The video streaming market is getting more brutal by the day: and where does that leave Netflix?
In July 2018, Netflix was nailing it. With stocks having surged 140% since December 2017, it was Wall Street's 'top-to-buy darling'. Now the tables have apparently turned. So, we need to ask ourselves, is Netflix just another victim of the tech sell-off - that also butchered Facebook, Apple, Amazon and Google - or is the massive dip a glimpse into the company's real future?
Left Behind?
Some experts think that the best days are now behind Netflix. As opposed to 2008, when at the dawn of the streaming era it was a real pioneer. Being the first and only successful streaming service worldwide, it ensured a strong hype and a share of very impressive winnings for investors, who managed to capitalize on the platform's 'first-mover' advantage.
Since nobody had previously provided an alternative to cable TV, people loved it! Sadly, Netflix couldn't ride the gravy train forever. Where there is demand, competitors are bound to pop up, and in this case, Amazon, along with Disney and WarnerMedia, are entering the arena as a very powerful trio!
The Craze of Competition
With Disney launching its own Disney+ streaming service in 2019, it announced that it would pull all its content off Netflix. Let's face it, Disney shows and movies are adored by the public. Its own household brands, like Marvel, Pixar or ESPN give it extreme leverage, and this may indeed cause families to abandon Netflix as their provider.
Then there's WarnerMedia, another giant, who already started a tug of war with Netflix over the streaming of "Friends". It's also planning to launch its very own streaming service in the last quarter of 2019, taking its titles back from Netflix one by one.
Some believe that as content goes, so will millions of subscribers, taking stock price along with them.
And if that's not enough, Amazon Prime Video - a popular streaming platform - is making the move of investing billions in developing its own original shows and movies, just like Netflix. This threatens to top Netflix's greatest competitive advantage.
Struggling for Solution
With the announcement of Amazon's plans in February, Netflix, eager to avoid falling behind, upped its spending by 50%. Many, however, argue that the platform had dug itself an even deeper grave.
After all, Amazon sits on a ton of cash, whereas Netflix makes a small profit. To fund its original productions, it has to borrow funds. This year their debt has risen to a shocking $8.3 billion - 70% greater than last year. It's starting to look like Netflix is accumulating bad debt, and that's hardly a good thing.
In contrast, some say that many successful companies operated at a loss for years, such as the now-world-renowned Amazon. Clearly they didn't just make it out alive, so why wouldn't Netflix do the same?
Ted Sarandos, Chief Content Officer at Netflix, also doesn't seem very bothered with the forthcoming rivalry. According to him, there is "plenty of room" for other services, and they won't bring Netflix down.
The 'Netflix-failure' camp openly wonders whether the boss is delusional. The uprising competition, along with the recent decisions Netflix took about dropping certain shows, is already leaving users ambiguous. According to this pattern of thought, it appears that it's either: loss of interesting content, further debt, or subscription cost increase. In any case, it doesn't sound very competitive.
To be fair though, market research specialists, Lab42, have recently released results from October 2018, and it appears that Netflix is the top streaming video provider with the greatest percentage of users and an exceedingly high retention rate. So maybe it's best not to panic, and let numbers speak for themselves?
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This article was submitted by Stratton Markets.
