Netflix Now Accounts for 10% of TV Viewing
More streaming competition means higher prices should continue for Netflix subscriptions.
Netflix thinks it’s a start of original content. Netflix’s future competition can have a negative impact on its it bottom lines and yet another price hike could help Disney+’s entry into the space.
Its subscription price hike will “set the bar even higher” for the streaming service in the future. Does Netflix think it can become the premium streaming service?
Netflix says it has 10% of all TV time in the US
Netflix isn’t that transparent with its viewing data, and while Walmart has scrapped plans for a separate video-streaming service, in favor of doubling down on its existing service, Vudu; a sea of competitors for Netflix is on the horizon.
As impressive as Netflix’s growth are, with fourth-quarter revenue totaling a at a 28 percent (YOY) year-over-year jump and more new subscribers than expected coming, it’s just a first-comer advantage.
Netflix gained 1.53 million domestic subscribers and 7.31 million international subscriber additions. Netflix said the technology created for its first interactive movie will be used for future projects as well.
Streaming Goes Mainstream in 2020
Streaming will reach ubiquity in 2020, as Netflix is king for now with about 100 million hours of video per day, earning an estimated 10 percent of all time spent in front of the TV in the U.S.
At $344 the stock is severally over-valued. Considering the onslaught of competitors that will arrive in the next three years alone, it’s ludicrous. Netflix is willing to spend an ungodly amount of money in a market it cannot win, while losing money and those are weak business fundamentals. The cash-burn here just looks really unsustainable.
These companies like Uber, We Company (WeWork) and Netflix play a risky game of growth at all costs, but when the bubble bursts it’s like a revelation. The sad part is Netflix could lose up to 20 Percent of its content library in 2019.
Increased Streaming Competition is Coming
Netflix may offer a truly compelling value proposition with global appeal for some investors, but I’m not sure the market realizes the kind of fierce competition that’s coming with Amazon, Apple, Disney+, Hulu, iQiyi, Facebook, NBCUniversal, AT&T, and so many others. Netflix won’t just lose marketshare, it could be a trainwreck as early as 2025. That’s how quickly things change in a new media and content channel with as much momentum as streaming has.
Netflix thinks its dominating in a virtuous cycle of providing great original content. Not so fast and not so simple to maintain the top spot in the years to come Netflix. Netflix only released data on “member households,” which leaves room for ambiguity since subscribers often share accounts.
Netflix’s most recent subscription price increase amounts to 13 to 18 percent depending on the subscription plan — and is the biggest increase since Netflix started its streaming service a dozen years ago. The price increases won’t stop, but Netflix’s sole dominance of the space could. That’s a no-win situation for one of Wall Street’s favorites.
Netflix is (over) Spending to Grow
In a world where Netflix is more scared of Fortnite and YouTube, than new-comers to streaming it’s missing out on the big picture. As Amazon begins to outspend it on content, it’s only a matter of time before Amazon makes blockbusters that attract new audiences. A little Lord of the Rings here if you please.
Analysts at Cowen estimate Netflix will spend $14.5 billion in cash on content for the full year of 2019. That’s simply not sustainable given the new entries and Disney+ content pulling out. Netflix is big, but it isn’t that big. International paid subscribers are growing, but it isn’t anything as incredible as they would have you believe.
Is 140 million paid global subscribers are game-changer? Not really. When your road is paved with cash and debt you become an innovator until the world catches up with you, and they do. The company spent about $8.5 billion in cash on content during the first nine months of 2018 and Walmart and Apple haven’t even started seriously spending on original content yet. Companies with deeper pockets are coming for the startup, and as much as we love Netflix the world is about to change.
Netflix might compete with (and lose to) Fortnite more than HBO, but what happens in 2020? As we all know by now, Disney is launching the Disney+ streaming service in the latter half of 2019, and is beginning to separate itself from Netflix ahead of the debut. Amazon will be spending more and doing things more professionally by then.
Netflix is a Cash Burning Disruptor
The company reported almost $12 billion in total debt as of Sept. 30, 2018. That’s not how you build a new media content empire. In a zero sum game, Netflix is doing is painting itself red in a streaming dystopia of incredible content.
Netflix is burning cash at faster and faster rates. Netflix has committed in 2019 to spending over $18.6 billion on content. But you can’t outspend the future. These are the final years of the dominance of Netflix, and it’s going to be a bloodbath for content disruption.