Millions of people in the world today are subscribed to Netflix, a widespread streaming service. Its distribution model gives consumers direct access to a vast library of licensed films and television series, as well as its own Netflix originals, for just a small monthly fee. They have seen a large increase of users (network effects), and some people identify Netflix’s dominance as a monopoly.
However, their growth has begun to stall. Other media players, such as Disney, NBC Universal, Warner Media, Comcast, and AT&T will soon be launching their own streaming services, and competition will rise. They may lose rights to some of the popular TV shows, like “Friends” (AT&T) and “The Office” (Comcast). Netflix will have to create their own originals to entice their consumers to stay, but they will likely have to increase the price of the subscription plans if they plan to invest in original films.
The ability for consumers to subscribe and unsubscribe whenever they want is known as “churning”. It is necessary for competing streaming services to have the ability to serve consumers in an attractive price and value fashion.
Will Netflix be able to keep up? If their original content doesn’t pay off, and if Netflix does not have a large licensed content library to rely on, they might see a drastic decrease in subscribers in the coming years.
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I don't think Netflix will be able to keep up well. They produce hundreds upon hundreds of originals (https://en.wikipedia.org/wiki/List_of_original_programs_distributed_by_Netflix), however only a small percentage of those are well known and become popular. It was reported in 2018 they spent over $12 billion on originals and it is heading towards $15 billion for 2019. Another interesting question, is what is drawing consumers to these new platforms?
ReplyDeleteI think the evolution of the entertainment streaming industry is very interesting. Streaming services like Netflix found success because people wanted to have access to a large amount of movies and shows at a low cost. It's cheaper to pay for one provider, like Netflix, than have to constantly rent or purchase, or subscribe to multiple. However, as companies begin to take back their content, these services begin to split and separate into different providers. This is inconvenient and a greater cost for consumers, most of whom would prefer to have access to content without having to pay multiple companies.
ReplyDeleteIt seems to me that if Netflix wants to be successful they need a change in strategies. The Netflix originals that they spend an enormous and unreasonable amount of money on does not even captivate audiences as its intention. They need to find another way in this competition to bring back their audience, perhaps price changes or something else of the sort.
ReplyDeleteIn the "beginning" of the rise of Netflix's streaming platform, I knew of many families that gave up cable because they had Netflix. I think this was a good option for those who only wanted to pay a small fee to get direct entertainment. With the new Netflix originals, I was actually surprised to hear that they will spend $15 billion in 2019. I think that the idea to expand their brand was good with these originals, but the excessive costs should have been a sign to stop or decrease costs, as the marginal returns are decreasing. Personally, I have really enjoyed Netflix originals, like Black Mirror, but many shows being taken off of Netflix definitely are affecting my decision on if I should continue my subscription. It will be interesting to see how the content on Netflix changes in the future.
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