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Jul 24, 2019

What’s Going on with Netflix?

By Team Stash

The war for eyeballs has begun in the streaming video industry.

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With nearly 150 million subscribers around the world, Netflix has long been at the top of the streaming content industry.

And while Netflix has plenty of smash hits—from “Orange is the New Black” to “Stranger Things”—the so-called direct-to-consumer streaming content industry is changing rapidly, with numerous media companies eager to get in on the action, from Disney to NBCUniversal.

Why? The video streaming services industry is currently worth about $22.6 billion, an amount that’s expected to increase by about $10 billion in the next three years, according to some estimates.

What’s the future of the video streaming industry?

Here’s a quick look at how things may be changing for Netflix and others.

  • Netflix user growth may be slowing temporarily. It reportedly added 2.7 million subscribers globally in its second quarter, 2019, less than half the number it added in the second quarter of 2018. But in the U.S., the company actually lost 130,000 paid subscribers in the quarter.
  • In April 2019, Netflix increased its monthly subscription price by $2.00 to $12.99, which may have contributed to subscriber losses in the most recent quarter, according to company executives in earnings call.
  • Netflix is also losing two of its most-watched shows—“The Office” and “Friends”, which will go to NBCUniversal and AT&T respectively. Both companies are launching their own video streaming services. “The Office” was streamed a total of 52 billion minutes in 2018, according to reports. “Friends” was the second-most-watched show on Netflix, according to the New York Times.
  • The Walt Disney Co. recently announced it will enter the on-demand video race with a new streaming video service it plans to launch in November 2019, called Disney+. For $6.99 a month—roughly half the price of a Netflix subscription—customers will be able to stream Disney’s trove of movies, television shows, and other content from its Disney, Pixar, Marvel and National Geographic Studios. Disney is also pulling content from Netflix, such as its Star Wars movies.
  • To come up with more shows, Netflix has increased its spending on original content at a rate that’s 50% higher than its revenue growth, according to reports.

Who are the other competitors?

  • HBO, now owned by AT&T, spends billions of dollars annually on original content, and it has its own streaming blockbusters such as the recently concluded “Game of Thrones” series.
  • Amazon Prime Video has produced 80 original TV shows, and has nearly 100 more in the pipeline, according to reports.
  • Hulu currently has nearly 100 original TV shows either available now or in the works. Hulu’s other owners include Disney and Comcast. (AT&T was also an owner, but Hulu recently bought out its shares from AT&T in a deal that values the streaming service at $15 billion.)
  • Apple recently launched Apple TV+, and is planning to spend $1 billion on original content, according to reports.
  • Cable companies Viacom and Comcast have both launched streaming services. Even Walmart is getting in on the act with its recently acquired video platform Vudu. Facebook is also experimenting with its own on-demand video service, called Watch.

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