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After a long winning streak, Netflix's vulnerabilities are becoming clearer

By Digiday

At 148.9 million subscribers, Netflix has a fantastic head start. But the streaming giant is not without its own share of real challengesRead full story

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  • I would bet on two things: a transfer of value from platforms to consumers (which will translate into lower margins) and Netflix being a survivor. Of the the newcomers, Disney is by far the strongest, thanks to a huge catalogue, with unique value for kids. Netflix’s consumer data gives it an advantage in programming that provide a big advantage over Apple, HBO, Showtime.

  • Suggesting that Netflix is vulnerable because of the birth of new offerings from Disney or Warner is the same as saying that the lion's position as apex predator is vulnerable because a bunch of hippos and gazelles were born.

    There are attackers and defenders. Netflix exists to attack a complacent industry. The Disney and Warner offerings exist to defend what's left of a food chain that players like Netflix have been devouring.

  • Boris Markovich
    Boris MarkovichCEO at StreetReader

    If Netflix can’t maintain their growth rate in the next few years then their ability to borrow high yield debt will be impacted. This will reduce their budgets for original content and could cause a further deterioration in growth.

  • Adrian Warr
    Adrian WarrManaging Director at Edelman

    Seems to me that the technology is not what will differentiate them over time, it’s a content game. And as far as I am concerned, they are not only right to invest heavily but also right to be a lot braver in what they are creating.

    Of course they have challenges. And thankfully, unlike the rest of the FANGs, they have competition. For every article on here that talks of their weaknesses there is an equal number celebrating their brilliance - such is life for highly successful companies

  • Netflix needs to do more than throw money at the challenge of having can’t miss content- they need to curate more ahead of time so the viewer knows Netflix original content is a premium production. It’s becoming overwhelming like a sprawling department store- trying to have everything for everyone at every level but becoming one big blur of stuff. THIS: “Netflix’s costs continue to escalate as the company aggressively spends more and more on original content — and takes on debt to fund those projects

    Netflix needs to do more than throw money at the challenge of having can’t miss content- they need to curate more ahead of time so the viewer knows Netflix original content is a premium production. It’s becoming overwhelming like a sprawling department store- trying to have everything for everyone at every level but becoming one big blur of stuff. THIS: “Netflix’s costs continue to escalate as the company aggressively spends more and more on original content — and takes on debt to fund those projects. And with domestic growth is slowing down, Netflix has begun to raise some prices in established markets — hoping to use some of that revenue to fund production costs.”

  • Calvin Yee
    Calvin YeeEgon Zehnder

    Cord cutting is real... options exist (too many)... so someone build a UX that makes exploration fun?

  • Dr Gail Barnes
    Dr Gail BarnesPartner at Personify LLC

    Written while flipping through a series of Netflix original movies, too many of which start with naked first scenes ... never a good sign of good content to come.

  • James Cakmak
    James CakmakEntrepreneur | Tech Analyst

    Rubbish. Netflix’s main threat is its valuation which is exceedingly high. One minor blip and it’s a crap shoot what happens to the stock. As far as the company, so long as the outlined strategy and execution stay status quo, Netflix will be just fine.

  • Richard  Reisman
    Richard ReismanAuthor of FairPay at FairPayZone.com

    Netflix has a natural role as an umbrella service -- as it began, a celestial jukebox for all video. It can retain that role by moving toward a new model.

    The future of subscriptions is to make them risk-free to the consumer. For digital services, the provider risks little except the opportunity to take money in exchange for no value. That will be less and less tolerated.

    Providers like Disney and HBO want to own their customer, and that can hurt Netflix in the short run. But, with flat-rate

    Netflix has a natural role as an umbrella service -- as it began, a celestial jukebox for all video. It can retain that role by moving toward a new model.

    The future of subscriptions is to make them risk-free to the consumer. For digital services, the provider risks little except the opportunity to take money in exchange for no value. That will be less and less tolerated.

    Providers like Disney and HBO want to own their customer, and that can hurt Netflix in the short run. But, with flat-rate all you can eat

    subscriptions, that is going to run into the brick wall of subscribers’ share of wallet.

    Why not a "risk-free" subscription. Get run of the house, pay a fair, volume-discounted price for what you use.

    Done right that can work for aggregators like Netflix and providers like Disney. Co-opetition can let users decide if they want a direct service or an aggregator, depending on their needs and the value-added services they want. To see why and how that can work, see "Risk-Free" Subscriptions to The Celestial Jukebox? https://www.fairpayzone.com/2019/03/risk-free-subscriptions-to-celestial.html

  • Edward Dowling
    Edward DowlingProduct Manager

    Netflix are betting heavily on quantity of content over quality, which seems like a mistake. Previously, Netflix original programming was an indication of quality - House of Cards, Narcos, Orange is the New Black. Now? Most of it is derivative rip-offs, like Black Summer (Walking Dead rip-off) and Silence (A Quiet Place rip-off).

    Apple seems to be investing in quality (remains to be seen), Disney has the most desirable back catalogue and brand reputation in the market and Hulu has immediacy (I can

    Netflix are betting heavily on quantity of content over quality, which seems like a mistake. Previously, Netflix original programming was an indication of quality - House of Cards, Narcos, Orange is the New Black. Now? Most of it is derivative rip-offs, like Black Summer (Walking Dead rip-off) and Silence (A Quiet Place rip-off).

    Apple seems to be investing in quality (remains to be seen), Disney has the most desirable back catalogue and brand reputation in the market and Hulu has immediacy (I can access shows at practically the same time they air on cable).

    I love Netflix, but they are trending towards “meh” with their original content.

  • The market has always the possibility to adjust to new conditions. This is what the entrance of new video streaming companies in the market will provoke.

  • Steven Rodas
    Steven RodasReporter at machineByte

    ‘During the company’s earnings call, Netflix CEO Reed Hastings said, “There’s a ton of competition out there, and Disney and Apple add a little bit more. But, frankly, I doubt it will be material.”’

    As for the correlation between Netflix and the Death Star, I think it may ring a bit false. There was two of those.

  • William Wood
    William WoodOwner at William Wood

    Of course Netflix’s growth rate will slow, at some point in time you will saturate the world, and growth will ebb. Netflix is fine, the challenge is for Disney, and the other streamers. They are far behind and will find the catchup more difficult than imagined. Which is all Disney has done so far, in the world of streaming.

  • Paul O'Brien
    Paul O'BrienCEO at MediaTech Ventures

    Netflix's vulnerability is that it's the equivalent of a premium cable channel.

    I subscribed to get HBO but I never bothered with Showtime and Cinemax... Good enough original content is all someone needs. That is, until a new model came along called *Netflix* and made me quit cable entirely.

  • There's two separate narratives in this article: What will happen to Netflix if it keeps on investing heavily in content (not all of it great) and competition keeps arising.

    And a second one, an inevitable one, in a world where the amount of money spent on streaming already rivals a pretty decent cable package.

    Mark my words, we're getting Streaming Cable.

    Someone will figure out how to offer for 45$ a month, the equivalent of 50$ in streaming services, and then it's off to the racetracks with this one.

  • Henry Tobias Jones
    Henry Tobias JonesEditor of Dyson on: at Dyson

    The problem people don’t often like to talk about when it comes to a market leader is their struggle to plateau and become a huge market dominator. It is hard to stay competitive when there is always a bigger fish...

  • Kathryn Sullivan
    Kathryn Sullivan

    Netflix in my home is for the grandchildren, I find very little for an adult to watch and it reminds me of going to drive in movies as a young adult you know B rated content, and sadly anything worth watching is in a foreign language.

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