Business

It’s Netflix’s world, and other media giants are struggling to keep up

In a strategic game of chess, making your opponent respond to your moves puts you in control. Right now, in the world of entertainment chess, Netflix is in control.

By having a strong hold on the entertainment and streaming market, Netflix is forcing companies to operate around it. This is clear from the bidding war over 21st Century Fox, which has Disney pitted against Comcast, the largest U.S. cable-TV provider.

A deal that is valued at $65 billion started with Disney’s original offer of $52.4 billion. This is just one example of how businesses are trying to find ways to compete with Netflix. Their actions are causing stock prices to rise and many to speculate on who will come out on top.

Twenty-First Century Fox is the target of acquisition between these two companies because of the invaluable content it offers, which allows these companies to respond to Netflix’s production with original content.

Netflix has produced noteworthy series of late and is not afraid to touch on serious subjects. Disney has begun removing its content from Netflix’s library in order to create its own personalized streaming service. Marvel content, Disney movies and all other production companies owned by Disney will no longer be available on Netflix.

Netflix, the brainchild of Marc Randolph and Reed Hastings, has been a disruptive force in this market ever since its DVDs-in-the-mail model debuted on Aug. 29, 1997.

This model caused big players such as video store franchise Blockbuster to go out of business. After its in-the-mail DVDs, Netflix shifted its focus to streaming, which has now become a market of its own.

In addition, the company is developing original content that will become personalized to viewers in months to come with movies tailored specifically for their profile to encourage “binge-watching.” This kind of programming will continue to solidify Netflix’s importance in the market as it continues to reinvent itself.

While some companies are losing steam, Netflix continues to prosper with a gain of 92 million customers in the last five years, while cable is declining year after year. This continual rise is what makes investors continue to believe in the Netflix model of
business.

Within the market, there are competitors, which include Hulu, HBO and Amazon, but each has difficulty keeping up with Netflix’s content creation and other services.

Hastings said in a recent earnings call that Netflix has invested “over $10 billion on content and marketing and $1.3 billion on tech.”

This investment, and other moves on Netflix’s part, are causing other media companies to take heed.

Every media company seems to be following in another’s footsteps in order to prepare themselves for a market that Netflix continues to dominate.

These actions, though large and expensive, will have very little effect on Netflix’s strategy and reception.

Every time that Netflix produces more content, each of these large entertainment corporations may lose some of their viewers.

June 27, 2018

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