Netflix Finally Faces Competition, Tries To Pretend Otherwise

from the nothing-to-see-here dept

Netflix had a pretty good run there for a long while. Thanks to low prices and an innovative streaming system, the company simply hoovered up streaming video subscribers as the cable TV industry stumbled around in the dark, busy pretending the cord cutting phenomenon either wasn't real or would end once Millennials started procreating. As a result, there was a big long window where Netflix's only real competitor was a bunch of fairly terrible "me too" half assed offerings from the traditional broadcast and cable sector.

That was then, this is now. With cable giants finally figuring out this whole streaming thing (Comcast's Peacock, Dish's SlingTV, AT&T's HBO Max) after numerous face plants (Verizon's Go90, AT&T's HBOMaxUltraExtreme), and numerous movie studios and broadcasters going direct to consumer (Disney+, AppleTV+) Netflix is finally started to see its market share slowly eroded. In fact the company's latest earnings report indicates Netflix lost 430,000 subscribers in the US and Canada. Like clockwork, Netflix now has to turn from innovation to turf protection.

And like the countless companies before it, part of that process involves pretending that things aren't changing under their feet. During the company's earnings call for example, Netflix executives tried to pretend roaring competition wasn't the primary reason for the subscriber dip:

"In the past year and a half, Disney, Apple, WarnerMedia, Comcast and others have launched streaming platforms, and there are more than 100 streaming services for consumers to choose from, according to data company Ampere. Yet on a call for investors, executives dismissed the idea that competition was behind the weaker figures. “Does HBO or Disney... have a differential impact compared to the past? We’re not seeing that in the [data] we have,” said Reed Hastings, Netflix co-chief executive. “That gives us comfort.”

Sure, some of the headaches could stem from COVID-related chaos, but it's hard to just brush off the impact Disney+ and other popular services have had on Netflix growth. Hastings' denial amusingly parallels the cable industry's "nothing to see here" approach of the last decade. However interesting it is to watch startups try to disrupt a sector, I've always found it just as interesting to watch companies gain popularity and critical mass, then inevitably pivot away from innovation to protectionism, timidity, and turf protection (Microsoft in the early aughts, Google over the last five years).

Seeing whether Netflix has the chops to maintain supremacy in the face of competent competition should prove entertaining, starting with the company's foray into video game streaming. There's still a lot of obstacles for Netflix to overcome, including a flood of studio/broadcaster direct to consumer offerings, and telecom giants that are not only starting to field competent streaming competitors, but remain eager to use their monopolies over broadband to erect unfair and arbitrary competitive barriers (see: pointless broadband usage caps).

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Filed Under: competition, streaming
Companies: disney, netflix


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  • identicon
    Anonymous Coward, 26 Jul 2021 @ 6:10am

    Sadly, this kind of doublethink is practically required in the corporate world. Any negativity, however slight, could result in the stock price crashing.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 26 Jul 2021 @ 7:11am

      Re:

      What options do they have? And how vested are they? If they cash out early, they can just walk away.

      reply to this | link to this | view in chronology ]

    • icon
      ECA (profile), 26 Jul 2021 @ 12:55pm

      Re:

      Understand that strange think, about corps.
      Arnt they supposed to BUY BACK the stocks, in the end? Other wise they are a Long term loan, with very low interest.

      If the stock exchange were to ACT like it was supposed to. They would be required to Buy back shares.
      So, a Drop in the price of shares would be a welcome thing, NOT the stock going up to make MORE profit for those in the top wages, in the company when they SELL the stock.

      Its all a game.

      reply to this | link to this | view in chronology ]

  • icon
    Dan (profile), 26 Jul 2021 @ 6:25am

    If those other companies would have been smart...

    If those other companies would have been smart, they would have pooled all their offerings into one competing streaming service and completely steamrolled Netflix by now. But greed wins out. Market segmentation is king, and VPN services along with piracy, is going to have a robust year.

    reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 26 Jul 2021 @ 7:09am

      Re: If those other companies would have been smart...

      Really, all the major studios had to do is licence out content to whoever wanted it, any and every service. Let the services compete on reliability, functionality, etc., then no matter which service the customer used they'd get the same cut. But, they had to be greedy and fragment the market, and now Netflix is not only the best streaming experience for so many people, they're a competing movie/TV studio as well.

      reply to this | link to this | view in chronology ]

      • icon
        Dan (profile), 26 Jul 2021 @ 7:23am

        Re: Re: If those other companies would have been smart...

        That would have been a great option too. I could see hesitancy in doing that, as Netflix would have been [more of] an industry juggernaut. (And my skepticism says the government would have ultimately bitched. "ANTI-TRUST ISN'T ALLOWED, OUTSIDE OF TELECOM!")

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 26 Jul 2021 @ 8:12am

        Re: Re: If those other companies would have been smart...

        The thing is the studios and the services are more or less the same thing now. Its a Prisoner's Dilemma. The market as a whole would benefit from everyone cooperating, but each service individually is always better off keeping their own content exclusive. If you don't have exclusives you don't have customers. Everyone would go to another competitor that has all the stuff you do and then some.

        reply to this | link to this | view in chronology ]

        • icon
          PaulT (profile), 26 Jul 2021 @ 12:14pm

          Re: Re: Re: If those other companies would have been smart...

          On a consumer level, the best case scenario is " we pick a single venue and we get everything from that one place no matter who produced it".

          On a producer level, the best option is "if you want X, you have to come to us"

          In the real world, there will always be a battle between the two factions. The studios decided that the latter was more important, which is a shame because we almost got to that point, as we almost did with books, music, etc.

          "If you don't have exclusives you don't have customers. "

          An annoying fallacy, for sure.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 26 Jul 2021 @ 12:42pm

            Re: Re: Re: Re: If those other companies would have been smart..

            Yes, but the thing is even if we did get to that point, it wouldn't stay that way. The incentive would still be for studios to make something exclusive. To be able to say, "we have everything the others have, plus X."

            reply to this | link to this | view in chronology ]

            • icon
              PaulT (profile), 26 Jul 2021 @ 12:56pm

              Re: Re: Re: Re: Re: If those other companies would have been sma

              That's a certain way of thinking, but one that inevitably comes with incentive to piracy because people don't want to pay 2x what they usually pay to get the same plus one title. The market has already indicated they will stand for people paying 2-3 services to get what they want, if studio greed causes this to collapse or for their preferred partners not to rise to the top, that's on them

              reply to this | link to this | view in chronology ]

    • icon
      ECA (profile), 26 Jul 2021 @ 1:02pm

      Re: If those other companies would have been smart...

      Netflix= 1 company with lots of material to watch.

      'insert name here' is one company supplying ONLY that 1 companies material.

      As was mentioned, IF' all those other companies had worked together(wont happen in this life), they would Still have to compete with the prices Netflix has. ANd probably not work together in the end, ask Apple itunes, sat radio, others how many different contracts they deal with.

      Spending $?? on each channel, WONT kill Netflix. Belonging to 1 site that has it all, is great. Belonging to 2,3,4+ different systems, can be a real pain, UNLESS netflix does not have those videos.

      reply to this | link to this | view in chronology ]

  • icon
    PaulT (profile), 26 Jul 2021 @ 7:05am

    Seems to be a but overhyped to me, all things considered. They can't possible grow forever, no matter the demands of the market, and they did actually grow on an international level - many of which countries have the same competition from Disney, at least.

    "Seeing whether Netflix has the chops to maintain supremacy in the face of competent competition should prove entertaining"

    I'd rather see them not obsess over "supremacy" by flailing to retain a crown they held for so long because there was no competition, and concentrate on continuing to deliver a quality service. The company won't be #1 forever, but it seems like a major folly to obsess over a #1 spot that they only retained for so long due to there being little meaningful competition, rather than focus on how they deal with that competition - even if that innovation isn't necessarily enough to stay #1 on its own.

    reply to this | link to this | view in chronology ]

    • icon
      Dan (profile), 26 Jul 2021 @ 7:26am

      Re:

      I had an ex-wife that worked for Comcast. That first year they had a subscriber dip... LAYOFF. Hope Netflix doesn't follow the same path.

      reply to this | link to this | view in chronology ]

      • icon
        PaulT (profile), 26 Jul 2021 @ 12:20pm

        Re: Re:

        There's a lot of issues behind Comcast and their business practices among many different industries. Netflix are more narrow in their scope, but honestly you don't get to that size without someone thinking somewhere that the way to improve is to reduce overhead (which usually means staff). The saving grace here is that Netflix haven't actually had a subscriber dip, they actually increased internationally. But, I don't know enough about the way they're organised to tell if that affects people on the ground.

        Either way, the fact that other companies they used to licence content from have decided to join the streaming industry that they said would not be viable and then bullied their way into with exclusive licencing does not necessarily reflect badly on Netflix. What they do to combat the obvious fact that they have to compete against juggernauts who won't let them have the titles used to bully them is another question. I think it's too early to say yet, but in an industry where most customers will only pay for 2-3 options in a market where everyone's trying to section off their viewer base, the next innovation might be crucial.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 26 Jul 2021 @ 7:48am

    I'm not exactly sure how cable companies removing their most popular shows on Netflix and creating another monthly subscription fee is competition that is good for customers. This is the same problem as the EPIC store. The businesses are not competing on who can provide a better streaming platform, they're just trying to make people pay $10 a month to watch the show they yanked from Netflix. People are only going to get more frustrated as the amount of subscriptions need to watch or read what they want grows endlessly. Why waste time subscribing to 17 streaming services when it's just as easy as ever to borrow things.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 26 Jul 2021 @ 9:24am

      Re:

      The ongoing cableification of the streaming market.

      reply to this | link to this | view in chronology ]

    • icon
      Samuel Abram (profile), 26 Jul 2021 @ 11:15am

      Re:

      Fortunately, there are free ad-based streaming services (e.g. The Roku Channel, Tubi, Vudu Free, Peacock, etc.) which offer content without the need to pay.

      reply to this | link to this | view in chronology ]

      • icon
        PaulT (profile), 26 Jul 2021 @ 12:25pm

        Re: Re:

        "Fortunately, there are free ad-based streaming services (e.g. The Roku Channel, Tubi, Vudu Free, Peacock, etc.) which offer content without the need to pay."

        This might be an interesting aspect of the situation. Sure, people might decide to pay premium prices, but does everyone need them? Some people might decide they need the monthly subs, others might decide that there's enough things to see on the free services. Not everyone needs the latest titles, some might decide they need to catch up on Cannon's back catalogue or that they were happy with ads so long as they weren't asked to watch them on cable subs they paid full price for.

        People might just get used to the idea that if they wait a year it's basically free, with the fact that they have that choice being the key decider.

        reply to this | link to this | view in chronology ]

    • icon
      ECA (profile), 26 Jul 2021 @ 1:06pm

      Re:

      How long did it take Netflix, to setup everything, and understand the WAY things are on the net? YEARS.
      WHO among the Cable/ISP's understands the WHOLE story of what has been done to get Netflix working and running around the world?

      Only 1 group has that knowledge, the SERVER PROVIDERS, AROUND the world.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 26 Jul 2021 @ 7:50am

    NetFlix makes stuff now

    I would have dropped it a year ago, but others in the household have gotten hooked on some of their home-grown shows. If I were in showbiz I wouldn’t count them out.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 26 Jul 2021 @ 8:02am

    smaller oli here we come

    loved their Marvel stuff
    hated their pedo stuff - and dropped them because of it

    In the end, these streaming services will all boil down to a smaller oligopoly of options owned by Comcast, Disney, and Elon or something.

    reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 26 Jul 2021 @ 12:32pm

      Re: smaller oli here we come

      "hated their pedo stuff"

      You mean that single movie from France they added that was uncontroversial in its home country but got a lot of bad press due to a woefully misjudged ad campaign?

      "In the end, these streaming services will all boil down to a smaller oligopoly of options owned by Comcast, Disney, and Elon or something."

      The options might be reduced due to competition, but I think that competition will continue. Also, I am laughing slightly at the idea that Musk would go into something as trivial as streaming video. There's nothing for him to attach his ego to, and it's an established space.

      reply to this | link to this | view in chronology ]

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  • icon
    techflaws (profile), 26 Jul 2021 @ 9:12am

    Seeing whether Netflix has the chops to maintain supremacy in
    the face of competent competition should prove entertaining

    Or not, given the abysmal material they've been putting out for quite some time now. Honestly, what BS won't they greenlight?

    reply to this | link to this | view in chronology ]

    • icon
      Samuel Abram (profile), 26 Jul 2021 @ 11:12am

      Re:

      Yeah, that's why I rarely watch anything new on Netflix. On the one hand, they take chances; on the other hand, to them "taking chances" means "throwing everything at the wall and seeing what sticks".

      reply to this | link to this | view in chronology ]

      • icon
        PaulT (profile), 26 Jul 2021 @ 12:29pm

        Re: Re:

        "to them "taking chances" means "throwing everything at the wall and seeing what sticks""

        I'm finding there's a good amount that sticks, and the stuff that does wouldn't have been produced by a "normal" network 20 years ago. Then, the beauty of the current situation is that nobody's forcing you to stick with them if you decide another service is better for you.

        reply to this | link to this | view in chronology ]

        • icon
          Samuel Abram (profile), 26 Jul 2021 @ 12:59pm

          Re: Re: Re:

          the beauty of the current situation is that nobody's forcing you to stick with them if you decide another service is better for you.

          I completely agree with this.

          reply to this | link to this | view in chronology ]

          • icon
            PaulT (profile), 26 Jul 2021 @ 1:05pm

            Re: Re: Re: Re:

            It's the main saving grace here. the industry standard is that you're not suckered into regular payments and you can cancel even after a free trial, which many allow you to do over and over. If there was any restrictive contract it would be problematic, but if people want to cancel Netflix one month then return when the show they want to watch is on, so be it. I won't understand that narrow form of taste, but go for it.

            reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 26 Jul 2021 @ 12:28pm

      Re:

      "Or not, given the abysmal material they've been putting out for quite some time now."

      I'm always intrigued by comments like this. I've been unable to keep up with the stuff they've been adding. Maybe it's because I have a love for random genre cinema and I don't mind it if something is not in English? Even when something doesn't hit the mark (looking at you, Resident Evil: Infinite Darkness), I can understand why it was there and that I'd prefer that to season 378 of some "reality" show.

      reply to this | link to this | view in chronology ]


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