Reed Hastings, co-founder and CEO of Netflix, attends a meeting with French President Emmanuel Macron during the “Choose France” summit at Versailles Castle on the outskirts of Paris, France, on January 20, 2020.
Benoit Tessier | Swimming pool | Reuters
The supposed plot of the streaming wars is as follows: sick of losing customers and a market value relative to Netflix, the big media made the transition from their aging television-focused businesses to focus on streaming services. subscriptions.
There is no exact start date for these “wars,” but on November 12, 2019, Disney released Disney +, initiating the assault on traditional media on Netflix.
Since then, AT&T’s HBO Max, Comcast’s NBCUniversal Peacock, ViacomCBS ’Paramount +, Discovery Discovery +, and AMC Networks’ AMC + have been born as Netflix competitors.
So who has been the big winner of all this new competition?
Netflix.
Since the day Disney + was launched, Netflix shares have risen more than 87%. All other media companies earn dwarfs over the same period of time.
Netflix reports first-quarter earnings on Tuesday after the close of trading. Analysts expect earnings of $ 2.97 per share, 89% more than last year, on revenue of $ 7.133 billion, up 24%.
Netflix is the base
The jump in market value goes hand in hand with eye-catching subscriber additions during the pandemic. In the first half of 2020, Netflix added 37 million new customers worldwide. This was a record gain for the company, with a previous annual high of 28.6 million in 2018.
A plurality of Americans believe that Netflix has the best original content among broadcast services, according to a recent Morgan Stanley survey. Thirty-eight percent of respondents chose it as No. 1 among streamers, far surpassing Amazon Prime Video’s No. 2 with 12 percent.
While streaming wars offer consumers more alternatives to Netflix, they also cement Reed Hastings ’business as an anchor product in many U.S. homes. If video streaming is now (or will soon be) the centerpiece of home entertainment, supplanting cable TV, Netflix will almost certainly be part of the typical home content diet.
Netflix spends all other content streaming services and already has over 200 million worldwide subscribers. Having this kind of global reach is a big advantage for creators who have a growing list of distribution partners.
“Our strategy is simple: if we can continue to improve Netflix every day to better delight our members, we can be their first choice for streaming entertainment,” Netflix wrote in its January shareholder letter. “Last year is a testament to that approach. Disney + had a massive first year (87 million paid subscribers!) And we recorded the highest year of paid member growth in our history.”
The streaming wars have fostered great competition for Netflix. But the biggest change has been more existential, giving way to video streaming as the dominant form of television as the importance of cable TV slowly fades.
The consequence of this change is that consumers want Netflix more than ever.
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