Netflix in trouble

[flyerhawk]

I'm far from a tech wiz, so it may very well be more complicated to than it appears, but this has been a rather glaring flaw in Netflix business since the beginning, and it's pretty surprising they really haven't done much to address it.

Though with the sales growth they saw for much of the past decade, it probably wasn't much of a priority.

They didn't do anything about it because it was more important to the them to keep increasing subscriber counts. Putting the hammer down on password sharing would have led to a reduction in subs.

 

[calsnowskier]

I'm far from a tech wiz, so it may very well be more complicated to than it appears, but this has been a rather glaring flaw in Netflix business since the beginning, and it's pretty surprising they really haven't done much to address it.

Though with the sales growth they saw for much of the past decade, it probably wasn't much of a priority.

They used to ENCOURAGE password sharing. It was part of their stated strategy to get market share. They officially changed their stance on that just a few years ago.

 

[flyerhawk]

They used to ENCOURAGE password sharing. It was part of their stated strategy to get market share. They officially changed their stance on that just a few years ago.

The problem that products like Netflix has is that they are always trying to expand the subscriber base but eventually you come up to practical limits on how many subscribers you can get. Once that happens you have to come up with other ways to increase revenues.

So they keep increasing fees but that comes at a cost as well. Subscriber counts start to decrease while password sharing increases.

So their only choices going forward is to either improve the content or reduce loss. IMO, Netflix has started to turn into a broadcast network perpetually producing low budget/low brow stuff like reality shows or game shows or cheesy teen dramas. But none of those shows generate buzz or makes people feel like they need to have a subscription.

OTOH, you have HBO Max which is constantly churning out content that people like to talk about. They AREN'T doing reality shows or game shows. HBO has the advantage of having a long standing content creation group famous for creating water cooler shows. And they are about to merge with Discovery+, greatly expanding their content.

 

[calsnowskier]

The problem that products like Netflix has is that they are always trying to expand the subscriber base but eventually you come up to practical limits on how many subscribers you can get. Once that happens you have to come up with other ways to increase revenues.

So they keep increasing fees but that comes at a cost as well. Subscriber counts start to decrease while password sharing increases.

So their only choices going forward is to either improve the content or reduce loss. IMO, Netflix has started to turn into a broadcast network perpetually producing low budget/low brow stuff like reality shows or game shows or cheesy teen dramas. But none of those shows generate buzz or makes people feel like they need to have a subscription.

OTOH, you have HBO Max which is constantly churning out content that people like to talk about. They AREN'T doing reality shows or game shows. HBO has the advantage of having a long standing content creation group famous for creating water cooler shows. And they are about to merge with Discovery+, greatly expanding their content.

What is in Discovery’s library? A bunch of nature stuff and documentaries, or is there a subdivision with good stuff I am not thinking of?

 

[flyerhawk]

What is in Discovery’s library? A bunch of nature stuff and documentaries, or is there a subdivision with good stuff I am not thinking of?

Well I'm not sure how much good stuff it has but it includes the History Channel, HGTV, Travel Channel, Food Network, A&E and a bunch of other channels.

Not sure it would have much I would care about but there are a lot of people that would care about that stuff.

 

[calsnowskier]

Well I'm not sure how much good stuff it has but it includes the History Channel, HGTV, Travel Channel, Food Network, A&E and a bunch of other channels.

Not sure it would have much I would care about but there are a lot of people that would care about that stuff.

That’s kinda what I thought.

Sounds like stuff that would be somewhat cheep to produce moving forward, so it should not pull funds from the good stuff HBO/WB/etc creates elsewhere.

 

[flyerhawk]

That’s kinda what I thought.

Sounds like stuff that would be somewhat cheep to produce moving forward, so it should not pull funds from the good stuff HBO/WB/etc creates elsewhere.

Yeah. Completely separate channels for content creation. I doubt that they will merge them in that sense.

 

[returnofjakedog]

An additional thought regarding Netflicks' library:

Disney, for example, has a huge catalog. They own their content and availability is solely at their own discretion.

On the other hand, Netflix creates a lot of content (mostly at a loss), and then contracts outside content for limited time periods. That, combined with a finite capacity, limits the amount of content available at any given time. The only specific info I could find was they had approximately 100 terabytes in 2016, so I'd guess this has expanded quite a bit since then.

So what is the way forward?
It seem that streaming services are going to start retracting as the big dogs continue to take over market share. I think that if Netflix wants to survive and thrive they will need to combine with other services, and make a huge amount of content available at any given time.

Given that, maybe Netflix should have started buying up content options for very long term deals years ago, and leave the content available on a essentially permanent basis instead of having stuff up for only a year or two?

 

[calsnowskier]

An additional thought regarding Netflicks' library:

Disney, for example, has a huge catalog. They own their content and availability is solely at their own discretion.

On the other hand, Netflix creates a lot of content (mostly at a loss), and then contracts outside content for limited time periods. That, combined with a finite capacity, limits the amount of content available at any given time. The only specific info I could find was they had approximately 100 terabytes in 2016, so I'd guess this has expanded quite a bit since then.

So what is the way forward?
It seem that streaming services are going to start retracting as the big dogs continue to take over market share. I think that if Netflix wants to survive and thrive they will need to combine with other services, and make a huge amount of content available at any given time.

Given that, maybe Netflix should have started buying up content options for very long term deals years ago, and leave the content available on a essentially permanent basis instead of having stuff up for only a year or two?

So who survives the next few years? Who becomes the new ABC/NBC/CBS?

I think Hulu is solid, but it’s ownership group is too convoluted. I fear it will end up being a casualty because of that.

Disney, HBO, Prime and Paramount seem to be in the best position atm. Netflix is still huge, but, as we have been discussing in this thread, has some potentially critical problems that make their long term health questionable. Apple has crap content, but they have a monster keeping them afloat, so they may survive just out of sheer massiveness. Same deal with Peacock. But they are new, so who knows if NBC will do it right or not.

 

[returnofjakedog]

So who survives the next few years? Who becomes the new ABC/NBC/CBS?

I think Hulu is solid, but it’s ownership group is too convoluted. I fear it will end up being a casualty because of that.

Disney, HBO, Prime and Paramount seem to be in the best position atm. Netflix is still huge, but, as we have been discussing in this thread, has some potentially critical problems that make their long term health questionable. Apple has crap content, but they have a monster keeping them afloat, so they may survive just out of sheer massiveness. Same deal with Peacock. But they are new, so who knows if NBC will do it right or not.

The clear leader going forward:
*Disney- With the literal 100 years of back catalog, additional prestige content with the likes of Star Wars and Marvel, and built in children and family appeal, they appear to be in the best position going forward. Plus they seem very keen on expanding via takeover.

Lots of prestige owned content:
*HBO- Many appealing, memorable series and programs should allow them to remain competitive indefinitely.

Do they even need to have a profitable business model?
*Amazon Prime- Prime does have a lot of good content but since it is tied to the Amazon shopping accounts they can survive as long as Jeff doesn't change the model. Profitability and even marketshare seem secondary, which makes it a special case.

*Apple- I haven't used it, and content seems to be an issue. But it can survive as long as Apple allows it to since it isn't the company's main product.

Seemingly safe:
*Paramount- They are doing well and have a sizeable back catalog. But if they stumble on future content quality.

*Hulu- I assume not as much of a back catalog as Paramount to draw on, but they are probably a little safer in regards to modern content.

Then there us the rest.

My guess would be that if any of the "smaller" services want to survive, they will probably have to merge, or at least be exclusively packaged together. Otherwise the "big dogs" might just scoop them up.
I could easily see Disney buying up any and all services with sizable content catalogs. The likes of HBO, Paramount, Apple, and even Amazon (though I'm not sure it would be a goal of theirs) also could.

I think the real question is if Netflix continues to sink then who would be most likely to buy them out?
-Disney seems obvious but their current content doesn't really match.
-Apple could take it as an initial loss just to gain content and marketshare
-Amazon could but do they deem it necessary considering their odd business model?
-HBO, Hulu, Peacock, Paramount, etc.- I could see it benefiting any of these but I don't know if they have the ability or desire to outbid the others. Of course concessions such as remaining a somewhat independent subsidiary, or other benefits might allow them to compete in a purchase/merger agreement.

It looks like a industry monopolization with only 3 or 4 big dogs cornering 90+% of the market could be the outcome in the next few years unless something changes.

 

[calsnowskier]

I could see an NBC/Netflix merge coming. NBC was late to the streaming game, but they probably still have a massive library that just needs the eyeballs. Netflix has the market share, but their library is beginning to show signs of strain and their leadership may be an issue. A merge with NBC may be a perfect match.

 

[returnofjakedog]

I could see an NBC/Netflix merge coming. NBC was late to the streaming game, but they probably still have a massive library that just needs the eyeballs. Netflix has the market share, but their library is beginning to show signs of strain and their leadership may be an issue. A merge with NBC may be a perfect match.

I feel that would be better than Disney just buying up everything!

 

[calsnowskier]

I feel that would be better than Disney just buying up everything!

In this scenario, I would envision “Peacock” folding up and “NetFlix” keeping it’s place, but as the primary/sole source for the NBC library. There are a lot of stuff there that can be profitable…

Seinfeld
Friends
Knight Rider
Baywatch
Cheers
Frasier
ER

just off the top of my head…

 

[returnofjakedog]

I was just watching an analysis that proposed some issues that have hurt Netflix:
*The "drop all at once" format. 8 years ago it was novel and allowed for binging on new shows. But in the long run it doesn't develop an audience as well as scheduled release progression.
*Lack of promotion: NF tends to flood their catalog with as much product as possible, and then rely on word of mouth to gain audience instead of doing standard promotion such as advertising campaigns.
*Cancelations: Too many series killed before they have a chance to fully develop.

 

[calsnowskier]

I was just watching an analysis that proposed some issues that have hurt Netflix:
*The "drop all at once" format. 8 years ago it was novel and allowed for binging on new shows. But in the long run it doesn't develop an audience as well as scheduled release progression.
*Lack of promotion: NF tends to flood their catalog with as much product as possible, and then rely on word of mouth to gain audience instead of doing standard promotion such as advertising campaigns.
*Cancelations: Too many series killed before they have a chance to fully develop.

Advertising is a real issue. Customer/viewers ve volt against them, but then they turn around and complain that the streaming services don’t promote the fact that they have a new show coming out or have a new season of an old favorite dropping in a month.

I don’t have a solution to this problem, but it is a legit issue.

 

[foster4prez]

In this scenario, I would envision “Peacock” folding up and “NetFlix” keeping it’s place, but as the primary/sole source for the NBC library. There are a lot of stuff there that can be profitable…

Seinfeld
Friends
Knight Rider
Baywatch
Cheers
Frasier
ER

just off the top of my head…

Seinfeld is on Netflix as we speak.

 

[Superbelt]

Seinfeld is on Netflix as we speak.

Yup, that's been my Netflix binge the last few months.

I think the market needs to contract/combine a bit because there are too many out there, making things worse and more fragmented than the cable era.

It's nice to be able to combine a Disney/Hulu account. And I've been with Netflix a very long time and I still find plenty of things to watch there.

Seinfeld, Umbrella Academy, Locke & Keye, Ozark, Schitt's Creek, Lost in Space. Stranger Things coming back.

I could go on and on. There is still a lot to watch there, some legacy, and some original. I don't see the problem, at least not with my usage of it.

 

[calsnowskier]

Yup, that's been my Netflix binge the last few months.

I think the market needs to contract/combine a bit because there are too many out there, making things worse and more fragmented than the cable era.

It's nice to be able to combine a Disney/Hulu account. And I've been with Netflix a very long time and I still find plenty of things to watch there.

Seinfeld, Umbrella Academy, Locke & Keye, Ozark, Schitt's Creek, Lost in Space. Stranger Things coming back.

I could go on and on. There is still a lot to watch there, some legacy, and some original. I don't see the problem, at least not with my usage of it.

Is L&K worth continuing? I watched S1, and I think I enjoyed it, but when S2 came out, I found I completely forgot the show existed at all (not a good sign). I tried watching P1 of S2, but felt completely lost. Should I power through? I never read the source nor did I watch the original series (movie?).

 

[calsnowskier]

Seinfeld is on Netflix as we speak.

I don’t have NF atm. But I would assume they have Seinfeld essentially on consignment from NBC. If NBC and Netflix had a more solid/permanent relationship, there is probably efficiencies to be had with library access. Otherwise, Netflix would be essentially at NBC’s whim wrt Seinfeld and any of their other NBC properties. If NBC is serious about getting into the streaming game (they would be derelict if they didn’t want to move in that direction), why wouldn’t they want Seinfeld, Office, Friends, etc on Peacock?

 

[Superbelt]

Is L&K worth continuing? I watched S1, and I think I enjoyed it, but when S2 came out, I found I completely forgot the show existed at all (not a good sign). I tried watching P1 of S2, but felt completely lost. Should I power through? I never read the source nor did I watch the original series (movie?).

It's as good as the first season, IMO. So if you liked that, you'll continue to.