Entertainment

How Netflix Has Been Preparing For Its Big Inevitable Subscriber Drop

Netflix’s massive growth since its inception is a huge success story that actually created the market they now compete in, but without their own catalog of media, it would only benefit if they were first in the market before real competition came. . Netflix’s growth will continue as long as it’s the only service of its size, offering a reasonable selection of licensed content at reasonable prices, but when major studios start amassing huge libraries on platforms like Disney Plus and HBO Max, Netflix had to deliver. A little competitive to keep itself at the top.

As established players, established studios lock in their theatrical and TV revenue, so it makes sense for them to be slow to respond to decades-old businesses through traditional distribution models; however, as Netflix’s annual streaming revenue exceeds With Disney’s box office revenue in any given year (especially since Netflix makes a bigger profit from that revenue), big studios have had to jump into the field. Then later. †

Movie and TV content has a huge global audience, but unless more hours per day can be added, consumption by a particular subscriber is limited, so as more players enter the arena, many Netflix subscribers should choose it from the many competing options one. With nearly 3 billion people around the world without even access to the internet, the biggest growth opportunities in the future will lie in entering new markets rather than competing with existing ones, although this is also a slow process that means the streaming wars can finally go from sprints to marathons.

Why Netflix had to take on huge debt

Of course, Netflix knows it will eventually have to deal with Disney’s established library and IP catalog, which is why Netflix has taken on so much debt to increase its content production budget. Netflix has to produce not just original content, but enough to compete with the libraries that other studios have spent decades investing billions of dollars into thousands of titles, and only a fraction of the time for young streaming companies to do it. thing. happened, amassing more than $15 billion in debt in just five years.

RELATED: Netflix subscriber disaster explains Stranger Things season 4 split

Without a huge library of original content, including its own popular new or acquired IP, Netflix has no chance of becoming a second-tier service in the long run. He tries to build original intellectual property such as: weird stuff refused, while others had to be acquired, e.g. magician† Netflix’s massive debt has spawned content production hell, both big hits and big flops, and it’s even known for canceling many of its fan-favorite shows, presumably to make room for more attempts to look bigger, But it was more important initially that the content simply existed and was original, and as more services entered direct competition, the need for quality increased.

Netflix’s movies and shows have caused a lot of buzz during awards season, and there are plenty of blockbuster movies and shows that have set audience records on the platform, so in many ways, the effort to build a library of original series and shows has been made from almost scratch. great success. , but Netflix’s original intellectual property still doesn’t match the Marvel, Star Wars, Harry Potter or DC Comics content owned by Disney Plus and HBO Max, but at least streaming is still running and has a significant lead with over 220 million subscribers, while the next runner-up, Disney Plus, still has just 130 million.

How Netflix is ​​changing to stay competitive in the future

Netflix may have to maintain a huge budget for original content to catch up with newfound rivals, though it can do so with a smaller budget and less debt. As a result, content may be more targeted, streamers are more quality-focused, fewer hit shows may be canceled in favor of more stakes, but content budgets may also be focused on new entrants in international markets to continue their popularity among viewers First time success. Who doesn’t have content loyalty yet.

Maximizing profit margins for existing subscribers is also a major concern, with price hikes and attempts to monetize free loaders sharing other people’s accounts already evident. Another new foray into the space is a new ad-supported tier for streaming, hoping to make subscription costs more attractive to customers who don’t care about ads, while adding a new revenue stream for paying advertisers.

Netflix may have popularized binge-watching, and it may not go away entirely, but as the streaming wars enter a new competitive phase, Netflix will want to make the most of every minute of content it produces. Might mean considering alternative release schedules for its original release. That could mean weekly releases of some of its shows, or a shift to releasing smaller seasons more frequently, as Netflix already does for most of its original animated content.

A flexible series release schedule can make a big difference in plot content, as can Netflix movies. Netflix is ​​no stranger to theatrical releases, as many of its big movies have limited theatrical releases before hitting the web, but HBO Max has proven that movies can be popular with streaming audiences at the same time. Time to generate tens of millions of dollars over a broad launch weekend, which could be a huge infusion of additional cash to offset the content production budget without seriously impacting the user base.

It’s too early to call this the beginning of the end for Netflix, but it’s certainly fair to call it the end of the beginning, as Netflix is ​​finally out of its first market-exclusive runway, and the streaming giant’s success will obliterate. As the streaming wars enter a new phase, it depends on its ability to compete directly with Hollywood’s established machines. Hopefully this means that no other competitor will see the same rapid growth as Disney Plus or HBO Max, and Disney Plus and HBO Max’s growth may also slow, but their established libraries, IP catalogs and built-in audiences will continue For Netflix as the streaming wars continue, his money.

Content

How Netflix Has Been Preparing For Its Big Inevitable Subscriber Drop

Netflix massive growth since its inception is a huge success story, virtually inventing the market they now compete in, but without a media catalog of its own, being first to market would only benefit them until the real competition came along. Netflix’s growth would last as long as it was the only service of its size providing a reasonable selection of licensed content for a fair price, but when major studios started corralling their massive libraries onto platforms like Disney Plus and HBO Max, Netflix needed to offer something competitive of its own to stay at the top.
As the entrenched players, established movie and TV studios have a lock on their revenue from theaters and television, so it makes sense that they’d be slow to react with decades of established business through traditional distribution models; However, with Netflix posting more yearly streaming revenue than Disney has ever brought in at the box office in a given year (especially with Netflix keeping a much larger margin of that revenue), the juggernaut studios were destined to invade Netflix’s streaming space sooner than later.
The global audience for movie and TV content is huge, but unless more hours can be added to the day, there’s a limit on how much any given subscriber is capable of consuming, so as more players enter the arena, many Netflix subscribers will need to select it from one of many competitive options. With nearly three billion people in the world who don’t even have access to the internet, the biggest growth opportunity of the future will be in establishing new markets, not competing in the already established one, although that’s also a slow process, meaning the streaming wars may finally be shifting from a sprint to a marathon.
Why Netflix Had to Take On Massive Debt

Of course, Netflix knew they’d have to face the established library and IP catalog of Disney eventually, which is why Netflix took on so much debt to fuel its content production budget. Netflix didn’t just need to produce original content, but it needed to produce enough to compete with libraries other studios spent decades building with billions of dollars invested in thousands of titles, only the fledgling streamer had just a fraction of that time to make it happen, racking up over $15 billion in debt in just half a decade.
Related: Netflix Subscriber Disaster Explains Stranger Things Season 4 Split
Without a massive library of original content, including new or acquired popular IP of its own, Netflix wouldn’t stand a chance as more than a second-tier service in the long run. Some of its attempts to build original IP, like Stranger Things took off, while others had to be acquired, like The Witcher. Netflix’s massive debt-fueled inferno of content production included both big hits and huge misses, even developing a reputation for canceling many of its fan-favorite shows, likely to make room for more attempts to pop even bigger, but initially it mattered for more that the content simply existed and was original, with the need for quality rising as more services come into direct competition.
Netflix’s movies and shows all draw a lot of buzz in awards season, along with a number of big blockbuster movies and shows setting platform viewership records, so in many ways the effort to generate an original film and TV library virtually from scratch was a big success, but original Netflix IP still doesn’t hold a candle to stuff like the Marvel, Star Wars, Harry Potter, or DC Comics content owned by Disney Plus and HBO Max, but the streamer is at least still in the race, still maintaining a considerable head-start with over 220 million subscribers, while the next runner-up, Disney Plus still has just 130 million subscribers.
How Netflix Can Change to Continue Competing in the Future

Netflix will likely need to maintain a massive budget for original content to continue playing catch-up with its new competition, although it may be able to accomplish this with a smaller budget and less debt. As a result, the content may be more targeted, with the streamer focusing more on quality and maybe canceling fewer successful shows in favor of more gambles,  but the content budget will likely also focus on newly accessible international markets to continue their first-to-market success with audiences who don’t already have content allegiances.
Maximizing the profit margin from existing subscribers is also a major focus, which is already visible with price hikes and attempts to better monetize freeloaders sharing someone else’s account. Another new venture in this area will be the streamer’s new ad-supported tier, hoping to make subscription costs more attractive for customers who don’t mind ads, while also adding a new revenue stream for paid advertisers.
The binge model may have been popularized by Netflix, and it likely won’t go away entirely, but as the streaming wars enter a new stage of competition, Netflix will want to get maximum utility out of every minute of content it produces, which may mean considering alternate release schedules for its original releases. This may mean weekly releases for some of its shows, or switching to more frequent drops of smaller seasons as Netflix already does with a lot of its original animated content.
Flexible release plans for series might make a difference with episodic content, and the same may be true for Netflix movies. Netflix isn’t a stranger to theatrical releases having put many of its big movies in theaters for a limited release before they hit the internet, but HBO Max has proven movies can be popular with a streaming audience while also generating tens of millions of dollars in a single wide-release weekend, which could be a huge added injection of cash to offset the content production budget without drastically impacting the subscriber base.
It’s far too early to dub this the beginning of the end for Netflix, but it’s certainly fair to call it the end of the beginning as Netflix is finally running out of its first-to-market exclusive runway and the streaming giant’s success moving forward will depend on its ability to compete directly with well-entrenched Hollywood machines as the streaming wars move on to a new phase. Fortunately, that should mean no other competitors will see the kind of rapid growth of Disney Plus or HBO Max and Disney Plus and HBO Max will likely also both see slower growth, but their established libraries, IP catalog, and built-in audience will still give Netflix a run for its money as the streaming wars continue.

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