NEWS ANALYSIS — With Netflix reporting first-quarter fiscal results after the market close today, some pundits suggest the subscription streaming video behemoth has suddenly become vulnerable to a host of challenges — both real and imagined.
Disney is set to launch a branded SVOD service in November with content previously earmarked for Netflix, and WarnerMedia and NBC Universal are pulling back licensed programming (“The Office,” “Friends” and “Grey’s Anatomy”) as well for proprietary services.
As a result, scuttlebutt suggests Netflix is scrambling to fill the void.
“Just throwing tens of billions at developing more original TV series and movies may not be enough on its own to keep the company growing domestically at the rate needed to reach its goal of 90 million US subscribers,” Helen Back with research firm “Kill the Cable Bill” wrote in a post.
Separately, online pundit “The Entertainment Oracle” contends Netflix has a “Game of Thrones” problem that has nothing to do with the fact the ratings hit resides on rival streaming service HBO Now.
The argument being that the high profile fantasy series — currently airing/streaming its last season — continues to fuel old-school water cooler buzz through weekly episodic programming rather than subscribing to Netflix’s “batch” distribution model.
‘They are losing that weekly buzz that has helped ‘Thrones’ rise to new [viewership] levels,” wrote The Oracle.
The pundit suggests that adhering to weekly programming has helped Amazon Prime Video and Hulu secure industry awards, while apparently ignoring Netflix’s binge/Emmy/Golden Globes success with “House of Cards,” “Orange Is the New Black,” “The Square,” “Unbreakable Kimmy Schmidt,” “Grace and Frankie” and “Bloodline,” among others.
“Netflix does have its big hits and its instant-conversation starters, but by remaining so steadfast in its “all-at-once model”, it’s hurting the long-term possibilities for shareholders and that’s expanding out into the marketplace,” wrote The Oracle.
What’s ignored is that HBO Now (with more than 5 million subs) remains tethered to Amazon Channels to drive sub growth while Netflix has grown domestic subs organically to the tune of 5.4 million net additions annually over the past five years.
Netflix is projected to top 90 million domestic subs by 2024.
More importantly, driving that sub growth is original programming, according to Netflix management.
“I’d say the vast majority of the content that’s watched on Netflix are our original content brands,” CCO Ted Sarandos said on the Q4 fiscal webcast.
Sarandos added that ranking episodic programs by individual seasons on Netflix is “dominated primarily by our original content brands.”
In addition, unscripted programing now accounts for more than 50% of viewer hours in the genre on Netflix, according to CEO Reed Hastings.
Impressively, Netflix says domestic subscribers stream about 100 million hours of content each day, or 10% of the 1 billion hours of daily TV consumption nationwide.
Hastings said Netflix has withstood competitive threats in the past and would do as well going forward. The executive also said he would subscribe to Disney+ when it launches.
“What we have to do is not get distracted,” Hastings said on the Q4 call. “We’ve got a path ahead, everyone else in streaming is trying to find one.”