In the world of streaming, Netflix (NFLX) is King. The entertainment giant has over 150 million subscribers worldwide. The company went public in 2002 and has grown considerable over the last few years. However, in their 3Q19 earnings results they missed analysts estimates regarding subscriber growth. Despite the company revenue increasing, profit fell by over 100 million. This brings us to some of the issues Netflix is facing. First is content, Netflix has spent a great deal of money on original content. Shows like Orange is the New Black and Stranger Things (season 3 was epic by the way), which Netflix creates, have brought in and kept subscribers happy, but according to the Wall Street Journal, the most watched show on Netflix is “The Office” which is owned by NBCUniversal. Which brings us to the second issue for Netflix. In order to keep subscriber growth increasing when they are losing popular content, Netflix has been burning money trying to create more original shows.
One of the biggest competitors for Netflix is Disney (DIS), who announced they are entering the streaming services in November 2019. With packages starting around $12.99 (the same price as standard Netflix subscription), Disney plans on taking a large bite out of Netflix’s business. According to Disney’s own website, the streaming services will include big names like Pixar, Marvel Studios and Star Wars (Disney News). The fatal flaw for Netflix is that they have one single revenue stream and since they are likely to lose their most popular shows, they have been adding debt to create more popular shows. Disney, on the other hand owns a large amount of content across many segments and has revenue streams to support it while it moves into streaming. If Netflix is to survive the onslaught of new competitors, it will have to start getting very creative unless they want to become the next Blockbuster Video.
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