Fourth-quarter revenue jumped to $4.19bn, 27% better than last year but Netflix had expectations of $4.21bn. Netflix gained 7.6 million followers mostly as a result of them growing outside the US. Netflix has had its doubters in recent months mostly because of them racking up a huge debt as a result of them purchasing content. But this should not be an issue. Netflix has an approach where they buy 100 movies and shows, release them in different parts of the world over a long period of time and only expect one or two to have a significant impact, but simultaneously catering to everyone’s needs in a way TV channels do not. Bird Box was the recent hit for the streaming giant with around 80 million subscribers viewing the movie in its first 4 weeks and once again became a popular water cooler conversation topic. Not only is Netflix one of the cheapest it has a large array of quality content, but the pairing of the two also gives them the advantage. It is a strong company that has dominated this space even when amazon and other companies have tried to reduce their market share.
Is Netflix at threat?
Netflix investors are losing their confidence in the brand with marvel content slowly being pulled from the platform and the news of Disney releasing their own streaming platform Disney+, in the third quarter of 2019. Disney are a multibillion-dollar company who have been dominating entertainment for the best part of a century. They own a few content creators and distributors such as ABC, Lucas Film, ESPN, Pixar and Marvel entertainment, as well as recently acquiring 21st-century fox which owns Hulu. Disney will be likely to throw large amounts of start-up capital into producing their own elite series and movies as well as adding in some of the shows they own the rights to such as the marvel cinematic universe.
Many believe that Disney will come into the scene and take a large market share from Netflix because they have such size and history in the entertainment industry. But we have seen companies try to muscle their way into these profitable industries before. Statistica states that 63% of Americans go to Netflix as their first place to consume TV content online, a few sources state Netflix takes up around 46% of hours spent streaming tv online. It is just a matter of time before Netflix gets award shows and sports on their platform and they take over TV completely. Amazon Prime and Hulu who are both backed by massive companies (amazon for amazon prime and Disney, AT&T, Comcast and 21st Century Fox for Hulu) have yet to make the impact of Netflix despite the backing of established billion-dollar companies mostly due to its lack of expertise, because ‘Hulu and Chill’ or ‘Prime and Chill’ does not have the same ring to it, it is simply not as cool. YouTube also is looking to get into this industry as well as producing their own content such as Weird City. But The reason why Netflix will dominate is that this is all they do and what they do best. The undivided attention to their platform is what is giving them the edge right now. This is what gives low-cost airlines an advantage over the larger long-haul companies which try to have a subsidiary in short-haul flights, or similarly why Spotify is the number 1 streaming platform despite Apple Music having the backing of one of the largest companies in the world.
The introduction of Disney + could shake up some things but in my opinion, it is more likely to take market share away from amazon prime before it eats into Netflix’s share. This is also not going to happen anytime soon as it takes a lot from people to change from subscriptions especially when they are comfortable with the content. Disney is looking to have an all-immersive platform featuring all its subsidiaries content. But it will not be cheap. Disney know the power they hold, and rumours have surfaced that the platform will cost around $20-$26 a month. Double what Netflix cost.
What many do not believe is that both companies can survive simultaneously. Disney+ does not have to take away from Netflix’s market share and if it was successful in doing this, the products are heterogenous enough that both can coexist. But for the majority of online streamers Netflix should keep its relevance and popularity especially whilst the phrase ‘Netflix and Chill’ is still in circulation because at the end of the day, nothing beats a brand and Netflix is the brand for this industry right now.
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