Netflix’s competitors are multiplying, and they’re ambitious. After Amazon Prime Video, YouTubeTV and YouTube Premium, Hulu, Sling TV, Now TV, Starz, Showtime Anytime, HBO Now (and soon HBO Max), and Apple TV+, the latest entrant is Disney+.
After months of teasing and speculation, Disney launched its platform on November 12 with the clear goal of ending Netflix’s leadership. (It will launch in France on March 31, 2020.) Others have already given up, such as the Japanese giant Sony, which will close PlayStation Vue in a few weeks.
Given the rising number of platforms, it’s getting more and more difficult to choose between them. All are trying to attract the largest number of subscribers with vast catalogs of films, series, shows, sports competitions and documentaries. Most potential customers can’t afford to pay more than two or three subscriptions, and the rates are expected to rise. The new offers could cause some of the public to ignore or leave Netflix, yet the pioneering company asserts that competition will only strengthen its dominant position.
A talent war
To attract and retain their subscribers, video on demand (VOD) companies rely primarily on the development of brands such as House of Cards, Orange Is the New Black, Money Heist, and Stranger Things for Netflix.
In this field, Disney has its own brand, one of the world’s best known, and it owns Star Wars, Marvel, Pixar, National Geographic, and The Simpsons thanks to the acquisition of 21st Century Fox. The flagship series of Disney+, The Mandalorian, takes place in the universe of Star Wars and has a budget of $15 million per episode. Produced by Jon Favreau, the show has been renewed for a second season. At least two other Star Wars series are planned, as well as seven Avengers-themed TV shows.
Beyond creating strong brands, each platform tries to attract big names, at the price of huge contracts, to demonstrate its prestige and the quality of its programs.
Apple is stepping up its game with the launch with Oprah’s Book Club; The Morning Show, a drama with Jennifer Aniston, Reese Witherspoon and Steve Carell; as well as projects from Alfonso Cuarón and Steven Spielberg.
Amazon Prime Video has recruited talents such as David Fincher, Jordan Peele, Robert Kirkman, Nicole Kidman, Javier Bardem, and the Russo brothers.
NBCU’s Peacock platform will be working on shows with Jada Pinkett Smith, Demi Moore, Sam Esmail, Jimmy Fallon and Seth Meyer, among others.
Disney develops series and film projects with Ewan McGregor (Star Wars Obi-Wan), Jeremy Renner (Hawkeye), Tom Hiddleson (Loki), Jeff Goldblum (The World According to Jeff Goldblum), Justin Theroux (The Beauty and the Tramp), Willem Dafoe (Togo), John Stamos (Big Shot), Elizabeth Olsen (WandaVision)…
Netflix is not left out with prestigious collaborations such as Martin Scorsese, Guillermo Del Toro, Eddie Murphy, Vin Diesel, Liam Neeson, and the Coen brothers.
A price war
The Disney+ subscription is competitive at $7 a month. Only Apple TV+ is cheaper at $5, and Apple offers a year of free access to customers who purchase a branded device, but the catalog is much more limited. Disney+ is also available with Hulu and ESPN+ for $13, the same cost as one of Netflix’s most popular packages without some of the options included in Disney’s offer.
Hulu alone is at $6 per month for its ad-supported plan or $12 for the ad-free one. Amazon Prime Video costs $13 but remains included in Amazon’s Prime service. HBO Max will be the most expensive at $15 per month and does not expect profitability until 2025. AT&T will give 10 million of its wireless customers free access to HBO Max for a year. Peacock could have the advantage of being free and solely ad-supported, making it the largest AVOD (Advertising Video on Demand) service. This business model could yield $5 per user.
All against Netflix
While Netflix has 158 million subscribers worldwide and accounts for 5% of all television time, the firm isn’t yet a threat to large networks. Nevertheless, they all seem determined to end its success story. In corporate communications, Netflix has asserted that its main competitors in the attention economy are Fortnite and YouTube, and the firm welcomed Apple and Disney in the latest quarterly mail destined for its shareholders, stating that the success of these new platforms would contribute to theirs.
Indeed, these players should contribute to accelerating the transition from linear TV consumption to 100% on-demand TV, of which Netflix would be the main provider. However, as Reed Hastings explains:
“While we’ve been competing with many people in the last decade, it’s a whole new world starting in November… between Apple launching and Disney launching, and of course Amazon’s ramping up.”
After the early cancellation of all Marvel-related series on Netflix, including the popular Daredevil, Disney no longer sells advertising for Netflix on its channels. Other series will depart from Netflix like The Office or Friends, which represent respectively 7% and 4% of total views. Both series went to competitors: NBC acquired the rights of The Office for $500 million while Warner paid $425 million for Friends.
If Netflix is still considered the best platform, its difficulties began before the Disney launch. Netflix is heavily indebted and will lose an estimated $3.5 billion in 2019. It has also lost US subscribers for the first time since 2011, with a drop of 126,000 in the second quarter of 2019. Globally over the same period, the number of subscribers only increased by 2.7 million, half of what was anticipated. Given the disappointing financial results, the value of the Netflix share has fallen by 30% for the last three months. While the firm has reassured investors, the skies are anything but clear.