Netflix Has Started A War With Its Suppliers

The battle for peak TV has just begun

Netflix ended the quarter with a cliffhanger. Well, not really. They just fell off a cliff. International growth stalled and they lost a net 130,000 subscribers in the US.

According to CEO Reed Hastings, this is why (paraphrased):

We think Q2’s content slate drove less growth in paid net adds than we anticipated. We don’t believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2.

So according to Hastings, people just didn’t like their shows. Which makes sense, I didn’t watch anything notable on Netflix besides Our Planet. But his statement contains a contradiction. If shows are what matter, then of course competition is a factor.

It’s not like people stopped watching TV. We watched Game Of Thrones (HBO), Chernobyl (HBO) and Good Omens (Amazon). They just weren’t on Netflix. If that’s not competition, I don’t know what is.

Hastings said the competitive landscape hasn’t changed, and that may be narrowly true for Q1. Right now Netflix is only fighting on one front — mostly against direct competitors and also HBO. Over the rest of the year, however, a whole new front is opening in the video wars.