Content Streaming Competition by the Numbers

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Images Courtesy of the Associated Press (Apple: Tony Avelar/AP)

With more competition arriving, Netflix subscriptions will undoubtably fall (by 49%) with the entrants of Disney+, which now owns the FOX entertainment assets and soon to be 100% of the Hulu platform through a deal with Comcast/NBCUniversal.  Apple+, WarnerMedia, and Amazon are also competitors.  There are four reasons Netflix will face stronger competition in the coming months.      

1. More Streamers

Disney+/Hulu, AT&T/WarnerMedia, Amazon, Apple+, and potentially others like DAZN and FloSports.  Comcast/NBCUniversal has also yet to enter the streaming space with its own streamer.

2. Loss of Licensed Content on Netflix

Due to expiring licensing deals (e.g., Disney and Marvel properties and eventually the FOX assets to Hulu), plus other streamers who enter the space. 

3. Netflix Originals

The streamer did not make many of the popular originals and now must produce and develop more of its own content versus licensing owned-properties. 

4. The “Go it Alone” Approach

Netflix chose not to integrate with Apple+ because it sees Apple as a direct competitor.  Disney did the same when it decided not to continue licensing its properties to Netflix late-2019.  Disney also owns 66% of Hulu and will likely purchase the remaining 33% from Comcast/NBCUniversal by 2024.  Where Disney’s family-friendly content and FOX’s adult content cannot be on the same platform, Hulu will be the place for sports and the Disney-owned FOX content.  The lack of cooperation and new entrants will lead to more competition like the cable and satellite companies of old.  This may also lead to lower revenues.

Depending on whether consumers view Hulu and other streamers as a substitute, complimentary, or independent streaming service compared to Netflix, consumer subscriptions will be at risk.  Disney will own and control two major streaming platforms by 2024 (Hulu and Disney+), not to mention ESPN+ and ABC.  Netflix will be raising its prices to $13-16 per month.  Hulu is already cheaper than Netflix, as will be the Disney+ platform ($6.99 per month).  Apple+ will be $5 a month.  Amazon is $9 a month.  Hulu is free for Sprint customers and is bundled in other deals for students (Hulu, Showtime, and Spotify Premium for $4.99 a month).  Until AT&T figures out HBO pricing, the WarnerMedia streamer pricing is unknown.  Interestingly, Netflix prices around the world vary significantly.      

Disney has a massive content library, and with FOX, that much more.  Disney will be able to put price pressure on Netflix through its platforms and decrease demand where it offers great content for less.  Consumers cancelling their Netflix subscriptions may be a concern when Disney+ and Apple+ go live since the two together with free Hulu will likely include more content than Netflix and for the same price.  Amazon also has an advantage because Prime includes ecommerce benefits and is still welcoming in its practices of licensing content. 

Netflix is an innovative company, however, and may take the following approaches to keep up with the competition.  Here are three things Netflix needs to do to retain its market share and mitigate the loss of their pricing power.

1. Add more Content 

Netflix must keep up with the Joneses.  This could be done through live and classic sports content and/or continuing to pay high fees for licensing other studio content.  Netflix needs to be the one stop shop for all content like Amazon is to ecommerce. 

2. Look at Purchasing a Studio(s)

Lionsgate and smaller studios to own the content libraries.  Netflix and Paramount have already entered into a multi-movie deal. 

3. Look at Exclusively Licensing another Studio(s) Content

Comcast/NBCUniversal just purchased Sky News in the UK.  NBCUniversal has a massive entertainment library.  Comcast/NBCUniversal does not have a streamer and is about to give up its 33% control in Hulu.  Seems like a prime relationship, pun intended.  Viacom is looking at combining with CBS.  Maybe some synergy there.  New FOX is not looking at creating a streamer, but maybe their sports and news content would find a home on Netflix. 

Netflix has already begun purchasing movie theaters to control the entire distribution model, raising questions about how the United States Justice Department might view the matter.  Congress members on both sides of the isle are already circling the wagons while looking at the tech giants, while entertainment companies have done far more mergers and acquisitions of each other.  This likely also helps their awards season push by controlling the venue.  It could also be a liability.  

Netflix is the largest streamer by the subscription numbers, but challenges await. 

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