News culture Netflix must react! The agreement between its competitors puts the platform in danger
Published on 01/15/2023 at 11:40
Thunderbolt yesterday in the world of SVOD platforms: Netflix lost its throne on the territory of the United States.
Last October, Netflix recorded 2.4 million subscribers for its third quarter of 2022, a figure which then far exceeded the expectations set at one million subscribers. After seeing its stock decline during the year due to a fall in its subscribers, the SVOD platform finally seems to be back on a peaceful path to growth, with 223 million subscribers worldwide. The box’s profit was $1.3 billion as revenue rose about 6% from a year earlier to $7.9 billion. Two figures once again well above the company’s forecast for the quarter.
A few months earlier, investors were agitated as the stock price tumbled after news of a net loss of 200,000 subscribers; it was the first reduction in the number of subscribers in ten years of existence. Netflix, always optimistic, then claimed to still maintain “one of the best retention rates in the sector” and blamed it in part on the suspension of its services in Russia, which would have lost 700,000 accounts in the process. Today, if it is picking up again, the streaming juggernaut must stay the course; it is for this reason that since Thursday November 3, 2022, subscribers have access to a new and unique formula dedicated to softening the smallest budgets: Netflix Essential with Pub, billed at 5.99 euros per month. Interested parties are entitled to the entire Netflix catalog with a few exceptions and access to Netflix on two screens in SD (480p) which includes 4 to 5 minutes of advertising per hour of content. Frankly well received in France, it “had nearly 1.4 million subscribers at the end of December (4.6% of French people), three out of five of whom are new customers”, notes the press release from NPA Conseil. But opposite, the competition is starting to really rage.
Netflix Falling From The Throne
Despite conspicuous efforts to maintain his leadership, co-founder Reed Hastings had to deal with some bad news this week: Netflix has lost its place as the number 1 service in the United States in 2022 according to the study by the specialized firm Parks Associates. It is now Amazon Prime Video, hitherto eternal second, which has stolen the first place of the podium, relegating Netflix to second place. The third and fourth places are occupied by HULU and Disney+, which, it should be noted, belong to the same group. In detail, Amazon Prime Video held 21% market share in the USA at the end of 2022, compared to 20% for Netflix. A small advance, but still historic.
In 2022, Amazon Prime Video claimed to have more than 200 million subscribers worldwide compared to 223 for Netflix. But in the United States, competition between platforms is more intense; problematic, when we know how essential the territory is for the platform at N rouge; In 2022 alone in the United States and Canada, 75 million households out of a total of 142 million subscribed to Netflix. But despite an attractive offer, in front of him, Amazon Prime Video is gaining considerable momentum. This week, the company formalized that it had recovered the rights to the HBO series which will now be accessible via a paid option called “Pass Warner”. A notable novelty which even includes the flagship series still available on OCS such as House of the Dragon.
From March 2023, at a price yet to be determined, happy Prime Video subscribers will also be able to exclusively enjoy new seasons of popular series (Perry Mason, Succession, Somebody Somewhere), great unreleased shows (White House Plumbers and True Detective: Night Country) and acclaimed classics (Sex And The City, The Wire and Chernobyl). Moreover, they will have access to the 12 Warner Bros Discovery channels: Cartoon Network, Boomerang, Boing, Eurosport 1, Eurosport 2, Discovery Channel, ID, Discovery Science, CNN as well as Warner TV, TCM Cinema, Adult Swim and Toonami. The proposal is daunting and today seems to surpass all those of competitors.
If he can of course count on a slew of blockbusters, Netflix, on the other hand, relies more on its original productions, which represent more than 50% of all available content. (Ahead of him, only Apple TV+ gives more importance to its original content). Ampere data also indicated that in the first quarter of 2022, the platform’s original and exclusive programs represented on average 12% of the 100 most popular titles available on SVOD in the United States; this is the highest share of all SVOD platforms. According to Joe Hall, analyst at Ampere Analysis, the strategy allows Netflix “to acquire more international subscribers to compensate for its maturity in developed markets”. The box would therefore have every interest in continuing on this vein.
Netflix’s growing self-sufficiency in content is necessary in today’s streaming market. The rise of studio-led direct-to-consumer platforms has led to fewer licensed content as studios prefer to keep their productions in-house. Original content also allows platforms to offer exclusive titles internationally without additional licensing costs. This aspect is particularly important as Netflix seeks to acquire more international subscribers to compensate for its maturity in developed markets.
On the other hand, the public adheres less to the video game content of the platform: it is estimated that an average of 1.7 million people engage in it daily, or less than 1% of the millions of subscribers.
And Disney+ in all this?
3rd in the ranking, Disney + continues to develop quietly on its side but still recorded an operating loss of nearly 1.5 billion dollars last year in its efforts to compete with its colleagues. It can nevertheless count on the strength of its Star Wars and Marvel licenses which, among other things, brought back 12.1 million subscribers during the last quarter, enough to increase the total number to 164.2 million. subscribers. Now, if you include Hulu and ESPN+ offerings, then Disney’s streaming business tops 235 million subscribers. ; now remains for Disney+ to become profitable following its losses; Bob Chapek believes this will be possible in fiscal year 2024, if inflation does not stand in his way. Following which, “we believe we will be on track to achieve a profitable streaming business that will drive continued growth and generate long-term shareholder value,” he said.
To expand its base in the Asia-Pacific region, the big-eared firm recently hit hard by announcing its collaboration with Kodansha, certainly the biggest publishing house in Japan. The platform can then take advantage of exclusive rights to a few behemoths, starting with Tokyo Revengers: Christmas Showdown Arc. A good strategy to watch, as global demand for anime content has increased by 118% over the past two years according to Parrot Analytics.
Japanese anime fills the white space in our content development plans and we believe this expanded collaboration will be a game changer in Disney’s future animation strategy in Japan. We look forward to bringing Kodansha’s anime titles and prized intellectual property to the global stage – Carol Choi, Executive Vice President of Disney Original Content Strategy Asia-Pacific.