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).