With the emergence of new streaming services like Disney+, Apple TV+, NBCUniversal’s Peacock and WarnerMedia’s HBO Mas, Netflix, which has served for years as a leading media-services provider, is at risk of losing its subscribers.
Netflix, founded in 1997, has had its dominance in the streaming industry. As one of the few services at the beginning of streaming, Netflix’s original content successfully had its subscribers engaged and provided access to expensive and licensed content.
As cable television lost its customers, Netflix gained more subscribers. However, emerging streaming services — which some providing similar services for a lower price — are creating a much more competitive atmosphere for the service.
Despite the growing number of other service providers and rising competition, shares of Netflix increased in the last quarter. The company projected to have 802,000 domestic paid subscribers but achieved only 517,000 domestic subscribers. Due to intense competition, the company’s third-quarter results fell wide of analysts’ expectations despite the increase in share price.
“Many are focused on the ‘streaming wars’ but we’ve been competing with streamers (Amazon, YouTube, Hulu) as well as linear TV for over a decade,” Netflix said in The Washington Post.
They added that “with so many firms now looking to provide premium video content to consumers, it’s a great time to be a creator of content.”
Critics argue that Netflix will soon lose the game as the pricing of its competitors — such as Apple TV+ and Disney+ — is far below Netflix’s standard $12.99 package. In January, the company announced an increase in subscription fee. Netflix’s subscription plans respectively increased between $1 and $2.
However, very few people are actually cancelling their Netflix subscription despite services like Apple TV+ and Disney+ available at $4.99 and $6.99.
Despite what the company had said about competing with streamers, Netflix, overwhelmed with rising competition, admitted that the competition has hurt its subscriber growth. Netflix recently acquired the streaming rights to ‘Seinfeld,” paying more than $500
million for the sitcom.
A day after, Warner Media’s HBO Max paid approximately $1 billion to acquire the streaming rights to “The Big Bang Theory” and “Two and a Half Men.” Amid the heightened streaming war, Netflix invested $15 billion on content this year while it invested $12 billion last year.
The key is to lure as many subscribers as possible into Netflix. Fifty-nine new offerings are expected to be streamed on Netflix next month and 43 original programs will be added.
By offering $2 billion in debt, the company will fund the creation of original content and focus more on content spending.
There have been growing concerns about Netflix’s longevity. Apple and Disney will be launching its streaming service in November, and AT&T’s, Warner Media and Comcast’s NBC Universal will follow next year. Disney+, which will be released on Nov. 12, will offer 7,500 episodes of classic Disney TV shows, 25 original series, Marvel movies, National Geographic specials and 30 seasons of “The Simpsons.”
More strikingly, the company has proclaimed that it will no longer license its content to Netflix. Melissa Cobb, Netflix’s animation chief, said in The New York Times that “About 60 percent of Netflix’s global audience watches the service’s content for children and families on a monthly basis.” At this rate, Netflix will lose its subscribers.
Stephan Paternot, co-founder and CEO of Slated said, “I do not believe it’s at all the end of days for Netflix, they’re just not years ahead of the competitive curve anymore. Netflix will be one of the five or so streaming services that make it through this period,” according to Forbes.
Although faced with the intense competition, this new competition could foster the development of the company, which is now challenged with bringing original content that attracts subscribers while achieving desired revenue and subscriber growth.
