintain but gain subscriptions.
“Define "Netflix Originals". Some are produced in-house, some are licenced from other countries and released under that banner in countries“
Yep, I have a serious issue when a distributor claims to be the source. I was referring to Red Letter Entertainment. In-house materials
Which would be free from outside licensing issues.
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Re: Re: Re: Prime?
"services I love that we’re near death, adding a Prime deal saved then. scream, Fear Factory, Arrow…"
I'd love to see your proof that Arrow, a service that launched 5 months ago and has had an Amazon option since launch, was "near death" for this reason.
Edit: while checking for this, I noticed that it launched in the US in 2020. The comment stands, though. Why would they be struggling so much less than a year after launching?
"My thought is, if Netflix were to join these consolidated platforms they’d likely not just maintain but gain subscriptions."
So, you're saying that because some tiny potential competitors struggled before getting on board with a major platform, the biggest household name out there might benefit massively by signing up with a competing service?
"I was referring to Red Letter Entertainment"
Here's a hint: if you have a specific idea in mind when making a comment, state what it is so the rest of us don't have to waste time guessing. It helps conversation somewhat when we're talking about the same thing.
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Re: Re: Re: Re: Prime?
I’m going by the numbers of HiFi, which is a print magazine for high end A/V marketing.
Which squarely put Arrow in the sub-10,000 category last year.
They’re in the top 25 today of non-OTT services.
Not bad.
As for Netflix, looking at international options I didn’t realise just how much rebranding they do based on distribution.
Looks like the use the Netflix Originals brand much more outside of the US.
I don’t necessarily look at Prime as a competitor. As much as a potential hosting company.
Adding their in-house distribution to the platform is unlikely to be o hurt.
Eros went from a local brand to a competitive service using prime.
It hasn’t harmed Criterian.
Nor Discovery+. Who had their numbers grow considerably.
It’s an option that hasn’t exactly hurt companies in general.
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Re: Re: Re: Re: Re: Prime?
"I’m going by the numbers of HiFi, which is a print magazine for high end A/V marketing.
Which squarely put Arrow in the sub-10,000 category last year"
On which date? Arrow launched on October 1st 2020 in North America, and is expressly a niche product. They did so without a huge amount of prior mainstream attention and their initial lineup IIRC was far more about the giallo rather than the new stuff.
"They’re in the top 25 today of non-OTT services.
Not bad."
OK, fine. Is that because they linked with Prime or because they had more than whatever number of days between the article you didn't link and whenever they got on Prime to get an audience? It was always going to be a slow burn type of offering, as Shudder was until recent history (their growth being due to compelling content, not simply because you could get a prime addon).
I have no doubt that getting Prime traction helped Arrow, I just think that if you're referring to a service that's not been around for 12 months yet, you're making claims that don't hold water. Especially a service whose selling point is more "we just added all Gamera movies, also there's some Japanese movies nobody heard of before, and get all your Argento here" compared to "we made a movie for $200 million just to play here on day one"
I love Arrow and have supported them since they created the Arrow Video brand, to the point of overspending on merch at film festivals. I'm not sure that applying what worked to them to Netflix is going to work any wonders.
"Looks like the use the Netflix Originals brand much more outside of the US."
They use it in the US as well. The US is less open to foreign language product than other markets, but there's been a number of notable successes over the last year that were that (off the top of my head, The Platform, 365 Days, Money Heist and Cable Girls were popular, though obvious exact breakdowns are hard to come by). They also screwed up massively when they bought in Cuties and did what they did with marketing).
"It’s an option that hasn’t exactly hurt companies in general."
Companies that haven't been consistently #1 in the world since they created the market itself.
Again, small companies partnering with large distributors often makes sense and can work. The #1 brand on the planet partnering with direct competitors doesn't seem as logical, even if they took a slight dip in one market.
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Re: Re: Re: Re: Re: Re: Prime?
December 7th. Which was probably written in November so maybe you have something there. I thought they launched in July, but I was apparently wrong.
Again, I’m not sure Amazon would qualify as a direct competitor.
Look at discovery+.
I believe you are one of the Amazon haters. If so, I ask to put that aside for a moment.
Is a single point of access really that bad? From a consumer point of view it makes it far easier to find what you want. Q
JustWatch is great most of the time if you live in a covered country. But they have enough errors and omissions to make it less than perfect.
But enter something outside of the mainstream, which is 99% of my personal consumption, and your left with no choices or a dozen small time streaming services each charging bit time rates.
I’m not sure how much it could hurt.
But there is the potential for helping.
Prime has let me into independents that I previously purchased used discs and tapes for. Now they get real cash money from my rentals.
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Re: Re: Re: Re: Re: Re: Re: Prime?
"December 7th. Which was probably written in November so maybe you have something there"
As I thought. Arrow Player is too new an entry into the market to make any judgements about which specific activity has caused subscriber growth, and it's just as likely to be natural growth from a fairly soft launch combined with regular additions to the catalogue as it is any other factor.
"Again, I’m not sure Amazon would qualify as a direct competitor."
Prime Video is a direct competitor to Netflix. The two companies work together in other ways (I believe much of Netflix's infrastructure is hosted on AWS), but in the video streaming space I don't see how you can claim they don't compete.
"I believe you are one of the Amazon haters"
You believe wrong, although they could certainly stand to improve their business practices and ethics and some areas.
"Is a single point of access really that bad? "
I've never said it was bad, just that it's unlikely to be a selling point for Netflix specifically. Bear in mind that these services don't appear for free, and unless Netflix lose significant marketshare (and they gained subscribers globally in this case), they're probably not going to start agreeing to share the billing revenue in the near future. This might change, and as I already mention I do personally pay for Disney+ and Netflix through my ISP subscription, but it's not something that's going to solve any specific problem for Netflix right now.
"JustWatch is great most of the time if you live in a covered country. But they have enough errors and omissions to make it less than perfect."
Yes, it's very useful but you can't rely on it to be completely accurate. Sadly, it's way more useful than the inbuilt search and recommendation functions in most of the actual platforms. I regularly find things on JustWatch that will never appear while casually browsing the streaming site itself.
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Re: Re: Re: Re: Re: Re: Re: Re: Prime?
“ Sadly, it's way more useful than the inbuilt search and recommendation functions”
Actually I found if you r get a title, hit page down twice….
Find a totally unrelated title worth watching.
:D
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