Streaming Service Wars: Taking Down Netflix

A long time ago, in a prosperous cable tv industry far far away… Netflix video streaming was born, and thus, the streaming service war began.

Vintage Cable Box Converter

Before we get into that however, lets see how we got there. Since 1948, when cable first started broadcasting on televisions across multiple states, we’ve all been immersed in its glory. Over the following few decades, many major networks came to life. By 1998, there were about 171 different cable networks for us to choose from. Looking back, life was probably good for the cable companies around the early 2000s. They were making billions of dollars and consumers had hundreds of channel options, not to mention, great quality content.

Enter Netflix.

Around 1998 when cable providers were innovating by introducing cable & internet broadband services, Netflix went live with their online DVD rental service. For the next few years they quietly gained subscribers and by 2003 they had hit 1 million users while simultaneously receiving big bucks from investors. Below is a short timeline of the major events that came after:

  • 2005 – Youtube launches (a huge moment for the internet but only included user video uploading and streaming).
  • 2007 – Netflix changes the game and announces full video streaming service (an online streamable version of their DVD catalog).
  • 2008 – Hulu announces video streaming (major competitor to Netflix, streaming shows and movies from its partners like Disney, NBC, FOX, etc. )
  • 2008 – Amazon creates “Video on demand” to complete with Netflix and Hulu.
  • 2011 – Netflix begins to expand, streaming globally, reaching 25.3 million subscribers compared to 1.5 million for Hulu.
  • 2013 – Netflix releases its first ORIGINAL content, the show ‘House of Cards’.
  • 2014 – HBO Now is announced, a stand alone streaming service for the entire HBO catalog.
  • 2015 – Gathering tons of steam, and subscriptions, Netflix stock grows to $100 per share (A ridiculous 574% increase in 5 years)
  • 2017 – In the U.S., Netflix grows to have as many subscribers to their site as people have cable subscriptions.
Netflix in 2007 via Koolio

By the late 2010s, it seemed most people were catching on to the trend of watching their favorite programs on alternative, internet enabled devices rather than their cable box. Thus, the exodus from cable began and was dubbed ‘cord cutting‘. Over the next few years, cord cutting had snowballed into a legitimate reason for cable companies to be worried. While millions of people still have not become ‘cord cutters’ per se, the numbers are steadily increasing. Last year, the Motion Picture Association of America (MPAA) released a report stating that for the first time, the total number of streaming subscriptions worldwide (613.3 million) surpassed cable subscribers (556 million). Through all this, Netflix has been sitting at the top as the first and clearly the best of the streaming services. The bigger they got, the more they were able to spend on giving us quality original content like Stranger Things, 13 Reasons Why, Orange is the New Black, etc. They had no real competition, they were sitting pretty.

This leads us to now. It’s the summer of 2019 and I can’t help but see that in the not so distant future, Netflix’s reign as the top streaming giant will end. Over the past year, we’ve seen a few MAJOR players enter the streaming war. Players with enough cash and credibility to throw haymaker in the ring against anyone. The important point to notice however, and one that I will mention substantially below, is the QUALITY of CONTENT they will be competing with.

via Apple

We can take a look at Apple TV+ first. In March of this year, Apple, yes Apple the trillion dollar tech company, announced they are getting into the streaming game. They announced their service called Apple TV+ which will have original content from some of hollywoods best creative minds. You can see how this could be a problem for Netflix already. Artists like Oprah Winfrey, Steven Spielberg, Jennifer Aniston, Reese Witherspoon, Octavia Spencer, J.J. Abrams, and Jason Momoa, are all slated to create new tv series or movies, so you know Apple isn’t messing around. This is all concerning for Netflix, especially when you look at the dollar figures too. Apple generated around $77 billion in cash flow last year alone (overall, not in a particular segment) while Netflix lost $339 million. The point here is, Apple will have a ton of extra money to dish out to top talent and we’ve seen the success they have had when they decide to enter a new industry (e.g. smart phones, tablets). This is a company that has always lead with quality over quantity so we know they won’t push out a product without knowing it is well crafted.

via Disney

Next, we take a look at Disney, yet another huge player throwing it’s hat into the streaming war for the fall of 2019. What makes this entry such a large blow for Netflix is that Disney is one of the largest media and entertainment companies in the world. As most of you should know, Disney owns its own very successful television network and film studio, but that is only the tip of the iceberg. They ALSO own ABC television, ESPN, Pixar, Marvel Studios, and Lucasfilm, talk about SERIOUS content catalogs. By creating their own platform, they are now able strip Netflix of the Disney owned (Marvel, Lucasfilm, Pixar included) movies and shows currently streaming on Netflix. Also, in addition to streaming its extensive catalog, they will also be producing new original content that will undoubtedly draw in millions of new subscribers. Just last week at San Diego Comic-Con, Marvel announced they will move with Phase 4 of the Marvel Cinematic Universe, including 5 new shows based on popular superheroes. Let’s also not forget that Disney is a $90 billion dollar company and that they will have a substantial amount of money to invest.

Recently, AT&T who owns Warner Media, unveiled a stand alone streaming service titled ‘HBO Max’. This obviously does not come as a big surprise. Given that at this point in this war every major studio is creating their own streaming platform, its important to take notice of the content. This is another massive competitor to Netflix because of just how deep this platform will be. By owning Warner Media, AT&T is able to include the ENTIRE HBO catalog in addition to a ton of material from other major networks. For decades HBO alone has provided some of televisions most award winning content, for example, The Sopranos, The Wire, Game of Thrones, and much more. Lets take a look at some of what else is included in the over 10,000 hours worth of entertainment HBO Max will provide:

  • HBO Catalog, including all new announced shows
  • New Line Cinema
  • Cartoon Network
  • Crunchroll
  • DC Universe
  • Turner Classic Movies
  • Shows from major networks TNT, TBS, The CW, CNN
  • They purchased the rights to classic shows ‘Friends’ and ‘Fresh Prince of Bel-Air’

It’s not to say that Netflix will completely die off like MySpace did when Facebook took over. Even with the arrival of these new platforms, Netflix will still remain the biggest, with their robust 47,000 episodes and over 5,000 movies. What’s happening here though, as compared to the cable era, is that WE as consumers have more leverage. When you give the consumer the power, more often than not, they will choose the better QUALITY product or service. With all these streaming services fighting each other, people will be willing to pay for the platforms that produce GOOD content that keeps us coming back. Netflix, in my opinion, will probably continue to spend hundreds of millions of dollars (that they don’t necessarily want to spend) on trying to attract the top artists in Hollywood. The problem here is that I believe most of the top people will be offered bigger and better contracts from the newer platforms, which ultimately will hurt Netflix. In the end, I am not sure who will come out on top in all of this, and honestly it probably doesn’t matter. As each company tries to outdo each other by creating the best series/movies they can offer, the REAL winners of the streaming wars, is US.

Rommel RB

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