Is Netflix Struggling With The Competition? – Part 2

27 Jun 2022 | Information, Latest News

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Hooshang Bakht

Savage & Palmer was started with a mission to make entrepreneurship easy. Our goal is to help business owners grow and scale without having to deal with the day-to-day stress of running a business. We specialize in providing services that help business owners grow their businesses, including search engine marketing (SEM), social media marketing (SMM), LinkedIn marketing, video production, accounts receivable (AR), accounts payable (AP), internal audit, VCFO, and recruitment. We have helped more than 500 brands grow their businesses. We work closely with the clients to understand their unique needs and develop customized strategies that deliver measurable results.

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Is Netflix Struggling With The Competition? – Part 1

Welcome to Part 2! Read on to find out who Netflix’s biggest competitors are, what they bring to the party, and what Netflix can do to survive, or even win, the Streaming Wars.

Here is a breakdown of what Netflix’s biggest competitors have, and how they are leveraging it:

Netflix Vs. Amazon

Amazon Prime Video is Netflix’s greatest competitor, with a gross revenue of $25.21 billion. Amazon Prime Video is the ideal online convenience and value offer. For medium and upper-class consumers (equally split between genders) with home computers or intelligent devices aged 18-44, it provides competitive personalised content based on language and regional preferences. While Amazon concentrates mostly on regional TV shows, Netflix offers a large library of worldwide and original films. In addition, despite having a Prime membership, Amazon requires you to pay to watch certain movies. Netflix restricts the quantity of offline downloads and account sharing, but Amazon does not.

Netflix Vs. Disney+

With $17 billion in annual revenue, Disney+ is another significant Netflix competitor. Regardless of the numerous choices available, Disney+ appeals to people’s emotional quotients and binds them to the brand. The programming on Disney Plus is currently aimed towards children aged 3 to 17 and their families, as well as older audiences. Netflix offers everything but the nostalgic recall of great tales and movies. Disney also owns some of the top movie franchises like the Marvel Cinematic Universe, and earns a lot of its revenue from movies like Star Wars, Ice Age, X-Men, Lion King, and Jungle Book, etc.

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Netflix Vs. YouTube

With yearly revenues of $19.8 billion, another Netflix competitor, YoutubeTV, is putting up a fight. Users of Youtube TV have access to over one billion videos. It allows the user to view their favourite episodes as soon as they air, as well as record them for free. It caters to people aged 18 to 49 and provides them with a variety of television channels, unique programming, and on-demand movies. Netflix has a large selection of movies, including its own exclusives, but it does not offer the ability to broadcast or record live television and is primarily targeted at adults aged 18 to 34.

Netflix Vs. HBO

With 69.4 million customers, annual earnings of $6.8 billion, and a global reach comprising 51 countries, HBO Max is building competition for Netflix in the coming years. HBO Max caters to older Gen X and Millennials between the ages of 25 and 44, whereas Netflix mostly caters to people between the ages of 18 and 34. While Netflix has basic, standard, and premium subscription levels, HBO Max just has one subscription package that is less expensive than Netflix premium but more expensive than the basic and standard plans. It also has some big movie franchises in its bag such as Harry Potter, Lord of the Rings, Scooby-Doo, etc.

Netflix Vs. Hulu

Hulu owns a big list of original content that adds $3.5 billion to its revenue yearly. While Netflix offers 4K material as part of a premium subscription, Hulu does it for free. Unlike Netflix, even the ad-free membership option on Hulu has advertisements. Hulu only permits offline downloads with the ad-free premium plans, but Netflix allows them with any subscription tier.

Important footnote: HBO and Disney are also pulling back contracts to air their shows on Netflix, slashing a huge portion of Netflix’s traffic. Disney might be releasing this content on its own platform i.e. Disney+, but there are speculations as regards HBO’s plans.

How will Netflix protect its throne?

Amazon, which is also generating a wide range of content, including several of its own original shows, is likely to be one of Netflix’s most potent adversaries in this future scenario. It, too, created a highly lauded series, “Transparent,” early on. It, too, is unconcerned about the cable bundle. It also generates income in excess of $100 billion, which neither the networks nor Netflix can match. Netflix may have a sizable war chest when compared to other networks, but it will still be outgunned in a confrontation with Amazon.

Netflix is counting on “unprecedented size” to preserve its dominance and start producing huge profits, according to Ball. This is where the initiative to build a global network which was unveiled at the Consumer Electronics Show in January comes in.

Regardless of how Netflix’s stock fares in the short term, the business might pursue a number of different ways to keep winning the streaming wars. Let’s take a closer look at them in the next sections.

Invest in new original content

Netflix’s economic model is primarily reliant on attracting new customers, who pay $9.99, $15.49, or $19.99 per month, up from $8.99, $13.99, or $17.99 per month last year, depending on the plan they choose.

Popular shows like “House of Cards,” “Bridgerton,” “Squid Game,” and “The Queen’s Gambit” have influenced popular culture, and Netflix desperately needs more hits like those to stand out in a saturated market, especially with competitors removing their own original content from the Netflix platform.

We also think it’s odd that Netflix hasn’t started broadcasting live sports, which is another wonderful way to draw in large and loyal audiences.

Its international expansion

Another path forward for Netflix could be ongoing expansion in overseas areas, especially when you consider how many people around the world still lack internet access.

Areas like Asia Pacific, Latin America, and EMEA present a huge opportunity for Netflix, especially as the company is facing increasing competition domestically.

Marketing Netflix’s original content to a global audience is one way the company can attract these international users. Shows like Squid Games, Money Heist, and Lupin may do wonders in other geographies, and these shows are already on the platform!

Netflix, however, will need to reconsider a few things and adapt to the changing tide. “Netflix is the king of invention, technology, and spin,” says Stephan Paternot, the co-founder and CEO of Slated, an online film funding marketplace. “They’ll be able to withstand the impending storm, but it won’t be pleasant.” Competitive services that come online over the next couple of years will very probably influence their subscriber growth, resulting in a significant drag on their stock price and the cost of the debt they’ve accumulated.”

3 learnings every business should take from Netflix’s journey

Because history repeats itself, keep in mind that whatever is occurring to a company now has either happened to the same company before or has happened to another company in a different domain. In this case, the 2007 equation between Netflix and Blockbuster is very similar to the 2021 equation between Netflix, Disney and the rest. These kinds of parallels will provide you a lot of insights into your company’s future prospects, and possible investment opportunities as well.

Even large corporations, such as Netflix, can experience vulnerabilities from time to time. And if you pay attention to how they react to it, you may be able to predict a company’s growth or decline long before it occurs.

The business ecosystem of the twenty-first century is becoming increasingly complex, with e-commerce enterprises now competing with entertainment companies. However, the nature of these strategic collaborations will create new strengths and vulnerabilities, and because all of this information is publicly available on the internet, it gives us the capacity to examine market nuances that only a few people can comprehend.

​​Will Netflix regain its mojo? It very certainly could, and possibly by the time the third season of Squid Game forces us to renew our subscription. But, it might potentially be so enormous that it doesn’t require the zeitgeist in the first place. Even if Netflix loses its mojo forever, there is a decent road map for how it can continue to dominate.

I’d say that, while Netflix is getting closer to filling the void left by CBS during the golden age of broadcast television. It appears to be the genuine heir to the throne, with a massive, devoted viewership. In the streaming wars, relevance will be a constant battle, but it will ultimately come down to who has the most viewers.

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