Netflix Nips at Disney’s tail

A Changing of the Guards?

Last Thursday, Netflix was for a brief moment the world’s most valuable media company as its stock rose to a record high, creeping above Disney for the first time. By Thursday evening the latter recovered and retook its familiar position at the top of the pile. Netflix has remained in second place, ahead of Comcast who they had previously trailed.

This momentary shift was not just a blip in the matrix, the rise of the streaming site has been rapid and unfazed by challengers. Neither Amazon Prime Video nor Disney’s Hulu have dented its progress and this is largely down to Netflix’s decision to invest in original content, examples being “Stranger Things” and “The Crown” amongst others.

Netflix Growth Costs Cash

The reliance on original content comes at a cost as Netflix continues to splash the cash on new productions to support its growth. It is expected that the company will spend over £8 billion on content in 2018 with around 85% of this being invested in originals.

By committing to hosting around a thousand originals by the end of 2018, they are clearly responding to a potential weakness. As Disney have begun to cut their ties with Netflix in preparation for the launch of their own streaming site, the latter have started channelling their investment into original material to bolster their brand.

In the short term this has resulted in a debt increase but the tactic may result in Netflix retaining their position as the number one streaming format despite the affluence and clout of both Disney and Amazon. By supplying content that can’t be found elsewhere, Netflix protect themselves from companies with more purchase power and potentially isolate themselves from competition.

A Surprise Package for Producers?

Ted Sarandos, chief content editor, has described the present as “a great time to be a producer” thanks to the streaming site’s recent shift in approach. The variety of shows offered by Netflix is an inherent positive for both the viewer and the producer.This is highlighted by Sarandos when he describes how “you wouldn’t guess that people who like ‘Bob’s Burgers’ also like ‘American Horror Story’”.

By consistently increasing the variety of shows and promoting creativity over ratings, Sarandos is confident of pleasing the majority of viewers.

A Netflix Monopoly?

Netflix have encouraged creativity amongst producers and creative execs but should one question how long this will last? If Netflix are successful in fending off the competition then might our worst fears be realised as a single company succeeds in monopolising the viewer experience?

It seems unlikely, as whilst Netflix has grown exponentially, it still generated only $11.7 billion in revenue in 2017 compared to Disney’s $55.7 billion or Comcast’s $84.5 billion. It also must be noted that Facebook, Apple, Amazon and Google’s figures all range from $500 to $900 billion.

Production Time

In summary, it is likely that the competition will remain and that each new or existing streaming site will follow suit regarding the incorporation of original content.

It may be an exciting time for producers going forwards as online platforms continue to draw viewers away from their television sets but look to promote a wider variety of content than ever before. We at Aimimage and Ice Film will of course be more than willing to join in the fun if this projection becomes a reality!