All Streaming Roads Lead to Netflix’s Dominance, Competitors Follow Suit

Netflix, owned by rivals including Walt Disney, Warner Bros. Discovery, Paramount Global, and Comcast, is facing the next phase of the streaming industry economy. While it is still expensive to produce and license movies and TV shows, consumers want to pay less and Wall Street will no longer be able to sustain growth at any cost. Compelling entertainment is key to driving business, and delivering that depends on having a solid catalog of programming and the ability to extend it, which requires enough subscribers to support growth while making a profit.

Netflix has the largest audience and is starting to generate meaningful cash flow. It benefited from first hitting the market in 2007, the same year Apple announced his iPhone. Hollywood producers focused on finding buyers for their products outside of cable and satellite operators, and Netflix accepted big losses at first. The relationship lasted nearly ten years, but Netflix cut its market value over the decade to 2017, putting it at 40. However, by then, Hastings already had a big head start.

The streaming industry has become crowded with competitors like Disney+, Paramount+, and NBC’s Peacock, making it a challenge for Netflix to maintain its stronghold. It has responded by introducing low-cost packages that include advertising and has cracked down on people sharing access to their accounts with friends and family.

Netflix has the edge in investing profits back into its business, spending $17 billion on shows like “The Diplomat” in 2020, equating to about $72 per customer, compared to about $76 in 2021, while Disney’s equivalent spending of $30 billion last year equates to $130 per streaming subscriber. Additionally, incumbents like Paramount and NBC have the added challenge of balancing their traditional TV business, which is becoming less profitable and a marketing disadvantage for streaming.

Overall, Netflix with its large audience and focus on revenue is expected to win out in the streaming industry.

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