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Originally Posted by OLD BOY
If the plan is to run at a loss initially, to increase prices over time and to expand globally while spending less on content when a sufficient library is amassed, that sounds pretty sustainable to me.
Netflix is playing the long game. No doubt you would have told us that Murdoch’s satellite TV service was doomed back in the 1990s.
I agree that Netflix has accumulated a lot of debt, but Murdoch’s venture actually nearly went under back in the day.I dare say that once Netflix have made retained their original material for so long, they will look to monetise them further by passing on the rights to broadcast over to other streaming services and who knows, maybe to conventionally broadcast scheduled TV channels. Maybe Netflix will come to their rescue with new content for them!
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I will agree here that Netflix are globally in front - they have the model, the brand, and the customer muscle memory...that being said they are not invulnerable.
You say that they will "spend less on content" when they have a sufficient library? That is highly unlikely...
If anything spend will continue to go up and they will continue to make more content as licenses expire as legacy companies repatriate content for their services as they slowly expand into other territories - they have to fill that backlog with more volume hence they will perpetually keep spending especially as data points to more cancellations and new orders. I'm sorry but you can't spend billions trying to be Costco and then decide all of a sudden you're a high end boutique.
They will have to compete as Apple and Amazon increase their comparatively low spend and pick up high end shows and films like Killers Of The Flower Moon and Borat 2 (if rumours are to be believed, Amazon bid $40 million more than Netflix for the Borat film) - and unlike those companies and the likes of Disney & Comcast, they do not have other primary businesses to fall back on.
And most importantly, all those other competitors? They don't need to exceed Netflix's subscriber numbers - most of them have different models that does not necessarily mean they need to go toe to toe with Netflix for sub numbers... all the likes of HBO Max, Peacock/Now TV, Disney+/Star/Hulu and Paramount+ need to do collectively is erode hours of viewing from Netflix whose whole business is about keeping you in their platform and nowhere else... if they increase prices and yet viewing hours go down, it will be reasonable to suggest customers may start to consider whether it is still a value proposition.
I don't think Netflix is going anywhere as they are still a damn good service but I don't think they are bulletproof either.