1 – Recommendation
This week, Netflix premiered a three-episode documentary about Bill Gates. Inside Bill's Brain: Decoding Bill Gates offers a different perspective on the story of the Microsoft founder, covering projects from the Bill & Melinda Gates Foundation, key people in his life — such as his mother and Melinda herself — and, most brilliantly, a portrait of how his mind works and the reasoning and methods he uses to seek solutions to humanity's greatest challenges. I strongly recommend it.
2 – Watch Out, Netflix
Netflix became known worldwide for offering an enormous catalog of movies and series at an affordable price, available whenever you want.
It put an end to what we now look back on as a real hassle: the bureaucracy of renting a movie:
- Drive to the video store;
- Rent a movie (not too many, since it was expensive);
- Watch it as soon as you got home (you had 24 hours to return it);
- Return it on time (in the case of VHS, it had to be rewound), otherwise you'd be charged a late fee.
The savvy ones would go on Saturdays, keep the movie the entire Sunday, and only return it on Monday. Since everyone knew the trick, if you didn't get there early, there would be no new releases left.
All of this might sound old and outdated, but it wasn't that long ago. In 2004, Blockbuster had 9,094 stores spread across the world and 84,000 employees.
Today, only 1 store remains open — in Oregon, USA.
The same wind that toppled that giant seems to be blowing back toward the very company that brought it down.
Netflix had two major turning points in its history:
In 2007, when it shifted its subscription model to streaming, and in 2013, when it produced its first original series: House of Cards.
This happened because CCO (Chief Content Officer) Ted Sarandos wanted Netflix to "become HBO before HBO became Netflix."
As it turns out, HBO and several other media conglomerates now want — and are learning — to be Netflix.
Services such as Disney+, Apple TV+, NBC Universal, and HBO Max promised to come after the streaming queen with full force as early as 2020.
The series The Big Bang Theory became one of the most expensive series in the world. The show was acquired by WarnerMedia (which also acquired the rights to the series Friends, previously held by Netflix) for $500 million over five years. The series will be part of the HBOMax streaming service, which will feature a massive lineup of content from Warner, HBO, and other brands.
How does this affect Netflix?
Netflix is an online video rental platform and, even with its own original productions, it still carries thousands of catalog titles it does not own.
Those are precisely the movies and series that competitors want to reclaim, since they will have their own streaming platforms to distribute them.
What does Netflix lose from this? That content accounts for more than 40 percent of what subscribers currently consume on the platform.
Here is how the main competitors plan to keep Netflix up at night in the coming year:
Apple TV+ (November 2019):
Investing more than $6 billion in original content to compete with Netflix.
Steven Spielberg confirmed with an exclusive series.
Price: $9.99
NBC Universal (2020):
Has Saturday Night Live in its catalog.
Will pull The Office from the Netflix catalog (the series logged more than 52 billion minutes watched on the platform in 2018).
Price: undisclosed
Disney+ (2020):
Pixar, Disney, Star Wars, National Geographic, all seasons of The Simpsons and Fox content, plus all Marvel Studios content and films.
Price: $6.99
HBO MAX (2020):
The streaming service belongs to WarnerMedia, which owns more than 40 media channels — including HBO, Warner Bros, CNN, Cartoon Network, the Hanna-Barbera group, TCM, TNT, TBS, Adult Swim, Boomerang, New Line Cinema, and much more.
Price: undisclosed
The last two on the list are expected to be Netflix's biggest rivals. One for having Marvel Studios content, the other for the sheer "cannon" of content at its disposal.
HBO has always been respected for creating high-quality original content, and bringing that together with more than 40 entertainment channels is a major draw — all while Netflix's catalog grows increasingly smaller as competition intensifies.
Experts believe HBO MAX has a strong chance of becoming the next streaming queen.
More competition on the way
As if that weren't enough, Facebook's video channel, Watch, reached 140 million daily viewers. Part of this result is due to investments in content featuring entertainment and sports personalities (such as Stephen Curry and Jada Pinkett-Smith). Now it just needs to win over the remaining 1.56 billion users.
3 – Puffs or Frosties?
Have you seen Bandersnatch, the Netflix interactive film in which you choose the protagonist's decisions? (If not, watch it). Well: due to matters involving the GDPR, the European general data protection regulation, the company is required to retain all of your data — including the choices you make throughout the experience.
4 – Falling Short of the Target
Expecting to gain 5 million new users in the second quarter of 2019, Netflix had to settle for just over 50% of its target, adding only 2.7 million new customers. This announcement caused the streaming service's stock to drop 10%.
The worst news: the series Friends and The Office, two of the biggest hits in the catalog, are still available. What could happen when these titles leave in 2020?
For CEO Reed Hastings, the Q2 content simply did not attract as many people as expected. The site Recode interprets this as "Netflix's proprietary content does not draw audiences the way titles from other major studios do." And competition is likely to intensify further once major players like Disney and Warner launch their own streaming services.
Another possible cause is the price increase — the subscription fee rose by $2 in the US. The increase is also set to reach regions such as Spain, France, and Germany. According to Hastings, the forecasting miss occurred across all regions, but especially in those that saw subscription prices rise.
5 – The Arrival of Amazon Prime
For R$9.90 per month, Amazon will offer free shipping on purchases as well as access to its video and music streaming services (the equivalent of Spotify).
Brazil Loves Netflix
In Brazil, Netflix is the audience favorite with 8 million unique subscribers.
This makes Brazil the third largest country in the world by number of users, behind the United Kingdom and the United States.
From 2017 to 2018, the number of subscribers grew 23 percent in Brazil, but this year growth is expected to settle at 14 percent, according to eMarketer analysis.
The outlook only gets worse: eMarketer estimates that by 2022 the Brazilian market will grow by just 2.5 percent.
The reason may be the subscription price increase, which also caused more than 120,000 Americans to cancel their subscriptions this year alone.
With competition intensifying and the company's catalog shrinking considerably in 2020, these numbers are likely to deteriorate even further.
The Streaming Wars are about to begin, and the ones who stand to gain the most from all of this are us, the customers, who will have more options at more competitive prices.
It seems HBO (and Disney, and NBC…) is finally becoming Netflix, just as Sarandos feared…
Netflix is one of the companies that most inspires executives and entrepreneurs worldwide.
The way it brought down Blockbuster, reinvented its business model, and became one of the most valuable companies in the world is proof that businesses less prepared for Digital Transformation must get ready for a Future that has already arrived.
However, if even Netflix itself needs to reinvent in the coming years to avoid losing market share to new and determined competitors…
What chance do traditional companies have in a market that is moving faster, becoming more competitive, and growing ever more technological?
Sources: Starse and ACE