Netflix Plans to Spend $7B on Content in 2018(streamingobserver.com)
streamingobserver.com
Netflix Plans to Spend $7B on Content in 2018
https://www.streamingobserver.com/netflix-plans-to-spend-7-billion-on-original-content-in-2018/
175 comments
It was only a matter of time before large scale streaming tech got commoditized. That was Netflix's moat early on and now it will have to be their content library. They clearly saw the writing on the wall long ago.
The golden age of streaming is over IMO, now content will be increasingly divided into their own streaming services. I wish that streaming video were regulated like radio, with a flat rate per minute that gets paid back to the license owner. I can dream...
The golden age of streaming is over IMO, now content will be increasingly divided into their own streaming services. I wish that streaming video were regulated like radio, with a flat rate per minute that gets paid back to the license owner. I can dream...
The issue is that I am ready to pay several times what I currently pay Netflix in order to get access to a full library of movies and series (so something where content is added all the time and never removed).
However, I am not at all ready to pay that sum to 4 or 5 services.
Sadly, savage download seems to be the most convenient option.
However, I am not at all ready to pay that sum to 4 or 5 services.
Sadly, savage download seems to be the most convenient option.
What possible justification is there for that? With radio there was at least the colorable reason that public goods (limited radio spectrum) were involved. Here's it's private content streaming from private servers over private wires.
I'm not certain if it predates the radio compulsory licensing, but I think the compulsory licensing for recordings is at least as old, so it's not about limited radio spectrum, it was rather about preserving certain rights that people were worried copyright would unduly restrict.
Well, in the US, copyright exists "To promote the progress of science and useful arts" I can argue that being able to be able to get movies in one place is certainly useful. Or that it seems reasonable that in exchange for the unnatural monopoly of copyright, strings can be attached.
All property rights are "unnatural" (animals don't recognize property rights, only possession). In my view, copyrights are the least unnatural. We grant property rights in land with few restrictions, yet real property rights are a greater restriction on freedom than copyrights. A copyrightable work, unlike a piece of land, is the fruit of someone's labor. Land, in contrast, pre-exists the owner. And whereas land is a scarce natural resources, the universe of copyrightable works is unlimited. There is no good reason to attach more strings to copyright than to real property.
Great points, but what's next after streaming?
Piracy.
What's after piracy?
More piracy except with VR.
Honestly, Netflix had a chance to really damage piracy by costing the product at the market rate not the "We can get away with this because we own government" lobbiest rate (It's called the Mickey Mouse Act for a reason after all).
The incumbents decided they didn't want that, so instead they'll split into a whole bunch of services that combined cost more than netflix would have done for the same amount of content and the people who would have paid a fair price but not an unfair price will just go back to torrenting or whatever Blockchain(TM) DarkNet(TM) thing replaces it.
If I was running the government (perish the thought), I'd actually be wary about cracking down too hard on copyright infringement (on the consumer side at least) because it will push users towards solutions that are genuinely anonymous (porn and movies will do that, expressing their democratic rights..probably not) and frankly as the sole voting member of Noirlord-topia that'd scare the shit out of me a lot more than Disney been pissed they made slightly less.
I don't watch much TV tbh (I'm in the UK and I don't have a TV license, haven't had for years) and I still have a Netflix subscription because occasionally I'll watch the odd movie, it's worth 7.99 a month to watch the odd film once or twice a month plus the occasional TV show, it's not worth 4.99 * 6 services.
I think I'd actually prefer a "£0.5 per episode, valid for 60 days" model to that.
Think is I can go watch a movie for £4.99 at the local cinema that has some absurd 8K screen, 27 speaker surround and comfy seats, why would I pay so much more to watch the odd movie.
I simply wouldn't.
Honestly, Netflix had a chance to really damage piracy by costing the product at the market rate not the "We can get away with this because we own government" lobbiest rate (It's called the Mickey Mouse Act for a reason after all).
The incumbents decided they didn't want that, so instead they'll split into a whole bunch of services that combined cost more than netflix would have done for the same amount of content and the people who would have paid a fair price but not an unfair price will just go back to torrenting or whatever Blockchain(TM) DarkNet(TM) thing replaces it.
If I was running the government (perish the thought), I'd actually be wary about cracking down too hard on copyright infringement (on the consumer side at least) because it will push users towards solutions that are genuinely anonymous (porn and movies will do that, expressing their democratic rights..probably not) and frankly as the sole voting member of Noirlord-topia that'd scare the shit out of me a lot more than Disney been pissed they made slightly less.
I don't watch much TV tbh (I'm in the UK and I don't have a TV license, haven't had for years) and I still have a Netflix subscription because occasionally I'll watch the odd movie, it's worth 7.99 a month to watch the odd film once or twice a month plus the occasional TV show, it's not worth 4.99 * 6 services.
I think I'd actually prefer a "£0.5 per episode, valid for 60 days" model to that.
Think is I can go watch a movie for £4.99 at the local cinema that has some absurd 8K screen, 27 speaker surround and comfy seats, why would I pay so much more to watch the odd movie.
I simply wouldn't.
I don't know if it's really fair to blame Netflix for this one. There's no obligation to charge the minimal price for your product, just the minimal competitive price. As for content, Netflix was able to dominate streaming early on because nobody had realized how big the market was going to be yet. It's a lot harder to dominate the market with other people's content now because everyone is realize how valuable their contracts with Netflix were and are starting to pull the rights to stream their content in favor of hosting their own platforms which forces Netflix into the content creation business if they want to stay relevant. None of that is really Netflix's fault in isolation.
Hmm, I wasn't intending to blame Netflix, Netflix had an interesting model, the incumbents just choked them off when they saw how popular it was going to become (and in fairness to Netflix they saw it coming and hedge their bets with their first forays into original content which gave them both some ability to weather the storm and engage in cross-licensing deals with existing networks - the massive expansion was worth it imo but it's a race against time for them, can they get enough original content to justify the subscription as they lose content to license deals expiring and keep the users they have and grow enough to justify the costs, if they can they'll win, if they can't they'll blow a lot of cash and crater).
It's kinda a tragedy of the commons, they all want to be Netflix without realising that Netflix only works with a large back catalogue of content from multiple places.
It's kinda a tragedy of the commons, they all want to be Netflix without realising that Netflix only works with a large back catalogue of content from multiple places.
Pirate streaming but that's already a thing. I think the interesting thing about piracy, ignoring the entire cost/no-cost and legality debates, is that pirates have the potential to always focus entirely on the end-consumer's experience because they don't care about the red tape that constricts the services provided by legitimate businesses.
Not only is it a thing, it's (from a UX pov) a better thing.
Some of the least techiest people I know have Kodi/Exodus boxes.
I don't even have a Kodi box and I have a fast linux PC connected to the living room TV.
Some of the least techiest people I know have Kodi/Exodus boxes.
I don't even have a Kodi box and I have a fast linux PC connected to the living room TV.
Lawyers whacking at digital hydras.
Streaming
television
It made sense when there were only a few platforms doing streaming services. If everyone starts doing it, the walls begin to close in. Then all of a sudden there are hundreds of streaming services all with their own exclusive content. At that point, what makes it different than a TV channel besides being on-demand?
Isn't this end game what a lot of people wanted (including myself). Pay for only the channels you want, when you want. I like not having to pay for ESPN when the Warriors aren't playing (although pay per game might make me even happier at the right price).
What I want is to pay for the shows I want.
I'd be happy to pay by the hour.
I'd be happy to pay by the hour.
That's probably not working, because producing the quality stuff is so expensive that people are not ready to pay enough to cover the production costs.
In the streaming business you lure people into paying more than they otherwise would (on average - your mileage may vary) by giving them a feeling that they get so much content for the money. Even though in practice they then actually find a quite limited amount of content they actually enjoy. Also there's the typical trick of subscription services that "you can cancel at any time (but you wont)", which makes the purchase feel more affordable.
In the streaming business you lure people into paying more than they otherwise would (on average - your mileage may vary) by giving them a feeling that they get so much content for the money. Even though in practice they then actually find a quite limited amount of content they actually enjoy. Also there's the typical trick of subscription services that "you can cancel at any time (but you wont)", which makes the purchase feel more affordable.
Amazon sells shows by the show or season. Here's an example: https://www.amazon.com/Halt-Catch-Fire-Season-3/dp/B01JFWK71...
Yeah, that's close to what I like. Except the prices are at least twice as high as I'd pay for TV. Movies are fine.
Maybe that's my bad attitude and I should pay what it costs. Or Amazon is pricing these too high for some reason.
Also, I'd need to see the first few episodes of any show before I pay up. I start a lot of shows, and hive up on most of them.
Maybe that's my bad attitude and I should pay what it costs. Or Amazon is pricing these too high for some reason.
Also, I'd need to see the first few episodes of any show before I pay up. I start a lot of shows, and hive up on most of them.
And all of it accessible only so long as you keep paying (and paying, and paying).
Back to discs, for me.
A year ago, when I saw how large my friends' collection of Bluerays and DVD's had grown, I thought they were taking things a bit far.
Now, not so much. At least, for content you want to watch more than once.
Since I moved, my local library is a significant drive away. But I've also been meaning to get over there and have a look at the current state of their collection, as well.
I don't need to see the latest thing, right away. So, this will work well, for me.
P.S. My friends have a rather nice viewing set up. And if it's the two of them, that's getting up towards $20 for two tickets to the theater -- for first releases. Invite a couple of friends over to their place, and even with Blueray purchases, they've already saved over the price of tickets. And... no unwanted distractions.
Back to discs, for me.
A year ago, when I saw how large my friends' collection of Bluerays and DVD's had grown, I thought they were taking things a bit far.
Now, not so much. At least, for content you want to watch more than once.
Since I moved, my local library is a significant drive away. But I've also been meaning to get over there and have a look at the current state of their collection, as well.
I don't need to see the latest thing, right away. So, this will work well, for me.
P.S. My friends have a rather nice viewing set up. And if it's the two of them, that's getting up towards $20 for two tickets to the theater -- for first releases. Invite a couple of friends over to their place, and even with Blueray purchases, they've already saved over the price of tickets. And... no unwanted distractions.
You don't need to subscribe to all the services at once, you can do them one at a time.
This worked for me. I wanted to watch 2 shows on HBO. I signed up for a free trial, watched 2 shows in 2 months, and paid $14.95. Now they don't have anything I want to watch, so I canceled.
Side note: Last night I was in a hotel with hundreds of channels including HBO, and there was nothing to watch, so I watched Netflix, which costs probably less than 10% of what I would pay for the hotel's selection at home.
Side note: Last night I was in a hotel with hundreds of channels including HBO, and there was nothing to watch, so I watched Netflix, which costs probably less than 10% of what I would pay for the hotel's selection at home.
You mean actual competition, instead of a handful of companies controlling users' eyeballs? Perish the thought!
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Would Netflix be spending $7B on content if they were the Spotify of movies?
and device makers like Apple getting into this business as well. I am waiting for Samsung etc to also jump in.
Staggering costs like these are exactly why Disney is actually in a great position to start its own streaming service. It is already one of the biggest media companies in the world, and has ownership of tons of IP beloved worldwide.
I'm all for competition so I hope both companies succeed, but its pretty evident that Netflix needed Disney more than Disney needed Netflix.
I'm also all for the democratization of great content thats happening on YouTube et al.
I'm all for competition so I hope both companies succeed, but its pretty evident that Netflix needed Disney more than Disney needed Netflix.
I'm also all for the democratization of great content thats happening on YouTube et al.
The question I have is whether or not Disney is willing to kill their golden goose: DVD sales. If they are willing to cannibalize these sales, then their service is going to be very good. If not, then it probably won't have a competitive price.
And don't think they also don't have staggering content costs. ESPN paid $3.5B just for NFL and NBA rights alone[1].
Ultimately their share holders will decide how much their willing to subsidize the service.
1. https://www.si.com/extra-mustard/2017/06/26/espn-sports-righ...
And don't think they also don't have staggering content costs. ESPN paid $3.5B just for NFL and NBA rights alone[1].
Ultimately their share holders will decide how much their willing to subsidize the service.
1. https://www.si.com/extra-mustard/2017/06/26/espn-sports-righ...
DVD sales peaked in 2006, and are down about 50% from then (~$10 to ~$5 billion), so that goose is already terminally ill. Disney is smart to get ahead of it, not wait until DVD sales drop another 50%.
Disney's golden goose is DVD sales? Then why aren't their movies on DVD? Remember the Disney Vault?
Think they will kill their golden goose?
Eventually, yes. In 2019, when Disney's service is set to launch, how many people do you think will still be buying DVDs? There'll be a few collectors and old people who will never switch to streaming services, but the potential for cannibalization sounds fairly low to me.
I was on the tube in London and saw ads to sign-up for Disney's on demand app with their entire library, is that the same thing or something else?
YouTube isn't always "great content" their feed algorithm is overflowing with click bait and misleading thumbnails and titles. There's no question that there is a place for YouTube, but the quality definitely hovers around what cable-access-television used to be.
Though perhaps with the advantage of advanced technology in editing and video capture.
Though perhaps with the advantage of advanced technology in editing and video capture.
The feed is still full of crap but the recommendations after you've watched a video have improved a lot. I've discovered tons of great bands after watching a video from a band I like
Why is everyone talking about Disney 'start its own streaming service'? Doesn't it already have Disney Life with all of the back catalog of the Disney brand I can think to search for https://disneylife.com/?
Because they are cutting ties with Netflix streaming [0], so people who rely on Netflix for that service will have to fork out additional $$$ for anything Disney.
[0] https://www.geekwire.com/2017/disney-cut-ties-netflix-launch...
[0] https://www.geekwire.com/2017/disney-cut-ties-netflix-launch...
I had no idea this existed. Yeah, this is what I think most people thought they would do next. Maybe expand the scope of it to include Marvel properties?
Didn't know this existed. It doesn't appear to include Disney properties like Marvel, Star Wars, ESPN, ABC, etc. which I imagine the new service will.
It already has Star Wars and Marvel sections.
Is this restricted to the UK? From the US i get warnings this isn't allowed in my country.
That's very strange - I don't know why the UK would get a US company's streaming service years before the US.
> I don't know why the UK would get a US company's streaming service years before the US.
One reason might be because the US company has an exclusive streaming contract in the US with a different provider. (In Disney's case, Netflix.)
One reason might be because the US company has an exclusive streaming contract in the US with a different provider. (In Disney's case, Netflix.)
With boomers, they loved their good ole' TV.
With millennials, they loved their good ole' streaming services.
With Gen Z, they love their smartphones. Does this mean the next big thing will be micro POV content tailored towards Gen Z? That could be the most accessible and democratized content there has ever been.
With millennials, they loved their good ole' streaming services.
With Gen Z, they love their smartphones. Does this mean the next big thing will be micro POV content tailored towards Gen Z? That could be the most accessible and democratized content there has ever been.
Something like that would certainly fit to the world, where many people have difficulties in allocating 1-2 hours of their day for concentrated media consumption.
Tailored block buster content, aimed to be consumed in 10-15 minute doses. Could be something for the Facebook's video endeavors.
Tailored block buster content, aimed to be consumed in 10-15 minute doses. Could be something for the Facebook's video endeavors.
I can't imagine the world where Netflix, Amazon, Disney, and HBO all coexist.
I can. That world is called "$40/mo", or about the price of a typical cable subscription.
Don't forget Disney is also launching an ESPN platform as well
Content actually seems like an area where you don't have overwhelming network effects. You're mostly funding a bunch of individual creatives and production companies on mostly a project by project basis. A lot is about personal relationships.
If you take Disney (less ESPN) and HBO specifically, they're pretty much diametrically different brands so it's pretty easy to see them coexisting.
If you take Disney (less ESPN) and HBO specifically, they're pretty much diametrically different brands so it's pretty easy to see them coexisting.
It's not necessarily that hard: Showtime, Starz, HBO, Netflix, Amazon, Disney, FX, AMC, Comedy Central, ..., already all exist.
Some of the most ambitious players right now may have to scale back, and the "deliver it all to the same place" problem that's been present ever since cable-alternatives started popping up is mostly unsolved (though some of them are starting to tackle this, as are companies like Apple and Roku) but the number of channels is hardly new.
Some of the most ambitious players right now may have to scale back, and the "deliver it all to the same place" problem that's been present ever since cable-alternatives started popping up is mostly unsolved (though some of them are starting to tackle this, as are companies like Apple and Roku) but the number of channels is hardly new.
Is it that different from broadcast TV where ABC, CBS, NBC, Fox, and The CW all coexist? The market is big enough to support multiple competitors. Also, think of HBO as Time Warner, and all that comes with (CNN, CW, Warner Bros, DC Comics).
HBO includes Warner Brothers, DC, and a huge catalog. So, I think they probably have a pretty good shot on their own.
Amazon and Netflix are the wildcards given their smaller original content.
Amazon and Netflix are the wildcards given their smaller original content.
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Netflix is certainly building up it's library. Amazon may decide they don't care.
+ Hulu
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What the lifespan of IP ? will people still love Mickey Mouse in 50 years ?
IP continually used and refreshed can potentially have infinite shelf life. Look at James Bond, the original books came out a long time ago. Look at Lord of the Rings, those books came out a long time ago.
There's a reason Disney keeps fighting to extend copyright, despite how much of their own material is derived from works based on expired copyright.
There's a reason Disney keeps fighting to extend copyright, despite how much of their own material is derived from works based on expired copyright.
They love Mickey Mouse already for 90 years. Merchandising, too. That started already in the 1930s.
Daffy Duck was referenced in Babylon 5 which plays in the 2250s and it felt believable. Shakespeare plays are still popular and adapted today, that's even longer ago.
I don't think that Disney and its IP will go away any time soon.
Daffy Duck was referenced in Babylon 5 which plays in the 2250s and it felt believable. Shakespeare plays are still popular and adapted today, that's even longer ago.
I don't think that Disney and its IP will go away any time soon.
Plus Disney should know the longevity - they made a lot of money by adapting folk tales with hundreds of years to animation.
So begs the question, which will win, current content companies creating streaming equivalents or streaming companies creating their own content channels?
Hint: answer is not boolean, but float.
Hint: answer is not boolean, but float.
It's amusing watching people complain about how we're headed to a world where the streaming services are no better than cable TV. Netflix is $10 / month. Pile on a half dozen services like that, and you're still only around 50-60% of what the average cable bill in the US is (just over $100 / month). Did you really think that all these media companies were going to magically shed 90% of their revenue?
The user experience does kinda suck, but I think Apple TV, Roku, and other meta-streaming-platforms will solve most of that in the long run. They'll be the new cable companies, essentially. But I bet you'll get less bundling than cable has now. Although I constantly see people saying that they want bundling. "I'd love to just pay $100 / month for every tv show, movie, song, etc. out there..." That's the ultimate bundling :)
Also, for the people who keep saying they want to just pay for a single show, can't you do that on iTunes and Amazon? Buy a season pass for a show? I haven't really done this much, so maybe it's outlandishly expensive, or they have poor coverage of shows people want.
The user experience does kinda suck, but I think Apple TV, Roku, and other meta-streaming-platforms will solve most of that in the long run. They'll be the new cable companies, essentially. But I bet you'll get less bundling than cable has now. Although I constantly see people saying that they want bundling. "I'd love to just pay $100 / month for every tv show, movie, song, etc. out there..." That's the ultimate bundling :)
Also, for the people who keep saying they want to just pay for a single show, can't you do that on iTunes and Amazon? Buy a season pass for a show? I haven't really done this much, so maybe it's outlandishly expensive, or they have poor coverage of shows people want.
"Also, for the people who keep saying they want to just pay for a single show, can't you do that on iTunes and Amazon? Buy a season pass for a show? I haven't really done this much, so maybe it's outlandishly expensive, or they have poor coverage of shows people want."
It's outlandishly expensive on iTunes and Google Play for shows - movies are okay. Also, the quality of the file is horrendous. We're talking full length movies at less than 2GB. You can get better from a torrent, easily. That's why I don't use it for movies.
It's outlandishly expensive on iTunes and Google Play for shows - movies are okay. Also, the quality of the file is horrendous. We're talking full length movies at less than 2GB. You can get better from a torrent, easily. That's why I don't use it for movies.
> Did you really think that all these media companies were going to magically shed 90% of their revenue?
This is exactly what happened with print media. Why is film media immune from the internet revolution?
This is exactly what happened with print media. Why is film media immune from the internet revolution?
The two situations are completely different. With print media, the Internet showed that the public was willing to forgo an expensive, high-quality product (e.g. the NYT) for a much cheaper, low-quality product (e.g. Buzzfeed).
That hasn't happened in television and film. To the contrary, peoples' expectations have only gone up. The production value (and production costs!) of television shows these days is up there with that of movies 10-15 years ago. Netflix's pivot to original content shows that consumers want high-budget, high-production-quality original content more than ever.
That hasn't happened in television and film. To the contrary, peoples' expectations have only gone up. The production value (and production costs!) of television shows these days is up there with that of movies 10-15 years ago. Netflix's pivot to original content shows that consumers want high-budget, high-production-quality original content more than ever.
> With print media, the Internet showed that the public was willing to forgo an expensive, high-quality product (e.g. the NYT) for a much cheaper, low-quality product (e.g. Buzzfeed).
Another big thing happened there: the Internet radically expanded total text content production. The median price of consumed text content plunged toward zero, while its production soared. I'd suspect a direct correlation between those two things, the NYT acquired immense new text competition in terms of the reader's attention across every possible quality & segment level.
In 1960, I could read the NYT, I couldn't read my friend's cooking blog, much less 8,207 cooking blogs. I may derive far more entertainment value or enjoyment out of those blogs than the NYT. Multiply that concept by a million fold.
Video production + Internet simply has drastically greater barriers to entry, almost at any scale (whether we're talking about Jenna Marbles or Comedians in Cars). Almost anybody can publish formatted, routine textual content online, via services like Wordpress. With a modest amount of effort (or just shelling out $50 for a theme) a blog can look decent. It takes far greater effort to get a video production to look decent.
Another big thing happened there: the Internet radically expanded total text content production. The median price of consumed text content plunged toward zero, while its production soared. I'd suspect a direct correlation between those two things, the NYT acquired immense new text competition in terms of the reader's attention across every possible quality & segment level.
In 1960, I could read the NYT, I couldn't read my friend's cooking blog, much less 8,207 cooking blogs. I may derive far more entertainment value or enjoyment out of those blogs than the NYT. Multiply that concept by a million fold.
Video production + Internet simply has drastically greater barriers to entry, almost at any scale (whether we're talking about Jenna Marbles or Comedians in Cars). Almost anybody can publish formatted, routine textual content online, via services like Wordpress. With a modest amount of effort (or just shelling out $50 for a theme) a blog can look decent. It takes far greater effort to get a video production to look decent.
>It takes far greater effort to get a video production to look decent.
That's absolutely true. Although relatively speaking generating at least indie-level video content has dropped drastically in cost/effort as well.
That's absolutely true. Although relatively speaking generating at least indie-level video content has dropped drastically in cost/effort as well.
But then, people feel the need to consume news.
I can easily forego watching a TV series. There are only a couple of "must watch" TV shows at any given time.
I already have a huge backlog of shows to watch/finish. I honestly don't care if I never watch a new TV show again
I can easily forego watching a TV series. There are only a couple of "must watch" TV shows at any given time.
I already have a huge backlog of shows to watch/finish. I honestly don't care if I never watch a new TV show again
I don't think this is universal. I bet many people feel a lot more attached to their favorite shows than to watching the news.
News will get to me. I need to proactively seek entertainment. I would rather pay for entertainment than news.
Though of course i am a public radio funder.
Though of course i am a public radio funder.
Attendance at theaters is also reaching new lows, though. So it's not just about production quality.
I would hypothesize - non-falsifiably - that moves are suffering in part because TV production quality has increased so dramatically.
I haven't gone to movie theaters much in years anyway. But in terms of screen-hours, I've definitely shifted the mix from movies to streaming TV over the past few years. I certainly still watch movies, but I'm mostly not a big fan of blockbuster action films and there's an almost limitless supply of quality well-written TV.
More than that, there are "straight to streaming" movies that are really good—people don't need the theater.
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But domestic box office revenues are still up slightly.
More IP movies like Bitmoji, and Fruit Ninja, more focus on little kids for the whole family sale and immunity from critical reception. After all, your kid doesn't see Shrek VII.V "The Shrekening" because it was rated 100% fresh.
I don't think it's either of those things, or attendee count wouldn't be down. They're making more per visit.
People are willing to pay for quality content and are not accustomed to it being free.
>It's amusing watching people complain about how we're headed to a world where the streaming services are no better than cable TV. Netflix is $10 / month. Pile on a half dozen services like that, and you're still only around 50-60% of what the average cable bill in the US is (just over $100 / month).
People are crazy to pay over $100/month. A half a dozen similar services + Netflix would already exceed any cable TV plan I've ever had.
And for less than $60/mo, I will get more content than I would if I just sign up for individual services. The reason I don't bother is that the content is pretty poor regardless.
People are crazy to pay over $100/month. A half a dozen similar services + Netflix would already exceed any cable TV plan I've ever had.
And for less than $60/mo, I will get more content than I would if I just sign up for individual services. The reason I don't bother is that the content is pretty poor regardless.
Also, while its hard to measure objectively, I would expect quality to be higher, because of the incentives. There is a higher pay off to a hit show because it can attract subscribers directly to your stream. In the old model, there is a layer of instruction (cable companies) which blunts the effect.
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What is stopping them from slowly pricing their services around the $20 p.m. mark?
Contrast this to HBO's budget which is ~2B$ I believe and they generally cost 15$+\month. Netflix is just getting started in ripping up the old order.
> Netflix is just getting started in ripping up the old order.
Not sure I like the direction the new order is taking, really look more and more like the old order to me. Before you need to pay for cable packages to get a random set of channels. The new order is that you pay various providers offering a random set of exclusive shows. It is still cheaper at the moment though.
What I'm hoping to see is big streaming network starting to use exclusive content as currency between themselves to share their catalogs. However, I'm not sure what would be their differentiator. Netflix is superior to DVD and the channel delivery mode of cable. However, Netflix vs Hulu vs HBO vs ... there is not much more to fight than price. Keeping their content exclusive on the other hand is very easy to sell.
Not sure I like the direction the new order is taking, really look more and more like the old order to me. Before you need to pay for cable packages to get a random set of channels. The new order is that you pay various providers offering a random set of exclusive shows. It is still cheaper at the moment though.
What I'm hoping to see is big streaming network starting to use exclusive content as currency between themselves to share their catalogs. However, I'm not sure what would be their differentiator. Netflix is superior to DVD and the channel delivery mode of cable. However, Netflix vs Hulu vs HBO vs ... there is not much more to fight than price. Keeping their content exclusive on the other hand is very easy to sell.
At least with the new order, you can choose to not purchase Netflix or Hulu or Disney's option. With the old order, it was all or nothing.
>With the old order, it was all or nothing.
Not really, HBO was always an add-on. In the new order, Internet access = basic cable, streaming services = premium channels.
Not really, HBO was always an add-on. In the new order, Internet access = basic cable, streaming services = premium channels.
Yep. No DRM-free releases, quite on the contrary, they are starting to get more into legacy media mindset.
At least with the new order, the barriers are low for new entrants offering direct content. That will hopefully keep competition alive between the providers - at least more than in the cable/satellite market.
At what point is Netflix no longer considered a technology company? Streaming the amount of video that they do is definitely a monumental technical challenge, but if content is the key to their future, it seems like they are an entertainment company.
This trope of establishing businesses as either "a tech company" or $INDUSTRY needs to end. You either provide a product or service in a particular $INDUSTRY and are technology lead, enabled or not. Netflix, Facebook, etc are "technology lead" businesses. Tech is not an industry, it's a medium in which a value proposition is delivered.
This came up in a thread about banks. Some finance institutions, or at least their employees, nowadays explicitly talk about themselves as technology companies that do finance. I had an interviewer at Morgan Stanley say this to me just last year. I used to work on the Quartz platform at Bank of America. It's a fantastic technology stack including dev and release tooling, authentication and security layers, configuration defined infrastructure, custom GUI and web front end libraries and tons of other really cool state of the art tech. All the big banks employ many thousands of developers.
A lot of companies are realising that for technology to be a competitive advantage it has to be more than just off the shelf. Banks are pushed this way partly due to regulatory pressure - they can't simply outsource their legal obligations or therefore the technology that implements them. But that's just an additional pressure pushing them that way. It's certainly not the only one. Nowadays lots of service companies are going this way.
A lot of companies are realising that for technology to be a competitive advantage it has to be more than just off the shelf. Banks are pushed this way partly due to regulatory pressure - they can't simply outsource their legal obligations or therefore the technology that implements them. But that's just an additional pressure pushing them that way. It's certainly not the only one. Nowadays lots of service companies are going this way.
There also companies (like the one I moved to recently) that are old, established SME (small/medium enterprises - more medium in my case) who are in niches that just aren't large enough for off the shelf to work but not small enough to do without.
I was talking to my boss the other day and he said that I was pretty modest compared to some of the programmers he'd dealt with at out sourcing firms over the years (they tried that first, it didn't end well), I think my response tickled him "I'm just a negative plumber with a keyboard, if I do my job right at this end shit doesn't come out the other".
I think the hubris of "We must do world changing things/disrupt everything" to provide tangible value is a by-product of the hype around the startup scene and 'entrepreneurs' (that is people who set out to be an entrepreneur first and figure out at what later).
I've never wanted that, I've only ever wanted to be compensated decently and work at a job where I can see measurable value in what I do, in my case that's writing production/factory management software that saves more money than it costs and makes the life of the end users more pleasant, it's also not particularly stressful and I go in at 9 and leave at 5 every day with complete technical freedom and time for that rarest of rare things, documentation.
After spending the last 5 years in high pressure, insane demand environments I'm never going back, I'll go do something else before I go back to that, it's simply not worth it (to me).
I was talking to my boss the other day and he said that I was pretty modest compared to some of the programmers he'd dealt with at out sourcing firms over the years (they tried that first, it didn't end well), I think my response tickled him "I'm just a negative plumber with a keyboard, if I do my job right at this end shit doesn't come out the other".
I think the hubris of "We must do world changing things/disrupt everything" to provide tangible value is a by-product of the hype around the startup scene and 'entrepreneurs' (that is people who set out to be an entrepreneur first and figure out at what later).
I've never wanted that, I've only ever wanted to be compensated decently and work at a job where I can see measurable value in what I do, in my case that's writing production/factory management software that saves more money than it costs and makes the life of the end users more pleasant, it's also not particularly stressful and I go in at 9 and leave at 5 every day with complete technical freedom and time for that rarest of rare things, documentation.
After spending the last 5 years in high pressure, insane demand environments I'm never going back, I'll go do something else before I go back to that, it's simply not worth it (to me).
I agree with you 100%. However, the $INDUSTRY label that a company receives, is often a huge factor in its valuation. Compare the forward P/E of Netflix vs. other entertainment companies getting into streaming. Netflix receives a significantly higher P/E due it being considered (right or wrong) a 'Tech' stock with more growth potential.
What about a company specialized "say" in web socket. That is it provides Web Socket related products and consulting. Doesn't that make it a Technology company?
I don't think this question makes sense.
Netflix is clearly a "technology + entertainment" company.
The "technology" distinction isn't mutually exclusive with another vertical—exactly the opposite. Companies can outmaneuver competitors by applying "technology" to a specific vertical. The reason Netflix has been able to crush competitors is both because they get entertainment AND because they get technology.
The only pure "technology" companies I can think of are developer tooling products, or research labs.
Netflix is clearly a "technology + entertainment" company.
The "technology" distinction isn't mutually exclusive with another vertical—exactly the opposite. Companies can outmaneuver competitors by applying "technology" to a specific vertical. The reason Netflix has been able to crush competitors is both because they get entertainment AND because they get technology.
The only pure "technology" companies I can think of are developer tooling products, or research labs.
To some degree. It can define their various positions. Pure technology company for example can be easily against DRM and copyright maximalism, while for media company that's a more novel view on things. It's not an inherent relation, it's just most media companies are conditioned to think that way.
This is spot on. Apple is going to start making self-driving cars; does this make them an automotive company? No, they are still a technology company and frankly who cares? The real story here is how Netflix went from swapping DVD's for you to spending $7B on content alone.
I think it would likely depend on the distribution of labor and expenses within the organization. Early on, Netflix (ignoring pre-streaming, mailed-DVD-movie days which I'm sure was an entirely separate metamorphosis) didn't produce any content but merely delivered existing content, leveraging technology to do so. I imagine the vast majority of the org and the expenses were on engineers and engineers' salaries. In that sense, certainly I think we can agree it'd be defined as a tech company.
Now, I'd be very much interested to see how the expenses and org makeup has shifted. I'd predict that much of their budget has been shifted to purchasing and producing content. The question then is, how much of their actual org is doing that work? Is that work outsourced? Are they merely spending money on contractors and production teams in LA/etc? Or is it in-house?
If they're outsourcing the actual content production, then I imagine it requires a small subset of the org to lead acquisition and curation of this content. Thus I'd lean towards saying they're still mostly a technology company. But if the vast majority of their budget is spent on content acquisition, then maybe it's more of a media production company at that point.
Another good heuristic for deciding what a company "is" is to look at the part of the business that once removed would redefine or cripple the business the most. What seems more valuable? A Netflix that only produces content that is then streamed through someone else that handles the technology? Or the Netflix of old that only streams content they had no hand in creating? Whatever's more valuable is most certainly the direction the business will go, and consequently gives you the framing for how the company would define itself.
Now, I'd be very much interested to see how the expenses and org makeup has shifted. I'd predict that much of their budget has been shifted to purchasing and producing content. The question then is, how much of their actual org is doing that work? Is that work outsourced? Are they merely spending money on contractors and production teams in LA/etc? Or is it in-house?
If they're outsourcing the actual content production, then I imagine it requires a small subset of the org to lead acquisition and curation of this content. Thus I'd lean towards saying they're still mostly a technology company. But if the vast majority of their budget is spent on content acquisition, then maybe it's more of a media production company at that point.
Another good heuristic for deciding what a company "is" is to look at the part of the business that once removed would redefine or cripple the business the most. What seems more valuable? A Netflix that only produces content that is then streamed through someone else that handles the technology? Or the Netflix of old that only streams content they had no hand in creating? Whatever's more valuable is most certainly the direction the business will go, and consequently gives you the framing for how the company would define itself.
Netflix will always be a tech company, mostly given through the fact that they use their large amounts of data to both recommend users new shows to watch, and also use that same data to decide what kind of shows to green light.
What separates a traditional company from a tech company these days really just revolves around how much the company values tech. Do they have a CIO who goes to IBM and asks them to use cognitive computing to transform their business, or do they have engineers in house to build machine learning models to keep customers engaged with the company as a whole.
What separates a traditional company from a tech company these days really just revolves around how much the company values tech. Do they have a CIO who goes to IBM and asks them to use cognitive computing to transform their business, or do they have engineers in house to build machine learning models to keep customers engaged with the company as a whole.
> What separates a traditional company from a tech company these days really just revolves around how much the company values tech.
I dunno; netflix has nice tech, but it's hardly without competition. I don't think you could even consider their tech a differentiator for customers; they could switch onto whatever tech HBO uses and leverage their existing content without subscribers even noticing.
Every large company has a tech component. Why do you think outsourcing data analysis vs doing it in house changes how an outsider should evaluate the business? What matters are why people pay them.
I dunno; netflix has nice tech, but it's hardly without competition. I don't think you could even consider their tech a differentiator for customers; they could switch onto whatever tech HBO uses and leverage their existing content without subscribers even noticing.
Every large company has a tech component. Why do you think outsourcing data analysis vs doing it in house changes how an outsider should evaluate the business? What matters are why people pay them.
They value tech, but Netflix without their proprietary content is just a dumb pipe. In comparison to, say, a telco it's not very different -- nothing more than a commodity.
The tech stack in itself can be cool for an engineer to work on, but business wise it has little value. The only way to progress in this market is to focus on content. That's what makes (or breaks) a service.
The tech stack in itself can be cool for an engineer to work on, but business wise it has little value. The only way to progress in this market is to focus on content. That's what makes (or breaks) a service.
>Why do you think outsourcing data analysis vs doing it in house changes how an outsider should evaluate the business?
This is the crux of the matter. Why roll your own tech when you can buy off the shelf?
Off the shelf tech is, by definition, old tech. If you roll your own you can have a new feature, optimisation or bug fix in production the same day it comes out of QA. The lead time for vendor tech can be months, or even years. If you prioritise a new feature likewise you can have your devs working on it the same day it gets green lit. Try that with a vendor. Controlling your own technology stack, sometimes even developing your own dev tooling internally, can be a decisive competitive advantage.
This is the crux of the matter. Why roll your own tech when you can buy off the shelf?
Off the shelf tech is, by definition, old tech. If you roll your own you can have a new feature, optimisation or bug fix in production the same day it comes out of QA. The lead time for vendor tech can be months, or even years. If you prioritise a new feature likewise you can have your devs working on it the same day it gets green lit. Try that with a vendor. Controlling your own technology stack, sometimes even developing your own dev tooling internally, can be a decisive competitive advantage.
I wouldn't expect any major studio (which is what most of these companies basically are at this point) to handle their streaming by calling IBM and write a check. On the other hand, implementing a reliable streaming platform--while requiring a lot of developers, ops people, and money--is a fairly well-understood problem at this point.
I expect that a branded streaming-as-a-service platform will absolutely exist at some point relatively soon. But I'm not aware of examples today.
That said, I'll bet on the company with the content rather than the company with an incrementally whiz-bangier streaming platform.
I expect that a branded streaming-as-a-service platform will absolutely exist at some point relatively soon. But I'm not aware of examples today.
That said, I'll bet on the company with the content rather than the company with an incrementally whiz-bangier streaming platform.
Really? AFAIK MLB's video service powers MLB, HBO, and soon Disney—it's already a reality. Source: https://www.theverge.com/2017/8/9/16118694/disney-bamtech-es...
As I say. Not surprised at all. It's a hard but well-understood problem that applies across a lot of content providers.
But surely you can perceive a difference between MLB, which developed in-house tech that gave them a competitive advantage versus other sports groups and enabled them to build a successful business providing that service to other companies, and the ones that buy in that tech. MLBs investment put them years ahead of their competition in that area.
I'm not sure how much was the tech. It wasn't all developed in-house anyway; they were a big reference for at least EMC ages ago. But certainly, like a number of the more successful media/entertainment companies, they recognized that technology was important at a time when you couldn't just get it off the shelf.
Today it's less clear that the tech is still as compelling a differentiator relative to the content.
Today it's less clear that the tech is still as compelling a differentiator relative to the content.
Major League Baseball is a tech company. Love it.
> Controlling your own technology stack, sometimes even developing your own dev tooling internally, can be a decisive competitive advantage.
That's true generally, though. That doesn't distinguish "tech" companies from "non-tech" companies.
That's true generally, though. That doesn't distinguish "tech" companies from "non-tech" companies.
I think it does. If you substantially develop your own technology stack, you're a tech company. It can be a small or large part of your business, but it's still a fact.
So—Walmart is a tech company? I'm fine with this definition, but virtually every valuable company will be a tech company in the near future.
they could switch onto whatever tech HBO uses and leverage their existing content without subscribers even noticing.
I disagree; subscribers would definitively notice if Netflix lost its global ISP-hosted dynamically-allocated caching network, for example: https://openconnect.netflix.com/en/
There's more tech than what's visible on the surface.
I disagree; subscribers would definitively notice if Netflix lost its global ISP-hosted dynamically-allocated caching network, for example: https://openconnect.netflix.com/en/
There's more tech than what's visible on the surface.
Well, I agree their data center technology is impressive, but—again—it's hardly unique. HBO and MLB both serve similar levels of peak traffic with similar quality, though netflix manages to deliver some bitrate at almost all times whereas HBO sometimes hiccups.
HBO Now has 2M subscribers.
Netflix has 100M.
Netflix has 100M.
I'd be interested if you could demonstrate there's a strong correlation between that and peak traffic—but I suspect things like GOT premiers will be highly competitive with netflix.
Furthermore, this is highly cacheable content. Again, netflix's tech is impressive, but at its core caching is a problem that has been solved and solved again. You aren't going to differentiate yourself by being a dumb pipe.
I highly, highly, highly doubt that netflix's tech is going to be a differentiating factor when people choose them so they can watch Kimmy Schmidt.
Furthermore, this is highly cacheable content. Again, netflix's tech is impressive, but at its core caching is a problem that has been solved and solved again. You aren't going to differentiate yourself by being a dumb pipe.
I highly, highly, highly doubt that netflix's tech is going to be a differentiating factor when people choose them so they can watch Kimmy Schmidt.
Going by the engineering salaries they seem to value tech quite a bit. I haven't heard that Netflix hired a bunch of IT vendors to deliver next-gen delivery platform, the way Sony / Warner Bros etc do.
There's no such thing as a "tech company" - technology is a means to an end, nothing something to sell in itself.
Netflix is a video/entertainment provider using newer technology to deliver better, faster and cheaper than others. The modernity of the technology is a spectrum that varies for each company and building-vs-buying to accomplish a goal has nothing to do with tech but is a tenant of running a business as old as the discipline itself.
Netflix is a video/entertainment provider using newer technology to deliver better, faster and cheaper than others. The modernity of the technology is a spectrum that varies for each company and building-vs-buying to accomplish a goal has nothing to do with tech but is a tenant of running a business as old as the discipline itself.
I'm curious, what does the difference mean to you? I classify them as a technology company because they continue to innovate. With your argument, you could classify Facebook or any other social media site an entertainment company.
Why is there such a dichotomy in your mind?
Why are we supposed to care about this classification?
Why are we supposed to care about this classification?
If forced to supply the XX one-word answer for which one Netflix is than it is entertainment. Doubt it's very useful to reduce things to one word in general though. Both entertainment and technology would delineate it from a car company though I guess.
I think the direction is clear. They are going to be a fully content based company in the near future. I think they should spin out their streaming technology arm into a separate company or license/sell services so other companies can benefit from it.
>At what point is Netflix no longer considered a technology company?
heh. This reminds me of "teams" where everyone is "qa" or everyone is a "developer". What's your mission if you're on the QA team? To QA all the things? That's not a mission.
What is a "technology" company's mission? It'meaningless. Technology is just a means to an end. Consumers don't buy technology - they buy products.
Netflix sells content. Using some cool tech, sure.
heh. This reminds me of "teams" where everyone is "qa" or everyone is a "developer". What's your mission if you're on the QA team? To QA all the things? That's not a mission.
What is a "technology" company's mission? It'meaningless. Technology is just a means to an end. Consumers don't buy technology - they buy products.
Netflix sells content. Using some cool tech, sure.
what's even a technology company anymore?
Whenever people get sufficiently used to streaming, I suppose. Cable TV/Internet and Satellite TV used to be new technology too, but now we consider them more communications and entertainment.
With more and more content providers pulling content, I'd say Netflix is the middle of the pivot from technology focused distributor to content creator already.
If you want to go that route then Google, Facebook, and Amazon aren't tech companies either.
When uber, airbnb & amazon are not tech companies.
Netflix has almost 100 Million users. That means they are spending approximately $70 per user on new Content in 2018.
Netflix costs between $7-$12 per month. Many of those subscribers will not last the whole year. It is awesome they are spending basically 100% of their revenue on new content, but this model is not sustainable.
Netflix costs between $7-$12 per month. Many of those subscribers will not last the whole year. It is awesome they are spending basically 100% of their revenue on new content, but this model is not sustainable.
I'm confused, based on the numbers you provided, doesn't their model make a lot of sense?
If on average you're getting ~$10/user/month, that's $120/user/year of which you're just spending $70/user/year, and thus have gross profits of ~$50/user/year. In other words, you're getting $12B in revenue, $7B of which you're spending on content to ensure that churn stays low and people continue to re-subscribe.
If on average you're getting ~$10/user/month, that's $120/user/year of which you're just spending $70/user/year, and thus have gross profits of ~$50/user/year. In other words, you're getting $12B in revenue, $7B of which you're spending on content to ensure that churn stays low and people continue to re-subscribe.
They made $8.8 billion in 2016, I think it's fair to say they expect to make far more than that in 2018.
While their US rates may be $7-$12 per subscriber, their international revenue projections may be quite different. For example at current exchange rates I'm paying just under $15 USD for my account in Australia(though I'm sure not every country is so expensive).
While their US rates may be $7-$12 per subscriber, their international revenue projections may be quite different. For example at current exchange rates I'm paying just under $15 USD for my account in Australia(though I'm sure not every country is so expensive).
Most of the content has a shelf life much longer than one year, so I'm sure that factors into the equation.
Plus good content invites new customers. Netflix has expanded to pretty much entire world now (China is the only major market with no Netflix). From my experience in India, they are investing heavily on local content. Existing, original or licensed, content is not enough for these markets.
I'd love to believe that the vast majority of that money will go to the artists, actors, directors, muscians, and other creatives actually making this content, but I have a bad feeling it'll just wind up in the pockets of executives, board members, and stockholders.
With this kind of spending, they must be planning to monetize beyond the subscription fees.
Get ready for the ads. Cable was ad-free in the early days too.
Get ready for the ads. Cable was ad-free in the early days too.
I don't know why people think that one can earn billions in online ads so easily. In my calculation, Netflix can't earn anywhere close to $10 per month on ads that people are willing to watch.
I'd like to see a DRM-free Netflix Original content only streaming plan. I'd sign back up and they could really set a good example.
Not only this, but could they at least enable Netflix original content through VPN/proxies? (as they've started blocking all access via proxy now).
Great we can look forward another half dozen remakes of the life and times of Pablo Escobar
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Anyone have any thoughts in how to get in on the content production game? Go get a film degree? Because this is really where the future is headed it seems.
Start hustling and pushing content on YouTube, Snap, etc. Find a niche that interests you and just push out massive quantities of content.
What's your goal and what kind of content do you want to make?
What's your goal and what kind of content do you want to make?
School's okay and all but you can learn a lot from just youtube tutorials and google tutorials. You can start with a setup as simple as your cell phone + tripod and shooting outside during the day so you don't need special lights. Watch a few basic tutorials on getting good audio, that makes a big difference in quality. Seriously just google "How to make a short film" or something similar.
Make a short video and post it on youtube, then monetize that video. Make enough Youtube videos and other creators will hit you up / listen to proposals to work together or you can use it as a portfolio for jobs.
Make a short video and post it on youtube, then monetize that video. Make enough Youtube videos and other creators will hit you up / listen to proposals to work together or you can use it as a portfolio for jobs.
Seems like the path is increasingly to focus on creating your own short-form content first. This route has led to television series pickups - Broad City and Insecure are two that come to mind immediately. There's also a bit of discussion of its effect on the film circuit here: http://www.newyorker.com/culture/richard-brody/a-generationa...
Same as most (all?) creation professions - start creating.
Start producing content that you care about. Practice and get better at it. The equipment costs are low, or some places (schools, non profits) offer classes and equipment loans.
7B?? Where is it coming from?? If average monthly fee is $19 then you need 333,000,000 paying customers. Or 33,000,000 annul.
buying passes to all 5 top streaming/content services costs $53 which is less than any cable package costs and give you access to so much content across all your devices and absutely no ads.
amazon $8.25/mo
netflix $7.99/mo
youtube $12.99/mo
hulu $7.99/mo
hbo go $14.99/mo
That's really not that much money, ESPN spends $1.9B on just one show--Monday Night Football.
Sure, and it's starting to look like that is not sustainable. ESPN just cut tons of expensive on-air talent. Cord cutting is killing ESPN as they are getting a very large portion of everyones cable bill.
ESPN is a big reason that non-sports watchers cut the cord - why subsidize costly sports channels for everyone else? If the demographic data is right, non-sports watchers are a larger proportion of younger demographics.
Aren't they funding The Witcher series?
They'll do far better to spend a bit of that money on improving the content experience.
I unsubscribed because there is far too much content and I never know what to watch
I unsubscribed because there is far too much content and I never know what to watch
This is really very hard to fix the problem. So you have unsubscribed because there are too much media to digest available? You must be an extreme minority with a problem like that.
$7B... let's see, with the astronomical amount of money Netflix dumps into individual projects, that's what, 10 or 12 shows? :)
Its 7 billion in content, not 7 billion in Netflix originals, big difference.
With a quarter of them coming from Adam Sandler.....
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Instead we have streaming companies getting into media and media companies getting into streaming. Multiple platforms each with their exclusive media content, each with their exclusive software and streaming protocols. Not exactly what I had in mind...