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Comment by scarface74 | Hacker News Reader

Netflix’s issue is not the quality of content - it’s their business model. They are borrowing billions to create content with the only way to recoup the cost is mostly by subscription revenue. Their initial rationale was that they were building a content library that would have value. But, they admitted during the last conference call that subscriber growth was slow expectations because they didn’t have any new big releases. No one is going to are about “House of Cards” in five years.

Compare that to Disney’s library. People still care about Disney’s animated movies from the 30s and even adults are nostalgic about the 90s X-men animated TV show and the original Star Wars from the 70s.

Besides, Disney makes billions from their content from theatrical releases, video on demand, network and cable TV, theme parks, toy sales, etc.

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I think what you're describing is squarely in the realm of content quality. They're spending large amounts of money and getting content that's largely junk, and even when it's good, it's buried under so much junk that it's hard to find. HBO spends 1/7th of what they do and has better shows. Netflix has spent billions trying to get one Game of Thrones and failed miserably.

That's what's killing subscriber growth. Lack of quality content. HBO has about the same number of subscribers, at a 50% higher subscription cost. The revenue is there to be had for someone with good enough content.

Despite spending $10b a year, Netflix's biggest shows are still ones it licenses (Friends, The Office, etc.) and they're losing them one by one. They've shown that for whatever reason, quality content isn't a problem you can solve by spending alone.

No one can predict what will be a hit ahead of time. There are only 2 reliable ways to have a library of hits:

1. Produce a ton of stuff, over a long period of time, and some of it will turn out to be good.

2. Buy someone else's content library.

Disney has done both.

I don't think that's correct. I mean nobody can predict it with 100% accuracy. but as I pointed out, Netflix spends 10 times the amount HBO does on content and gets less from it.

HBO is batting at least .700, and Netflix is not even batting .100. That's not randomness. I don't know nearly enough about the industry to know why.

but what I do know is that Netflix has probably spent more money on content in The last two years then HBO has spent in its entire history, and HBO's library is significantly more valuable.

I was in the valley during the time the music industry was being gangbanges by technology and I have a good guess as to why. Tech people often make the mistake of thinking non-tech people are stupid. Pure speculation on my part, but I would guess that Netflix thought they could solve the problem by throwing money and technology at it, and the people who have been making good content for 20 years were just better.

>Netflix’s issue is not the quality of content - it’s their business model. They are borrowing billions to create content with the only way to recoup the cost is mostly by subscription revenue. Their initial rationale was that they were building a content library that would have value. But, they admitted during the last conference call that subscriber growth was slow expectations because they didn’t have any new big releases. No one is going to are about “House of Cards” in five years.

I think you are contradicting yourself here. If the quality was good they wouldn't have mentioned not having big releases as being the reason why their subscriber growth was slow.

>Compare that to Disney’s library. People still care about Disney’s animated movies from the 30s and even adults are nostalgic about the 90s X-men animated TV show and the original Star Wars from the 70s.

I think you are arguing in favor of what I was saying?

>Besides, Disney makes billions from their content from theatrical releases, video on demand, network and cable TV, theme parks, toy sales, etc.

Yes, and for some strange reason Disney trades at 2x the market cap of netflix with 17x p/e while netflix trades at 88x p/e. Either Disney is severely undervalued or Netflix is severely overvalued (or both).

I think you are contradicting yourself here. If the quality was good they wouldn't have mentioned not having big releases as being the reason why their subscriber growth was slow.

No, I’m saying that Disney’s library content has value and doesn’t have to be hit driven to be successful. If Netflix’s only way of gaining customers is by keep getting in debt to fund new content, it has an unsustainably high customer acquisition cost. If customers don’t care enough to stick around to have access to its library content, the lifetime value of a customer is low.

Either Disney is severely undervalued or Netflix is severely overvalued (or both).

Why does Uber and Lyft have any value at all when they are losing billions and have no hope of having profits that justify their value? Dropbox should also be valued at zero. Market cap is not a substitute for sound business fundamentals like actually having a profitable business model.

I think we both agree, I don't what statement I made you are arguing against.

The interesting part of the streaming space is that the incumbents actually have an advantage over the upstart technology company. They are joining the party almost 8 years after netflix and will probably succeed just because of the massive repository of content they have accrued over the past 60 to 70 years.

Disney is hit driven in that all their things are mostly either for entire families or four quadrant sort of mainstream hit-style media. Which is most of their historical content library.

Netflix actually has a lot of quality original shows. All modern as they are all from this decade.

People want hits though, so that isn’t helping Netflix enough.

I’m not making a value judgment on the “quality” of Netflix’s content vs Disney’s. I’m only talking about business models. Netflix’s business model isn’t competitive by any objective measure.

Four quadrant media/tent-pole media isn’t what all hits are, but it is true for a lot of them. I was assuming quality in that regard.

I don’t see any media company including Comcast’s media companies being close to Disney and runner up Warner in terms of content. Which is basically business model at this point. Netflix can’t compare to Disney, but all the other media companies can’t either. They are going to have to do something as well.

I agree with this analysis. Netflix-created content is hit-or-miss, and generally miss IMO. I honestly keep the subscription alive today for the same reason I started it in the first place, all those years ago - to have on-demand access to old Star Trek TV shows (TNG-ENT). If they drop those shows, I'll drop them.

All content everywhere is hit or miss. With Disney, I didn't care for Solo or Star Wars Resistance. I enjoyed Star Wars Rebels and Rogue One. The Last Jedi had mixed reviews at best. I haven't been interested in a Pixar movie in several vears. It's not like Disney content is amazing all the time. It has winners and losers like everyone else.

Netflix has some of the best shows I've seen in a long time. It also has some is the worst. Just like Disney.

The Last Jedi might have had “mixed reviews”, but it grossed 1.333 Billion.

As far as Pixar movies, it doesn’t matter what you are interested in, look at their box office, home video, video on demand results and related merchandise sells and theme park attractions.

Loads of young people wouldn't care about Star Wars, Marvel, ... if they didn't release high budget movies regularly. How many kids under 20 care about the biggest franchises from the 80s like Indiana Jones, Beverly Hills Cop, Back to the Future, Ghostbusters or ET ? How many adults would still rewatch them ?

I think old content is overrated. People subscribe for the new stuff. If they watch old stuff, it's mostly to fill the time before a new show comes out.

The whole Disney Vault concept has been successful for decades. Disney’s early animation is still popular generation after generation.

> People still care about Disney’s animated movies from the 30s and even adults are nostalgic about the 90s X-men animated TV show and the original Star Wars from the 70s.

Come one. Saying people is a cop out? Everyone, no way. So how many people, because that is what matters.

https://www.thewrap.com/disney-plus-subscriptions-more-than-...

Early hype for the Mouse House’s upcoming streaming service, Disney+, appears to be building, with 24% of Americans saying they’re “extremely likely” to subscribe once it’s available in November, according to a Tuesday survey from UBS. That would come out to about 30.2 million U.S households. Another 19% said they’re “somewhat likely” to subscribe, which, if grabbed by Disney, would add another 24.2 million U.S. households to its fold. Disney execs, on the other hand, have projected Disney+ will pull in up to 30 million subscribers by the end of 2024

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