The story of how Netflix came up, and the big, evil Blockbuster is a tale many of us have heard. Blockbuster was known as the worldwide leader of video rental stores (Associated Press 1992) with 60.000 employees, 9000 stores and market value of 5 billion dollars at the heights of it reign(Harress 2013).
However, a large group of users actually didn’t really like using the services of Blockbuster. The company was famous for its aggressive late fee policy, which accounted to 16% of its total revenue back in 2000, but also the accounted for the majority of annoyance of its userbase. (Liedtke,Anderson 2010)
However, unfortunately for them it also sparked the anger of Reed Hastings, the founder of Netflix, who was done with paying late fees and introduced the Netflix dvd-by-mail system.
This became a large problem for Blockbuster, and even more so when Netflix became a frontrunner on the new streaming market, which eventually lead to the end of blockbuster within a decade.
Netflix established itself the main streaming platform across the world, and as a result had an immense growth. They grew from 46.13 million subscribers in Q1 2014 to 148.86 million in Q1 2019(Statista 2019).and the shares rose 8.300 percent since 2009
No, you weren’t reading that wrong. That is an increase of eight-thousand-tree-hundred percent.
What could possible spoil the party for Netflix? Well the answer is one tiny mouse.
The mouse that represent the media empire the Walt Disney company.
For years Netflix has been the leader in the streaming industry. They have done this by a great combination of offering fan-favorite shows such as Friends, The Office, and many others(McBride 2019) and offering quality self-made content, such as House of cards, Stranger things, and Black mirror. Which was a smart move, as this self-made content was a way of creating loyal customers over the last decade and this is the field were Netflix will face heavy competition over the next year. Because if we look at content as value then Disney is king.
Starting this week Disney has released a Disney+ trial period before its official release on November 12th, and its content is subjectively of incredible quality. With all content from Marvel, Star Wars, and Pixar franchises already available. In addition, Disney+ will start offering its own content starting from November 12th, and most importantly all this content will be available only on Disney+ meaning that all Disney owned content will be removed from Netflix.
Furthermore, Netflix will receive even more competition with Apple releasing its own streaming platform called Apple TV+, Warner media coming with HBO Max in 2020, and NBC Universal streaming coming in 2021.
The most important feature of the upcoming streaming platforms is not only that they will increase the competition, but at the same time Netflix will lose a large portion of its content, and this hasn’t happened so far.
There are multiple ways this could affect the streaming industry, but I personally believe that the content of Disney is favorable for the majority of people, and people will not be positive towards paying for multiple streaming platforms, and in result there will be a shift from leader and Netflix will slowly lose its position to Disney, but remain a close second to Disney. In addition, the other players will take a slice of the market, but they will remain niche players.
Please share what you think will happen next!
Sources:
Associated Press. 1992. “VIDEO INDUSTRY HOPES LATEST HITS WILL HELP SUMMER RENTALS REBOUND – Deseret News.” https://www.deseret.com/1992/5/26/18986204/video-industry-hopes-latest-hits-will-help-summer-rentals-rebound-br (September 28, 2019).
Harress, Christopher. 2013. “The Sad End Of Blockbuster Video: The Onetime $5 Billion Company Is Being Liquidated As Competition From Online Giants Netflix And Hulu Prove All Too Much For The Iconic Brand.” https://www.ibtimes.com/sad-end-blockbuster-video-onetime-5-billion-company-being-liquidated-competition-1496962 (September 28, 2019).
Liedtke, Michael, Anderson, Michael. 2010. “Blockbuster Tries to Rewrite Script in Bankruptcy – Boston.Com.” http://archive.boston.com/business/articles/2010/09/23/blockbuster_tries_to_rewrite_script_in_bankruptcy/ (September 28, 2019).
McBride, Stephen. 2019. “Netflix Has 175 Days Left To Pull Off A Miracle… Or It’s All Over.” https://www.forbes.com/sites/stephenmcbride1/2019/05/21/netflix-has-175-days-left-to-pull-off-a-miracle-or-its-all-over/#3e5d7b6475c4 (September 28, 2019).
Statista. 2019. “• Number of Netflix Subscribers 2019 | Statista.” https://www.statista.com/statistics/250934/quarterly-number-of-netflix-streaming-subscribers-worldwide/ (September 28, 2019).
Hi Marko,
Thanks for the read. I found it interesting that you think Disney will take market leadership from Netflix. I guess that Disney will definitely remove some blockbuster movies from Netflix, but aren’t TV shows the big hit on Netflix nowadays? I mean, movies you usually watch once, maybe more often sometimes, but TV shows are what keeps you coming back. After having released many popular Netflix Originals such as Stranger Things and House of Cards (as you mentioned), I feel Netflix has a good grip on what sells to the public. Moreover, they have started making country-specific Netflix Originals, and releasing those rather quick (faster than big worldwide productions). Therefore, I’m not to sure if Netflix will lose its market leader status in the coming years. However, I’m also curious to see how the market will reshape seeing that many companies such as NBC, FOX and WarnerMedia are launching their own streaming services.
Hi Marko, interesting post! You make a lot of good points. I agree with you that Netflix is in danger of losing its current market position with the entrance of Disney+. Especially if you take into account the loss of content they will incur. They are already struggling with adding and keeping content on their platform due to the difficulties of licensing, and Disney removing all their content is not going make it any easier for them. You make another good point talking about the multi-homing costs. Paying for multiple platforms is unfavorable for the majority of the consumers. However, I do not believe that Disney+ will become market leader. Even though Disney+ will be able to offer Marvel, Star Wars, Pixar, and National Geographic alongside their own content, their content will still be limited compared to Netflix. What I mean with that is that Netflix offers something in every genre. Whether it’s romantic comedy you like or horror, Netflix has something you can watch. With Disney+ this will not be the case. They offer a lot, but not everything, and a large portion of what they will offer falls under the same genre. For those who do not care for these genres or have an interest in multiple genres (which I believe is a large portion of the consumers) Disney+ is not going to cut it. For this reason I believe Netflix will remain the largest player in the market.
Hi Marko,
thanks for sharing your perspective on the future of Netflix. The indication “The return of the industry..” in your title sparked my interest, as mostly the discussion circles around how Netflix beat Blockbuster – well, this was 2010. I found that Disney’s Hotstar platform in India has already beat Netflix with Disney being on top of the game with an annual growth rate of roughly 22%. I think its gonna be interesting to see where Netflix is heading to with more and more platforms evolving or if it will eventually go the same way as its former rival Blockbuster.