Reed Hastings, co-founder and CEO of Netflix, attends a meeting with French President Emmanuel Macron during the “Choose France” summit, at the Chateau de Versailles, outside Paris, France, on January 20, 2020.
Benoit Tessier | Swimming pool | Reuters
The alleged plot of the streaming wars goes like this: sick of losing customers and relative market value to Netflix, major media outlets have shifted their aging television-focused businesses to focus on subscription streaming services instead.
There is no exact start date for these “wars,” but on November 12, 2019, Disney launched Disney +, kicking off the traditional media attack on Netflix.
Since then, AT & T’s HBO Max, Comcast NBCUniversal’s Peacock, ViacomCBS ‘Paramount +, Discovery’s Discovery +, and AMC Networks’ AMC + have all come to life as Netflix competitors.
So who is the big winner of all these new competitions?
Netflix.
Since the launch of Disney +, Netflix shares are up more than 87%. That surpasses the profits of any other media company in the same period.
Netflix will report first-quarter earnings on Tuesday after trading closes. Analysts expect earnings of $ 2.97 per share, up 89% from last year, on revenues of $ 7.13 billion, up 24%.
Netflix is the foundation
The jump in market value goes hand in hand with dazzling additions to subscribers during the pandemic. In the first half of 2020, Netflix added 37 million new global customers. That was a record profit for the company, which was 28.6 million a year earlier in 2018.
According to a recent survey by Morgan Stanley, a number of Americans believe that Netflix has the best original content among streaming services. Thirty-eight percent of survey respondents chose it as No. 1 among streamers – well above No. 2 Amazon Prime Video at 12%.
While the streaming wars provide consumers with more alternatives to Netflix, they are also bolstering Reed Hastings’ business as an anchor product in many US households. If streaming video is now – or soon – is the focal point of home entertainment and replacing cable television, Netflix will almost certainly be part of a typical household’s content diet.
Netflix devotes all other streaming services to content and already has more than 200 million subscribers worldwide. Having such global reach is a huge selling point for creators with a growing list of distribution partners.
“Our strategy is simple: if we can keep improving Netflix every day to better delight our members, we can be their first choice for streaming entertainment,” Netflix wrote in its January shareholder letter. “The past year is a testament to this approach. Disney + had a massive first year (87 million paid subscribers!) And we had the biggest year of paid membership growth in our history.”
The streaming wars have created a lot of new competition for Netflix. But the bigger shift has been more existential – ushering in streaming video as the dominant form of television, while the importance of cable television is slowly fading away.
As a result of that shift, consumers want Netflix more than ever.
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