Reed Hastings, co-founder and CEO of Netflix, attends a meeting with French President Emmanuel Macron during the “Choose France” summit at the Chateau de Versailles, outside Paris, France, on January 20, 2020.
Benoit Tessier | Swimming pool | Reuters
The alleged plot of the streaming wars is as follows: Sick of losing customers and the relative market value of Netflix, the big media have shifted their outdated television-focused businesses to focus on subscription streaming services.
There is no exact start date for these “wars”, but on November 12, 2019, Disney launched Disney +, starting the traditional media attack on Netflix.
Since then, HBO Max from AT&T, Peacock from Comcast NBCUniversal, Paramount + from ViacomCBS, Discovery Discovery + and AMC + from AMC Networks have come to life as Netflix competitors.
So who was the big winner in all this new competition?
Netflix.
Since the launch of Disney +, Netflix shares have increased by over 87%. That dwarfs earn by any other media company in the same period of time.
Netflix reports earnings in the first quarter on Tuesday after the close of trading. Analysts expect earnings of $ 2.97 per share, up 89% from last year, on revenue of $ 7.13 billion, up 24%.
Netflix is the foundation
Increasing market value goes hand in hand with the addition of subscribers during the pandemic. In the first half of 2020, Netflix added 37 million new global customers. This was a record gain for the company, whose previous annual maximum was 28.6 million in 2018.
A lot of Americans believe that Netflix has the best original content among streaming services, according to a recent survey conducted by Morgan Stanley. Thirty-eight percent of survey respondents ranked it 1st among streamers – well ahead of Amazon Prime Video by 12%.
While streaming wars offer consumers more alternatives to Netflix, they are also consolidating Reed Hastings’ company as an anchor in many US households. If video streaming is now – or soon will be – the centerpiece of home entertainment, replacing cable television, Netflix will certainly be part of the typical diet of a household’s content.
Netflix spends all other streaming services on the content and already has over 200 million subscribers worldwide. Having this type of global coverage is a great selling point for creators who have a growing list of distribution partners.
“Our strategy is simple: if we can continue to improve Netflix every day to better delight our members, we can be their first choice for streaming entertainment,” Netflix wrote in its January shareholders’ letter. “Last year is proof of this approach. Disney + had a massive first year (87 million paid subscribers!) And we saw the largest year of growing membership in our history.”
The streaming wars have fueled a new competition for Netflix. But the bigger change was more existential – introducing video streaming as the dominant form of television, as the importance of cable television is slowly disappearing.
The consequence of this change is that consumers want Netflix more than ever.
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