12 ms·

I'm gonna attempt to break this down: - Netflix has 5-6 Billion USD free cash flow, and because they got what debt they do have under favorable terms, they are

I'm gonna attempt to break this down: - Netflix has 5-6 Billion USD free cash flow, and because they got what debt they do have under favorable terms, they are positioned to retain most of that free cash flow - Disney, Comcast (Peacock), CBS/Viacom and other media corporations are saddled with debt, and are all losing money on their own independent streaming businesses. Likely untenable in their shareholder model - Therefore, Netflix needs to do what it can to retain / attract subscribers, but essentially can wait until the other services have to give up due to cost In a nutshell, Netflix is poised to play more long game, due to cost structures of their competitors. so fair, sounds good, but it assumes the boards / leadership of these companies won't also play a long game, seeing some sort of profitability horizon is they cannibalize their existing businesses for sticky services (like streaming). I could see Disney doing this, to some extent, with their cable TV channels and movies. I'm less bullish on Comcast/NBC, CBS/Viacom or really any other media company being able to do this, simply because they don't have the "staying power" Disney does. This also fails to account for the strength of HBO Max (very strong sub numbers)

b112 4y ago
HBO / Netflix merger FTW?
- exhilaration 4y ago
  HBO is owned by Warner Bros. Discovery, likely one of their most valuable assets. I can't see them giving it up.
  - de_keyboard 4y ago
    Indeed. Feels like vast majority of the TV worth watching is HBO. I value my time so I'd rather have access to a few HBO series / year than an endless sea of A/B dross.
- no_wizard 4y ago
  That would now mean buying out WarnerMedia Discovery Group which just merged, and WarnerMedia was the owner of HBO before that. AT&T was forced to divest at least. Never the less, that would be a massive acquisition, they carry alot of debt.
  - e40 4y ago
    $53B in debt at HBO. Crazy.
- devmunchies 4y ago
  I think Netflix is better served getting exclusive rights to top IP that differentiates them from others. They don't have many memorable brands that people would buy a T-Shirt for. Like a $5B deal for exclusive streaming rights to all Nintendo IP (think live action Zelda, animated Mario Kart series for kids, Metroid series for adults, etc).
  - CSMastermind 4y ago
    > think live action Zelda Honestly an animated Zelda would be better. You could even do each season in a different art style as a callback to the games.
zamadatix 4y ago
What I don't understand is how e.g. Disney+ is losing so much money. It's Disney's content, has an enormous userbase, and somehow is bleeding billions?
- bcrosby95 4y ago
  It's extremely cheap.
- no_wizard 4y ago
  Marketing. I also suspect that alot of Disney's most core userbase don't make up enough volume to make this profitable. I consider myself an ardent Star Wars & Marvel fan and I just couldn't keep up anymore, so I axed Disney+. Netflix still drops enough documentaries that I keep it around.
  - chongli 4y ago
    Yeah I think there’s a big Marvel and Star Wars fatigue factor that isn’t talked about enough. Only the hardest of the hardcore fans can keep up with all that stuff. Regular people and casual fans pretty much only see the big blockbuster movies and maybe watch the Mandalorian to see what all the baby Yoda memes are all about.
- darth_avocado 4y ago
  > It’s Disney’s content That is partly the problem. You spend hundreds of millions to make blockbuster movies and then release it on Disney+ in a few months for free (or sometimes directly). That costs money. Add to that over reliance on only Disney content creates two problems: 1. You can’t have enough new content every month, subscribers therefore don’t keep the subscription year round. 2. You have to pay money to create content. Vs the ability to buy content for cheap or add it for a few months. On top of that, Disney overseas also includes live sports in their packages which can get expensive.
  - ghaff 4y ago
    >You can’t have enough new content every month, subscribers therefore don’t keep the subscription year round. I suspect that, in addition to ad-supported tiers, we'll see more annual subscriptions or at least subscriptions where annual is sufficiently cheaper on a monthly basis that it's essentially an offer a lot of people can't refuse.
matwood 4y ago
Good summary. Couple notes/IMOs... HBO Max is great, but it's tied to a terrible management/company anchor. Rumor is now they are going to drop the trusted HBO brand smh. Netflix is well positioned, but a player like Disney is also setup to acquire other streamers as they fall over from cost structure issues. I think we're about to see mass consolidation. Finally, I'm kind of sad that I think the content 'golden era' is likely coming to a close. Cheap money and the fighting for subs led to more money being spent on content relative to what subs paid than at any other point in history. If nothing new was ever made again, I think the list my wife and I already have to watch is longer than time we have left living.
- no_wizard 4y ago
  On the content of HBO Max: Its been very hit or miss for me with HBO Max originals. HBO (they do brand them differently) originals are still stellar, for the most part. If the new Velma show is any indicator of what HBO Max wants to do as run of the mill content though, I'm wondering how long it'll hold up as a premium streaming service. Warner didn't even unlock their entire backlog of Looney Toons cartoons on their own streaming service, which would bolster its brand and make it more sticky
  - viciousvoxel 4y ago
    FWIW my understanding is that WB withholding the Looney Tunes backlog is entirely due to the fact that there's a lot of problematic (e.g. racist, sexist) material in there that they're understandably worried about. I completely agree with you otherwise.
    - no_wizard 4y ago
      Disney+ got around this problem by just adding disclaimers to the content. They did this for all their questionable content, and if people reported it (IE they missed something) they were quick to add it. It seems Disney+ isn't scarred by this at all (it definitely doesn't dominate the public conversation around it), so perhaps there is a lead in here?
jedberg 4y ago
> This also fails to account for the strength of HBO Max (very strong sub numbers) It's important to note that those numbers are very juiced. For example, my HBOMax comes for free with my AT&T internet (still). I've never paid them a dime directly. When they first started they were basically giving away accounts like crazy to get growth. I think they also gave free accounts to their cable subscribers. So while their numbers look really big on paper they aren't getting a lot of income from those subscribers.
- ribosometronome 4y ago
  Netflix comes free with T-Mobile Magenta plans, I think Comcast includes some sort of premium Peacock subscription. I don't know that AT&T bundling it would be much different than the other services bundling, would it?
  - deleted 4y ago
    [deleted]
  - cptskippy 4y ago
    I think the difference might be that to leverage the Netflix through T-Mobile you have to actively sign up for Netflix or switch to T-Mobile being the payment processor. Where as with the AT&T/HBOMax deal, you just login to HBOMax with your AT&T credential. Interestingly, we're not on Magenta but one of the earlier plans so the OnUs benefit is for the HD teir of Netflix. As I said above, T-Mobile becomes the payment processor on the account so when I upgraded to 4K my T-Mobile bill went up a couple bucks to account for the difference.
- lotsofpulp 4y ago
  ATT’s grandfathered mobile plans including HBO Max are a ripoff ever since they sold it to Discovery. You effectively are paying ~$15+$5 per line per month for 1 account of HBO Max compared to the current ATT plans offered to customer. I have 6 lines on my ATT Unlimited Premium Plan (the most expensive retail plan), and the monthly cost dropped by $60 by removing HBO max and switching to the new plans. It is probably cheaper just to buy directly at HBOMax.com See the “new” ATT prices, all without HBO Max (couple years old now maybe?) https://www.att.com/plans/unlimited-data-plans/ https://www.att.com/plans/unlimited-data-plans/
pastor_bob 4y ago
I can see them 100% getting into podcasting and picking up Joe Rogan when his contract with Spotify ends.
scarface74 4y ago
The bear case for Netflix is once again the “DropBox problem”. Streaming services is becoming a feature not a product. When Disney creates a movie. It can monetize the movie across its entire “flywheel” - movie theatres, video on demand, licensing to third parties, toys, theme parks etc. It’s streaming content has already made a billion in the box office before it ever hits streaming. Streaming is additive. Netflix paid millions of dollars just for the rights to the “Knives Out” sequel for instance only to make a pittance in limited release and then go to streaming. The same is true for the other players. That’s not even to mention Apple, Amazon and Google who are playing a completely different game.
- flyingpenguin 4y ago
  I think Google quit.
  - scarface74 4y ago
    Google has YouTube live and just outbid everyone to get the (American) football deal that DirecTV use to have. Google is playing a slightly different game.
lubujackson 4y ago
Seems like the logical endgame is Netflix buying up and aggregating these legacy content producer/channels, possibly piecemeal. There are too many walled gardens right now and they will likely into 3 or 4 key players (say Netflix, HBO and Disney) with everyone else getting gobbled up. Then everyone has 3 channels on their TVs and we start the explode/aggregate cycle again, just like what happens to banks and telcos.
karaterobot 4y ago
> - Therefore, Netflix needs to do what it can to retain / attract subscribers, but essentially can wait until the other services have to give up due to cost Good summary. Worth noting as well that he spends a lot of time in the article drawing the historical parallel to Blockbuster. The lesson is that Netflix has been in this situation before, of waiting for its competition to punch themselves out. Personally, I think it's impossible to really predict the future for stuff like this, but it's an interesting read.
treis 4y ago
>- Netflix has 5-6 Billion USD free cash flow, and because they got what debt they do have under favorable terms, they are positioned to retain most of that free cash flow This is a bit off. They had 1.6 billion in FCF in 2022 & project 3 billion for 2023: https://s22.q4cdn.com/959853165/files/doc_financials/2022/q4/FINAL-Q4-22-Shareholder-Letter.pdf https://s22.q4cdn.com/959853165/files/doc_financials/2022/q4... That said, to me Netflix feels like it is lagging. Not enough to really hurt subscriber numbers yet. But feels like it's stuck in a local minima of A/B testing. Like they've driven me to the line of canceling. Which is good for them because I haven't yet but risky because Netflix is more a habit/default for me these days. Pretty close to canceling and not sure what would draw me back if I did.
- horsawlarway 4y ago
  They lost me this year. I had been a subscriber for 12 years. Between the ads and the complete inability to let a show run more than 2 seasons unless it's a global hit... I'm no longer interested. I've had a kid - and my viewing habits have changed. I can't always watch a show right when it drops. The reality of my life is that I have other things going on, and I rarely have 10+ hours of uninterrupted time. But now... by the point I have time to watch a show, more often than not Netflix has already announced its cancellation, and I have zero interest in a catalog of dead shows. None. Nadda. My take is that Netflix is hot fucking garbage at determining the quality of their own shows, and that really - they don't have the creative side down at all. It's too much focus on the stats, and timelines that are too short. Some of the most widely watched shows in history had fairly lackluster first seasons (see: Parks & Rec, The Office, Friends). Netflix is busy killing off everything that's not a sizzle in the pan. But those flare up and burn out. They need the slow burn shows that grow into their own - and they've ruthlessly slaughtered them all because the numbers aren't great at first.
  - skydhash 4y ago
    I dont have a kid, but between work, chores, and other hobbies, I can only have 1 or 2 hours a day to watch anything. I can only slot a movie or a single episode within that time frame. Also, it’s something I do together with my partner so we always pick something that suits us both. And our backlog is getting bigger as we are adding older movies. The cancellation of 1899 was a big blow for me. It’s the kind of show you can’t really binge watch as it requires focus to really follow what’s going on. And I think it would have grown its audience organically over time.
publicola1990 4y ago
What about the state of affairs in emerging markets, which are likely going to be bigger revenue source than US/Europe in the not too distant future? Also what about (live) sports coverage? Does Netflix have a strategy there? For many subscribers it is appealing if their streaming service carries sports coverage.
- scarface74 4y ago
  The ARPU is a lot smaller and the article even calls out that different markers want local content meaning that content costs will also grow.
  - publicola1990 4y ago
    ARPU could be smaller but the user volumes would be much higher. In absolute terms it could be a significant portion of revenue. Netflix perhaps is not doing as well in these markets, presently. There are reports that Netflix is doing badly in India, for example, which is a massive potential market.
    - scarface74 4y ago
      Revenue - yes Profit - no
BiteCode_dev 4y ago
Unlike netflix, Disney+ has a good incentive to never become profitable. It pays enormous licensing fees to its parent company. This means the profits flows to there, and they don't pay a cent of taxes. Now you are going to say, but doesn't "The Walt Disney Company", the parent of Disney+, then pay all the taxes? No, because this company is located in Delaware, which means it's virtually exempt of taxes as long as it makes only money from activities outside of Delaware. Which is does, since it's only selling IP to other companies, like the entity managing Disney+ which has it's headquarters in California.
- tzs 4y ago
  That might make it virtually exempt from Delaware taxes, but what about Federal taxes?
  - BiteCode_dev 4y ago
    They still have to pay it, but skipping on the state taxe an is already a huge break, espacially since no vat is paid in the transfert.
kwanbix 4y ago
I think that in the long term needs to merge with someone with great content.
xwolfi 4y ago
Is HBO max that big? I only hear about it from time to time, it feels very English-language. I have 2 netflix subs I share between my Chinese and French family and I admit Disney+ has a huge advantage for kids stuff I couldnt get anywhere else, so they'll likely last.
- chadlavi 4y ago
  Unclear what the perception of HBO is outside the US, but HBO is historically _the_ prestige television brand, and now they have a pretty good catalog of stuff that wasn't originally on HBO as well. It seems like Warner is hell-bent on ruining HBO Max though.
skrowl 4y ago
I've talked with several of my friends about this. EVERYONE was universally willing to pay Netflix their monthly sub when all the studios just sold their content to Netflix. NO ONE has subscribed to all of Disney+, Apple+, Paramount+, Peacock, etc. in the new everyone-built-their-own-netflix era. They're all either making do with less content or sailing the high seas mateys yo ho. In many cases they've even DROPPED Netflix. I don't see how the current over a dozen streaming media provider status quo stands for much longer. Some (many?) are going to have to fail before everyone gets pissed off and goes elsewhere for their entertainment.
- tzs 4y ago
  I don't know how big a factor this is, but note that some of those have bundling deals with other services. For people that happen to use those other services this can as a side effect greatly reduce the annoyance of the things one wants to watch being spread over different non-free services. I have Hulu as part of my Spotify subscription. I have Peacock Premium as part of Xfinity internet. I have Paramount+ as part of Walmart+. I have Amazon Prime Video as part of Amazon Prime. Some T-Mobile plans include Netflix and Apple TV+.
  - asdff 4y ago
    For a lot of people I know their bundling deal is just sharing passwords with friends and family.
nostromo 4y ago
The tech part of streaming no longer matters and Netflix is in serious trouble due to their lack of quality content. I'm no fan of Disney, but you have to give it to Bob Iger. He just paid out the nose to buy every piece of valuable IP: Pixar, Lucasfilm, Marvel, Fox, even Jim Henson. The amount of content they now own is insane. Everything from Sunny in Philadelphia to the Muppet show to Alien to Avatar to The Simpsons to Starwars. It's nuts... you can't throw a dead cat in Hollywood without hitting Disney IP. Meanwhile Netflix makes something worth streaming every year or two, if that.
- runako 4y ago
  > Netflix is in serious trouble due to their lack of quality content. People say this often, but I have never seen it manifested in a viewership chart. Just using Nielsen data as an example, Netflix absolutely dominates the Top 10 chart, with 7/10 of the programs: https://www.nielsen.com/top-ten/ https://www.nielsen.com/top-ten/ Anecdotally, when traveling outside the US, Netflix & Disney are really the only providers I have seen have any kind of footprint. Is there any data to back up the "content quality" complaint, or is it just a personal preference?
  - vlunkr 4y ago
    The subscriber count continues to grow, so it seems like the content is fine. Or at least not so bad that people are unsubscribing. It seems to me that Netflix still has the most generally appealing content. Yeah Disney has some of the biggest names, but unless you 1. have young kids or 2. are a huge, not burnt-out Star Wars or Marvel fan, Disney+ is a pretty poor service. Most of the other services fall somewhere else in the middle of that spectrum.
- chadlavi 4y ago
  I agree with you, but don't underestimate how many people just want to leave The Office or something similar running in the background for hours and are willing to pay Netflix for that.
- hintymad 4y ago
  > Netflix is in serious trouble due to their lack of quality content. I feel the opposite. Marvel's content are getting really tiring now. Superheroes with superior technologies choosing primitive societal and political structures really turned me off. Not enough great action flicks, or binge-worthy dramas like Oz and Strange Things. Not enough international hit shows. Not enough old catalogs.
indigodaddy 4y ago
“Therefore, Netflix needs to do what it can to retain / attract subscribers, but essentially can wait until the other services have to give up due to cost” Much as they did with Blockbuster as he described in the article, correct?
silisili 4y ago
I don't understand why every single company needs to maintain their own. And there's more than what's listed of course, Paramount, Hulu, and whatever that new one is with Lifetime. It seems like at some point they'd rally behind whoever has the best interface and willing to accept deals - probably Hulu. Just charge for access to the content and forget about doing your own CDN and app dealings?
- papercrane 4y ago
  I don't think the media companies are capable of cooperating on a platform like that. You mention Hulu which I think is a great example of that model failing. Hulu was originally a intended to be that kind of platform, and has at times included investment from ABC, NBC, FOX, and Time Warner. Now Disney owns a majority share in it and it's a brand under Disney's streaming services, and I think would like to just fold it into Disney+, but they'd need to make some sort of deal with Comcast for their minority share.
lvl102 4y ago
Netflix is valued as tech but it’s no longer tech. Once you recalibrate that you can easily see where the company is headed. It’s not going to be pretty. They relied on the Koreans (among others) for cheap shows but that’s not going to last long.
user_named 4y ago
The competition is never going to give up on streaming.
LatteLazy 4y ago
Bob Iger addressed this on the a16z podcast a few weeks back. He said 2 things really: * he thinks that content will beat out distribution every single time. And Disney has content Netflix doesn't and cannot get (think of Disneys huge catalogue and IP collections) * he said when he went to the board and proposed that they (a) give up a huge revenue stream and (b) spend a tonne of money building their own streaming service, he expected it to be a hard battle. He thought it would be very hard to convince investors to look at anything beyond the effect on the next quarter financials. Instead, once they heard the case, they demanded he actually go faster, spend more and be more aggressive. He said (I have not checked) that when they announced the move, the stock price went UP... https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5zaW1wbGVjYXN0LmNvbS9KR0UzeUMwVg/episode/MTQyOGZmOGMtMDY0NC00MWQ1LWIwY2UtZWQ0ODdiNGFmN2Ey?hl=en-GB&ved=2ahUKEwjx9cSKkt78AhUWiVwKHdWlAR0QjrkEegQIBhAF&ep=6 https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5zaW1wbGV... Personally I think he made a pretty good case that content distributors were basically commodities and were priced as such (you get low margins). Bit content creators/owners were in a non-competitive position and so had much higher margins and better long term prospects. I guess in a way, we are back to "Netflix has to become HBO before HBO can become Netflix". Can Netflix use it's huge cash pile to build/acquire enough content to become Disney-like before Disney can build enough infrastructure/customer base to be Netflix?

b112 4y ago

HBO / Netflix merger FTW?

exhilaration 4y ago
HBO is owned by Warner Bros. Discovery, likely one of their most valuable assets. I can't see them giving it up.
- de_keyboard 4y ago
  Indeed. Feels like vast majority of the TV worth watching is HBO. I value my time so I'd rather have access to a few HBO series / year than an endless sea of A/B dross.
no_wizard 4y ago
That would now mean buying out WarnerMedia Discovery Group which just merged, and WarnerMedia was the owner of HBO before that. AT&T was forced to divest at least. Never the less, that would be a massive acquisition, they carry alot of debt.
- e40 4y ago
  $53B in debt at HBO. Crazy.
devmunchies 4y ago
I think Netflix is better served getting exclusive rights to top IP that differentiates them from others. They don't have many memorable brands that people would buy a T-Shirt for. Like a $5B deal for exclusive streaming rights to all Nintendo IP (think live action Zelda, animated Mario Kart series for kids, Metroid series for adults, etc).
- CSMastermind 4y ago
  > think live action Zelda Honestly an animated Zelda would be better. You could even do each season in a different art style as a callback to the games.

zamadatix 4y ago

What I don't understand is how e.g. Disney+ is losing so much money. It's Disney's content, has an enormous userbase, and somehow is bleeding billions?

bcrosby95 4y ago
It's extremely cheap.
no_wizard 4y ago
Marketing. I also suspect that alot of Disney's most core userbase don't make up enough volume to make this profitable. I consider myself an ardent Star Wars & Marvel fan and I just couldn't keep up anymore, so I axed Disney+. Netflix still drops enough documentaries that I keep it around.
- chongli 4y ago
  Yeah I think there’s a big Marvel and Star Wars fatigue factor that isn’t talked about enough. Only the hardest of the hardcore fans can keep up with all that stuff. Regular people and casual fans pretty much only see the big blockbuster movies and maybe watch the Mandalorian to see what all the baby Yoda memes are all about.
darth_avocado 4y ago
> It’s Disney’s content That is partly the problem. You spend hundreds of millions to make blockbuster movies and then release it on Disney+ in a few months for free (or sometimes directly). That costs money. Add to that over reliance on only Disney content creates two problems: 1. You can’t have enough new content every month, subscribers therefore don’t keep the subscription year round. 2. You have to pay money to create content. Vs the ability to buy content for cheap or add it for a few months. On top of that, Disney overseas also includes live sports in their packages which can get expensive.
- ghaff 4y ago
  >You can’t have enough new content every month, subscribers therefore don’t keep the subscription year round. I suspect that, in addition to ad-supported tiers, we'll see more annual subscriptions or at least subscriptions where annual is sufficiently cheaper on a monthly basis that it's essentially an offer a lot of people can't refuse.

matwood 4y ago

Good summary. Couple notes/IMOs... HBO Max is great, but it's tied to a terrible management/company anchor. Rumor is now they are going to drop the trusted HBO brand smh. Netflix is well positioned, but a player like Disney is also setup to acquire other streamers as they fall over from cost structure issues. I think we're about to see mass consolidation. Finally, I'm kind of sad that I think the content 'golden era' is likely coming to a close. Cheap money and the fighting for subs led to more money being spent on content relative to what subs paid than at any other point in history. If nothing new was ever made again, I think the list my wife and I already have to watch is longer than time we have left living.

no_wizard 4y ago
On the content of HBO Max: Its been very hit or miss for me with HBO Max originals. HBO (they do brand them differently) originals are still stellar, for the most part. If the new Velma show is any indicator of what HBO Max wants to do as run of the mill content though, I'm wondering how long it'll hold up as a premium streaming service. Warner didn't even unlock their entire backlog of Looney Toons cartoons on their own streaming service, which would bolster its brand and make it more sticky
- viciousvoxel 4y ago
  FWIW my understanding is that WB withholding the Looney Tunes backlog is entirely due to the fact that there's a lot of problematic (e.g. racist, sexist) material in there that they're understandably worried about. I completely agree with you otherwise.
  - no_wizard 4y ago
    Disney+ got around this problem by just adding disclaimers to the content. They did this for all their questionable content, and if people reported it (IE they missed something) they were quick to add it. It seems Disney+ isn't scarred by this at all (it definitely doesn't dominate the public conversation around it), so perhaps there is a lead in here?

jedberg 4y ago

> This also fails to account for the strength of HBO Max (very strong sub numbers) It's important to note that those numbers are very juiced. For example, my HBOMax comes for free with my AT&T internet (still). I've never paid them a dime directly. When they first started they were basically giving away accounts like crazy to get growth. I think they also gave free accounts to their cable subscribers. So while their numbers look really big on paper they aren't getting a lot of income from those subscribers.

ribosometronome 4y ago
Netflix comes free with T-Mobile Magenta plans, I think Comcast includes some sort of premium Peacock subscription. I don't know that AT&T bundling it would be much different than the other services bundling, would it?
- deleted 4y ago
  [deleted]
- cptskippy 4y ago
  I think the difference might be that to leverage the Netflix through T-Mobile you have to actively sign up for Netflix or switch to T-Mobile being the payment processor. Where as with the AT&T/HBOMax deal, you just login to HBOMax with your AT&T credential. Interestingly, we're not on Magenta but one of the earlier plans so the OnUs benefit is for the HD teir of Netflix. As I said above, T-Mobile becomes the payment processor on the account so when I upgraded to 4K my T-Mobile bill went up a couple bucks to account for the difference.
lotsofpulp 4y ago
ATT’s grandfathered mobile plans including HBO Max are a ripoff ever since they sold it to Discovery. You effectively are paying ~$15+$5 per line per month for 1 account of HBO Max compared to the current ATT plans offered to customer. I have 6 lines on my ATT Unlimited Premium Plan (the most expensive retail plan), and the monthly cost dropped by $60 by removing HBO max and switching to the new plans. It is probably cheaper just to buy directly at HBOMax.com See the “new” ATT prices, all without HBO Max (couple years old now maybe?) https://www.att.com/plans/unlimited-data-plans/ https://www.att.com/plans/unlimited-data-plans/

pastor_bob 4y ago

I can see them 100% getting into podcasting and picking up Joe Rogan when his contract with Spotify ends.

scarface74 4y ago

The bear case for Netflix is once again the “DropBox problem”. Streaming services is becoming a feature not a product. When Disney creates a movie. It can monetize the movie across its entire “flywheel” - movie theatres, video on demand, licensing to third parties, toys, theme parks etc. It’s streaming content has already made a billion in the box office before it ever hits streaming. Streaming is additive. Netflix paid millions of dollars just for the rights to the “Knives Out” sequel for instance only to make a pittance in limited release and then go to streaming. The same is true for the other players. That’s not even to mention Apple, Amazon and Google who are playing a completely different game.

flyingpenguin 4y ago
I think Google quit.
- scarface74 4y ago
  Google has YouTube live and just outbid everyone to get the (American) football deal that DirecTV use to have. Google is playing a slightly different game.

lubujackson 4y ago

Seems like the logical endgame is Netflix buying up and aggregating these legacy content producer/channels, possibly piecemeal. There are too many walled gardens right now and they will likely into 3 or 4 key players (say Netflix, HBO and Disney) with everyone else getting gobbled up. Then everyone has 3 channels on their TVs and we start the explode/aggregate cycle again, just like what happens to banks and telcos.

karaterobot 4y ago

> - Therefore, Netflix needs to do what it can to retain / attract subscribers, but essentially can wait until the other services have to give up due to cost Good summary. Worth noting as well that he spends a lot of time in the article drawing the historical parallel to Blockbuster. The lesson is that Netflix has been in this situation before, of waiting for its competition to punch themselves out. Personally, I think it's impossible to really predict the future for stuff like this, but it's an interesting read.

treis 4y ago

>- Netflix has 5-6 Billion USD free cash flow, and because they got what debt they do have under favorable terms, they are positioned to retain most of that free cash flow This is a bit off. They had 1.6 billion in FCF in 2022 & project 3 billion for 2023: https://s22.q4cdn.com/959853165/files/doc_financials/2022/q4/FINAL-Q4-22-Shareholder-Letter.pdf https://s22.q4cdn.com/959853165/files/doc_financials/2022/q4... That said, to me Netflix feels like it is lagging. Not enough to really hurt subscriber numbers yet. But feels like it's stuck in a local minima of A/B testing. Like they've driven me to the line of canceling. Which is good for them because I haven't yet but risky because Netflix is more a habit/default for me these days. Pretty close to canceling and not sure what would draw me back if I did.

horsawlarway 4y ago
They lost me this year. I had been a subscriber for 12 years. Between the ads and the complete inability to let a show run more than 2 seasons unless it's a global hit... I'm no longer interested. I've had a kid - and my viewing habits have changed. I can't always watch a show right when it drops. The reality of my life is that I have other things going on, and I rarely have 10+ hours of uninterrupted time. But now... by the point I have time to watch a show, more often than not Netflix has already announced its cancellation, and I have zero interest in a catalog of dead shows. None. Nadda. My take is that Netflix is hot fucking garbage at determining the quality of their own shows, and that really - they don't have the creative side down at all. It's too much focus on the stats, and timelines that are too short. Some of the most widely watched shows in history had fairly lackluster first seasons (see: Parks & Rec, The Office, Friends). Netflix is busy killing off everything that's not a sizzle in the pan. But those flare up and burn out. They need the slow burn shows that grow into their own - and they've ruthlessly slaughtered them all because the numbers aren't great at first.
- skydhash 4y ago
  I dont have a kid, but between work, chores, and other hobbies, I can only have 1 or 2 hours a day to watch anything. I can only slot a movie or a single episode within that time frame. Also, it’s something I do together with my partner so we always pick something that suits us both. And our backlog is getting bigger as we are adding older movies. The cancellation of 1899 was a big blow for me. It’s the kind of show you can’t really binge watch as it requires focus to really follow what’s going on. And I think it would have grown its audience organically over time.

publicola1990 4y ago

What about the state of affairs in emerging markets, which are likely going to be bigger revenue source than US/Europe in the not too distant future? Also what about (live) sports coverage? Does Netflix have a strategy there? For many subscribers it is appealing if their streaming service carries sports coverage.

scarface74 4y ago
The ARPU is a lot smaller and the article even calls out that different markers want local content meaning that content costs will also grow.
- publicola1990 4y ago
  ARPU could be smaller but the user volumes would be much higher. In absolute terms it could be a significant portion of revenue. Netflix perhaps is not doing as well in these markets, presently. There are reports that Netflix is doing badly in India, for example, which is a massive potential market.
  - scarface74 4y ago
    Revenue - yes Profit - no

BiteCode_dev 4y ago

Unlike netflix, Disney+ has a good incentive to never become profitable. It pays enormous licensing fees to its parent company. This means the profits flows to there, and they don't pay a cent of taxes. Now you are going to say, but doesn't "The Walt Disney Company", the parent of Disney+, then pay all the taxes? No, because this company is located in Delaware, which means it's virtually exempt of taxes as long as it makes only money from activities outside of Delaware. Which is does, since it's only selling IP to other companies, like the entity managing Disney+ which has it's headquarters in California.

tzs 4y ago
That might make it virtually exempt from Delaware taxes, but what about Federal taxes?
- BiteCode_dev 4y ago
  They still have to pay it, but skipping on the state taxe an is already a huge break, espacially since no vat is paid in the transfert.

kwanbix 4y ago

I think that in the long term needs to merge with someone with great content.

xwolfi 4y ago

Is HBO max that big? I only hear about it from time to time, it feels very English-language. I have 2 netflix subs I share between my Chinese and French family and I admit Disney+ has a huge advantage for kids stuff I couldnt get anywhere else, so they'll likely last.

chadlavi 4y ago
Unclear what the perception of HBO is outside the US, but HBO is historically _the_ prestige television brand, and now they have a pretty good catalog of stuff that wasn't originally on HBO as well. It seems like Warner is hell-bent on ruining HBO Max though.

skrowl 4y ago

I've talked with several of my friends about this. EVERYONE was universally willing to pay Netflix their monthly sub when all the studios just sold their content to Netflix. NO ONE has subscribed to all of Disney+, Apple+, Paramount+, Peacock, etc. in the new everyone-built-their-own-netflix era. They're all either making do with less content or sailing the high seas mateys yo ho. In many cases they've even DROPPED Netflix. I don't see how the current over a dozen streaming media provider status quo stands for much longer. Some (many?) are going to have to fail before everyone gets pissed off and goes elsewhere for their entertainment.

tzs 4y ago
I don't know how big a factor this is, but note that some of those have bundling deals with other services. For people that happen to use those other services this can as a side effect greatly reduce the annoyance of the things one wants to watch being spread over different non-free services. I have Hulu as part of my Spotify subscription. I have Peacock Premium as part of Xfinity internet. I have Paramount+ as part of Walmart+. I have Amazon Prime Video as part of Amazon Prime. Some T-Mobile plans include Netflix and Apple TV+.
- asdff 4y ago
  For a lot of people I know their bundling deal is just sharing passwords with friends and family.

nostromo 4y ago

The tech part of streaming no longer matters and Netflix is in serious trouble due to their lack of quality content. I'm no fan of Disney, but you have to give it to Bob Iger. He just paid out the nose to buy every piece of valuable IP: Pixar, Lucasfilm, Marvel, Fox, even Jim Henson. The amount of content they now own is insane. Everything from Sunny in Philadelphia to the Muppet show to Alien to Avatar to The Simpsons to Starwars. It's nuts... you can't throw a dead cat in Hollywood without hitting Disney IP. Meanwhile Netflix makes something worth streaming every year or two, if that.

runako 4y ago
> Netflix is in serious trouble due to their lack of quality content. People say this often, but I have never seen it manifested in a viewership chart. Just using Nielsen data as an example, Netflix absolutely dominates the Top 10 chart, with 7/10 of the programs: https://www.nielsen.com/top-ten/ https://www.nielsen.com/top-ten/ Anecdotally, when traveling outside the US, Netflix & Disney are really the only providers I have seen have any kind of footprint. Is there any data to back up the "content quality" complaint, or is it just a personal preference?
- vlunkr 4y ago
  The subscriber count continues to grow, so it seems like the content is fine. Or at least not so bad that people are unsubscribing. It seems to me that Netflix still has the most generally appealing content. Yeah Disney has some of the biggest names, but unless you 1. have young kids or 2. are a huge, not burnt-out Star Wars or Marvel fan, Disney+ is a pretty poor service. Most of the other services fall somewhere else in the middle of that spectrum.
chadlavi 4y ago
I agree with you, but don't underestimate how many people just want to leave The Office or something similar running in the background for hours and are willing to pay Netflix for that.
hintymad 4y ago
> Netflix is in serious trouble due to their lack of quality content. I feel the opposite. Marvel's content are getting really tiring now. Superheroes with superior technologies choosing primitive societal and political structures really turned me off. Not enough great action flicks, or binge-worthy dramas like Oz and Strange Things. Not enough international hit shows. Not enough old catalogs.

indigodaddy 4y ago

“Therefore, Netflix needs to do what it can to retain / attract subscribers, but essentially can wait until the other services have to give up due to cost” Much as they did with Blockbuster as he described in the article, correct?

silisili 4y ago

I don't understand why every single company needs to maintain their own. And there's more than what's listed of course, Paramount, Hulu, and whatever that new one is with Lifetime. It seems like at some point they'd rally behind whoever has the best interface and willing to accept deals - probably Hulu. Just charge for access to the content and forget about doing your own CDN and app dealings?

papercrane 4y ago
I don't think the media companies are capable of cooperating on a platform like that. You mention Hulu which I think is a great example of that model failing. Hulu was originally a intended to be that kind of platform, and has at times included investment from ABC, NBC, FOX, and Time Warner. Now Disney owns a majority share in it and it's a brand under Disney's streaming services, and I think would like to just fold it into Disney+, but they'd need to make some sort of deal with Comcast for their minority share.

lvl102 4y ago

Netflix is valued as tech but it’s no longer tech. Once you recalibrate that you can easily see where the company is headed. It’s not going to be pretty. They relied on the Koreans (among others) for cheap shows but that’s not going to last long.

user_named 4y ago

The competition is never going to give up on streaming.

LatteLazy 4y ago

Bob Iger addressed this on the a16z podcast a few weeks back. He said 2 things really: * he thinks that content will beat out distribution every single time. And Disney has content Netflix doesn't and cannot get (think of Disneys huge catalogue and IP collections) * he said when he went to the board and proposed that they (a) give up a huge revenue stream and (b) spend a tonne of money building their own streaming service, he expected it to be a hard battle. He thought it would be very hard to convince investors to look at anything beyond the effect on the next quarter financials. Instead, once they heard the case, they demanded he actually go faster, spend more and be more aggressive. He said (I have not checked) that when they announced the move, the stock price went UP... https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5zaW1wbGVjYXN0LmNvbS9KR0UzeUMwVg/episode/MTQyOGZmOGMtMDY0NC00MWQ1LWIwY2UtZWQ0ODdiNGFmN2Ey?hl=en-GB&ved=2ahUKEwjx9cSKkt78AhUWiVwKHdWlAR0QjrkEegQIBhAF&ep=6 https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5zaW1wbGV... Personally I think he made a pretty good case that content distributors were basically commodities and were priced as such (you get low margins). Bit content creators/owners were in a non-competitive position and so had much higher margins and better long term prospects. I guess in a way, we are back to "Netflix has to become HBO before HBO can become Netflix". Can Netflix use it's huge cash pile to build/acquire enough content to become Disney-like before Disney can build enough infrastructure/customer base to be Netflix?