Netflix is in rough shape. This week will determine its future
cnn.com
cnn.com
They had no vendor lock-in effect like Apple, Microsoft or Google and no social media network efect like Snapchat, Discord, Meta that would guarantee their customer base to stay long term on the platform. They also couldn't monetize their users' personal data through ads as much as the other chat apps and social networks. And it was only a matter of time before juggernauts with valuable IPs like Disney, Warner, etc. would build their own streaming services to disrupt them.
The moment their competitors with the desirable IP would jump in the ring, or their content was no longer addictive, or their customer base would feel economic hardship, or their VC money dried up, their service could be easily disposed of without a hit to quality of life to their users.
Also, people could pirate their content basically for free, so there's also that, versus the likes of Disney, Warner, etc had other revenue streams besides just a streaming service.
For a long time, the general idea worked out. The problem was that the studios did manage to get their butts off the ground eventually - especially Disney removing all their stuff from Netflix and creating Disney Plus with a lot of the most popular cinema franchises (Star Wars, MCU, Avatar, all the "classic" Disney and Pixar films) was a real setback - and now combined with the aftereffects of pandemic lockdowns and work-from-home movie distractions going away, Netflix' future does seem a bit bad.
Netflix doesn't have a similar advantage. Media companies produced shows and Cable companies distributed them just fine before. The advantage they had in technology and being able to buy cheap media has evaporated.
Their advantage of being able to burn money is now evaporating with it. They're left with trying to produce better media cheaper which they can't do because they're worse than legacy studios. Or distributing cheaper/better which they can do but there's not a 10+ billion dollar company there.
Worse for them Apple & Amazon still seem to be happy burning money for a while. Not a lot of bargains out there buying media.
They eventually reached a scale in the streaming category (which they essentially invented from a business standpoint, even though they did not invent the technology) where it made sense for them to produce their own content, both because it was more economically efficient generally and to prevent studios from starving them of content and shutting off their revenues. Their move into producing some fraction of their own content matched that of both cable companies and TV studios before them.
Netflix's primary advantage, in both the DVD market and the early streaming market was 100% a radically disruptive distribution advantage. Eventually, in both cases, they became so dominant that they redefined their own industries. It's not that Netflix is a cable company, it's that cable were forced to become Netflix to stay alive and avoid the fate of Blockbuster and Netflix's original competitors.
Who said that Spotify is the endgame? That's like saying that MySpace is the endgame for social media or that 3Dfx is the end game for GPU tech. Few tech companies survive long term. AFAIK, unlike Netflix, Spotify don't own any of the IP they stream, they just license it from the major record companies, making them effectively just a middleman with commodity tech. So, in theory, if they wanted to, the major record companies who actually own the IP Spotify streams, could join forces and build their own streaming services, and stop licensing their IP to Spotify, effectively killing them over night. And let's not talk about the bad blood between Spotify and many artists who would love to see Spotify burn to the ground.
So, IMHO, in theory Spotify is even easier to kill than Netflix, but as to why that hasn't yet happened, that's up to the execs of the major record companies to answer. Maybe they decided it's easier and more convenient to just sit on their butts and license their IP to Spotify, Apple, Amazon, and have them outbid each outer for the licensing fees and collect rent from them, rather than bothering to assemble armies of picky and expensive SW devs to build their own competing services, since those dinosaur execs at the record companies aren't known to be very tach savvy, and in fact spent most of their lives fighting the tech industry in courts instead of investing in it.
Also, most importantly, music and video distribution and consumption are completely different beasts, so direct comparisons between Netflix and Spotify are pretty difficult even if all other things were to be equal.
Each of the big media companies hold maybe 25% of the "legacy" catalogue (75% of streams). And playlists are usually mixed, so switching app to listen to a few 15% of songs won't happen.
They simply don't have the market power at the moment.
IMO it makes sense for the music industry to shift their focus and attention towards live events anyway - you can't steal or pirate tickets (and scalper profits are often enough rumored to originate at the artists themselves) and merchandise, and the effort not just in development but especially in brand recognition building against Spotify would be immense, not to mention the shitstorm/backlash potential from such a move or the antitrust risk.
Why spend time and money building your own music platform when you can get paid to not do that 4 times? 4 players also solidifies content owner's position in the market because simple supply x demand.
What I'm surprised by is how long they were able to extract a large middle-man fee from studios and use that to fund a direct competitor to them. Took some chutzpah.
Fun fact: In 2019, the DoJ decided that it would stop enforcing the Paramount decrees, because there's no way studios could lock out independent distributors in today's environment. Clearly, no way whatsoever.
[0] https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic...
It might have been a great business, if the owners of those movies had been happy to just get a small fee from Netflix.
Unfortunately that's not how it turned out, for instance Disney decided they could both make their own tech and their own content, esp for such things like Mandalorian which takes a modern long-story format that is suitable for streaming. Basically it turns out content is king, which Netflix also realized as they went and tried to make their own stuff with limited success.
What I don't get is why it's so hard to make the content. They've certainly thrown a lot of money at it, how come nothing sticks? By contrast everything Disney makes seems to be high quality.
Instead they fragmented, and there is no way that I will be figuring out which of the dozen subscriptions I need any time I want to watch something, and I know I am not alone here.
Piracy is king once again. It has all the content, and none of the bullshit.
This kind of thing comes from company culture too. I can’t speak to specifics, but presumably Disney and other studios who have been at the content game a lot longer than Netflix have a better understanding of how to cater to their customers and foster that relationship over time.
Another way to put all this is simply that it’s a lot harder to build a content business than a CDN, especially now. So the existing content biz just built CDNs.
It was a solid theory, and honestly it still isn't obvious that it's failed. Netflix still has an much larger user base than any of the competing services, despite charging much higher prices. But other than the stellar job they did with international content, they certainly haven't executed on this as well as people imagined. It's quite amazing how badly they have been spending that massive content budget, and how long the mismanagement has been going on.
(Their prestige "Hollywood movies at Hollywood budgets straight to streaming" projects are probably the most obvious example. Who the fuck greenlit Gray Man at $200M?)
Turns out, when billions are on the line, they could actually.
Also by leaning into the "...and chill" idea by recommending users interested in hookups.
Where I'm at, Disney is already cruising.
Infact, all major production companies seem to have realised a while ago that they all can individually create their own streaming platform.
For years, Netflix stock has been growing, Netflix has been hiring great software engineers, and people considered them a tech company. But the tech there is not a differentiator. I don't know anyone who will choose Netflix over Disney+ or HBO because of better tech. My brother hates the HBO app, but he uses it because it has content he likes to watch.
Streaming still provides technical challenges, and people will praise providers for great UX, high quality video etc. but in this case, very clearly content is the king. Netflix has had a few years to catch up with competitors who have decades worth of content. It wasn't a lot of time, and they did what they could, but it seems this time is over now. Netflix is no longer the sole player, it's one of a few competitors.
I don't think it is about tech choices but user hostility. Any streaming service could differentiate by allowing you to turn off autoplay or not have some pushy in-your-face "feed" berry your recently watched series list.
But ye, in the end its probably all down to content, like you say.
That doesn't seem to be the case with video unfortunately. I predict a resurgence of piracy.
But the days of walking into department stores and purchasing things based on a service rep's recommendations are behind us. We understand stores are incentivized to sell you the item most profitable to them. The Internet has a vast amount of places to inform your decisions independent of parties acting against your interests.
Netflix is a gigantic warehouse of a lifetime of content. Some bad, some good. If you select something poorly, perhaps you're better served honing a better selection criteria.
I suppose because they should be able to do this well. They know what I have watched, what I bailed out early on, terms I search for and which results I looked at, and so on. And no shortage of tech talent to do the right thing with all of that.
There was a time when the player for some streaming services was so terrible I'd avoid it, though sometimes only terrible on a specific platform (Roku, etc). I think you're right though, they are all now good enough that it's not a real factor for the basic player functions.
Though I do still tend to prefer Prime over some other services when picking something that's available on many, like a new-ish movie rental. Mostly because of the "X-ray" feature where I can see the list of characters and actors by scene. So, at least for me, there's some tech advantage left here and there.
Funny, Netflix is my least favorite app (on AppleTV), followed by the AppleTV TV+ app. The current version of the HBO Max app is fine. It lets me find what I want, keeps track of what I was watching so I can easily resume, surfaces interesting content.
Netlfix by contrast makes it hard for me to resume where I left off unless I explicitly add a show or movie to my list, which it still makes it hard to get to. Netflix refuses to expose its catalog to Apple, so I can't search for shows via Siri. Netflix also still forces the end of a show/movie down to a thumbnail sometimes before the credits even roll. And yes, it does this regardless of the autoplay settings, which I have turned off.
The only annoying bug HBOMax continues to have is that it constantly turns subtitles back on.
My favorite streaming app is Criterion. Netflix at the bottom, the others all in the middle.
You know what has none of these problems? Playing locally from my NAS using Infuse. When I'm watching something I care about, I download it to my NAS in advance. Sad, but true.
I also wonder if Netflix thought that perhaps content could be licensed on multiple platforms. It's unfortunate that movie/TV content seems to have exclusive licenses in contrast to music which is available on multiple platforms.
Their advantage was licensing (Marvel, Friends, The Office etc.) and tech. In both cases eventually competitors caught up - they launched their own platforms, and licensing contracts expired. That gave Netflix a few years more to develop their own content, but now it's over.
That's probably a company worth billions. But not the hundreds of billions Netflix is valued at.
Well now they have tried to become every channel and completely lost their brand identity. It used to be tied to more prestige TV (house of cards) etc. Now they try to produce content for everyone, and in the end their brand ends up standing for no particular kind of content. When you log in to someone else’s Netflix it’s like a completely different streaming service.
Meanwhile streaming tech has become more and more of a commodity. And other brands are associated with better / specific content.
The reason was / is pretty widely known, their customer base did not reaction "properly" with the "correct" opinions to the shift in direction of neflix original programming and comedy specials, coming to head with the widely panned Amy Schumer Special which most netflix customers responded negatively to and brought an end to the review and rating system
https://www.dailydot.com/upstream/amy-schumer-netflix-alt-ri...
Also pretty common, a meme for the most part now, for media outlets to proclaim all negative criticism is "alt-right trolls", these accusations are often given with out any real evidence backing the claim
Why is that fascist totalitarians on left want to ban freedom of the speech and always resort calling anyone who in most slightest and mildest degree disagree them as alt-right.
And again, this isn't a case of "calling anyone" alt-right, it's not speculation, it's a report about stuff that happened in specific reddit threads.
If this was a trial it would be a circumstantial case, probably not enough to convict someone "beyond a reasonable doubt" but if it were I think there is "clear and convincing" circumstantial evidence to correlate the 2 events
> Amy Schumer Special which most netflix customers responded negatively to
Speculation. There was a big social media swarm very loudly upset about Schumer, even putting aside the claim that they were alt-right like someone else here mentioned, you cannot deny the bandwagoning. The bad star ratings simply could not be trusted after that.
> I think there is "clear and convincing" circumstantial evidence to correlate the 2 events
These sorts of changes can take years to pitch and refine, especially given existing data Netflix had. I'll accept that the ratings brigade may have been a "okay, we've seen enough" moment for Netflix, but the fact is Netflix had been publicly talking about redesigning the rating system for more than a year prior.
This is like saying Elon Musk made Twitter work on an edit button, turns out they had been hashing out the details for years and were forced to say something.
https://www.businessinsider.com/netflix-wants-to-ditch-5-sta...
The "incorrect reviews" predated Schumer, but as you said Schumer was the "we have had enough with our customers giving us feedback we do not like" moment
It was clear for a LONG LONG time before Schumer that at least 50% of netflix customer base was not happy with the direction the content was going... The ever decreasing subscriber count is a reflection of this as well
As to the "everyone that disagrees with me is alt-right nazi trolls" charge that people like to bet around anytime a movie, TV Show, or comedy special etc is not approved of by the audience is frankly non-sense.
The "media" coverage around the "review bombing" provided not actual evidence of such a thing happening, and unlike sites like Rotten Tomatoes, one had to be an actual customer of Netflix to review it so their is less opportunity for that than say a rotten Tomatoes which I personally think the "problem" is over stated even for those sites,
Instead it is gate keepers being out of touch with the consumers but they refuse to admit that so it is not them that is out of touch no it has to be "bots and trolls" or "alt-right" or some thing other than the actual fans, consumers, etc rejecting their project
Letterboxd wants to be that, pretty much, without tying it to one specific catalogue of titles available to stream.
I think Mubi still has a lot of reviews, regardless if movies are available there or not. There it works, I think, because their offering always was understood to be much more niche than Netflix's.
It’s absurd to me that a company with this many active subscribers can be called in “rough shape” simply because they cannot continue to grow (there is an upper bound to the number of people worldwide who can and will subscribe to streaming)
In my opinion they fell too much in love with the concept of keep doing the one thing you do well. We usually criticize companies that don't do it but sometimes it works the other way too, esp if you want to keep growing at the level that is expected from a FAANG company. They didn't really expand their service to other areas (beyond expanding to original content and international, both very successfully) like Amazon for example is doing with Prime. But they did keep increasing prices.
I’d also look at acquiring Criterion and A24. Netflix then becomes the home of independent cinema, auteur and classic cinema and original storytelling vs the other options which (HBO/Now TV excepting) all seem to rely heavily on existing franchises. I’d also look at upping the amount of stand up specials which it seems to be doing with the Netflix is a joke festival.
Netflix: 84.02
Spotify: 19.71 Dropbox: 8.17 Peloton: 2.86 Valve: 10 Substack: 0.65 A24: 2.5
Sounds doable looking at those numbers.
Good one. To be 'full' Apple One competitor, you'd need default app installs as well as built-in advertisements/notifications channel across macs/iDevices.
Oh also, Valve is privately owned money printing machine. I doubt gaben would be interested in selling it.
Netflix has sufficient capital & technology to cause trouble for the kinds of markets that EA and Activision-Blizzard operate in. I don't know if they have the requisite time or leadership to execute before the market eviscerates them though.
and now Microsoft is the Disney of gaming, with Xbox Live being Disney+ of gaming
Netflix also recently released mobile GOTY contender Poinpy, developed by the Downwell guy.
One way would be to buy someone with big enough catalog like THQ Nordic. They have been playing acquisition game for long time now: https://en.wikipedia.org/wiki/List_of_acquisitions_by_THQ_No...
I don’t care about Netflix, I was never a subscriber. But I wonder if this is really about Netflix or about the absurdity of the larger system.
What's basic capitalism? Is it bad that capitalism victimizes fundamentally unsustainable companies? And to whom does netflix need to show endless growth?
Lots of people and even companies do not require or have endless growth, many are content (or at least sustainable) turning a relatively constant profit.
Capitalism punished the people who had unrealistic expectations of netflix's growth.
This is not the case under capitalism, it happens under regulated economies.
Under capitalism, "profitable" _is_ the signal of the net value something generates, and that is its own motive.
> It's simply never enough (hence the many references to unrealistic infinite growth),
Untrue. Many people and companies operate under steady (or even declining) profits, still run while they generate profit.
> so what is most likely to happen is some way to 'restart' the growth count, so we can have a pretend-infinite-growth party again. Maybe a merger, maybe a spinoff, maybe a some other construction.
A great number of good options for valuable companies and products and services are available under capitalism yes, this is one point I will agree on.
If we were just talking about netflix story, in that case what we're talking about is a CNN article claiming these things might happen which really has little basis in actual reality or how capitalism works. The _actual_ Netflix is still here, and it is still here despite being deemed not profitable enough by many.
If you would like to interpret it differently, that's up to you and I can't really help you with that.
I was replying to parent who said that. Or at least that's how I read it.
No member of the board would ever sign off on a plan that involves valuing the stock at 20% the current price. That’s why no CEO will have a no-growth plan.
Netflix has more valuable data on user preferences that Hollywood could only dream of. If they add a good gaming platform, they will do well in the coming future.