Hugh Scallon’s Post

Great article + summary of the streaming environment.

The Rise of Netflix and the Fall of Blockbuster: In the late 1990s and early 2000s, Blockbuster was the king of video rental services, with thousands of stores across the globe. They had a near-monopoly in the home entertainment industry. Around the same time, Netflix started as a small DVD rental-by-mail service, offering a different model: customers paid a monthly subscription fee and could rent DVDs without late fees. In 2000, Netflix’s founders approached Blockbuster with a partnership offer, proposing that Blockbuster could buy Netflix for $50 million. Blockbuster laughed them out of the room, not seeing any threat in the DVD-by-mail model and believing customers would always prefer in-store rentals. But Netflix adapted with the times. As technology evolved, they shifted from mailing DVDs to streaming content directly to viewers’ homes. Blockbuster, on the other hand, stuck to its traditional brick-and-mortar stores and late-fee revenue model for too long, even as online streaming began to take off. By the time Blockbuster tried to launch its own streaming service, it was too late. Netflix continued to grow, becoming the leader in streaming and even creating its own original content. Blockbuster filed for bankruptcy in 2010, its business model rendered obsolete. Moral: Complacency in a rapidly changing environment can be fatal. Blockbuster’s failure to innovate and adapt to the digital age led to its downfall, while Netflix’s ability to pivot and embrace new technology made it a global leader. In business, staying ahead of trends and being open to change is crucial to long-term success.

ICYMI: Netflix's surprising move to cease reporting subscriber numbers has sent shockwaves through the streaming industry, raising questions about the company's future trajectory. With shares taking a 4.2% hit, investors are left wondering about the implications of this decision and how it will impact Netflix's competitive position in the ever-evolving #streaming landscape. https://lnkd.in/gNM_B2NU

The most interesting thing about Netflix’s transition is how it reflects broader changes in the way the market treats streaming. Entertainment companies are always trying to work the refs, especially in the streaming era. Warner Bros. Discovery thinks it doesn’t get enough credit for its progress toward making Max (formerly HBO Max) healthy. Others say that Warner Bros. Discovery’s numbers, which show profitability from its direct-to-consumer segment, are hard to parse because they include traditional HBO. Peacock still seems to get points, at least in the press, for gaining subscribers, despite losing massive amounts of money. Now Netflix is trying to shift market expectations again. But this time, on its own terms.

Amazing long form article on the streaming media at a crossroads, with industry titans like Brian Roberts, John Malone, and Barry Diller recognizing the unsustainable nature of current business models. Here are the key takeaways: 1. Legacy media giants like Paramount, Warner Bros. Discovery, and Disney are struggling financially, while disruptors like Netflix and Amazon thrive. 2. The magic number for profitability in streaming is at least 200 million subscribers, with Netflix leading the pack. 3. Costs for content production and sports programming are soaring, creating significant financial pressure. Opportunities: 1. Bundling services can attract price-sensitive consumers and reduce churn. 2. Advertising-supported tiers offer new revenue streams and potential growth. 3. Licensing content, as demonstrated by Sony, can be a profitable strategy without running a streaming service. Challenges: 1. Achieving profitability requires massive investments in content and sports rights. 2. High churn rates and subscriber acquisition costs are ongoing issues. 3. The industry may consolidate, with only a few major players likely to survive. The future of streaming hinges on balancing quality content with financial viability. Innovation and strategic partnerships will be crucial for navigating this evolving landscape. #Streaming #MediaIndustry #Netflix #AmazonPrime #Disneyplus #WarnerBros #Paramount https://lnkd.in/gu-pY6ew

🎬 𝗡𝗲𝘁𝗳𝗹𝗶𝘅'𝘀 𝗣𝗿𝗶𝗰𝗲 𝗛𝗶𝗸𝗲𝘀: 𝗧𝗵𝗲 𝗦𝘁𝗿𝗲𝗮𝗺𝗶𝗻𝗴 𝗚𝗶𝗮𝗻𝘁'𝘀 𝗪𝗶𝗻𝗻𝗶𝗻𝗴 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆 Netflix has once again raised its prices, and it's not just about funding new content. Here's why this move signals Netflix's dominance in the streaming industry: 1. Unrivaled Cultural Impact Netflix has become indispensable to mainstream culture, producing hit originals like Stranger Things and Squid Game that rival HBO's appointment TV. 2. Diverse Content Offerings From high-end TV shows to sports events and reality programs, Netflix now offers a "cable bundle" for the streaming era. 3. Competitive Pricing Despite price increases, Netflix still offers significant value compared to traditional cable subscriptions, with users watching an average of 2 hours daily. 4. Strategic Ad-Supported Tier The company is nudging users towards its ad-supported plan, which is more profitable for Netflix. 5. Ambitious Growth Plans Netflix is exploring live sports, video games, and creator-driven content to capture an even larger entertainment market share. The bottom line? Netflix can raise prices because it has won the streaming wars. As co-CEO Greg Peters puts it, they're tapping into just 6% of their revenue potential in current markets. #Netflix #StreamingWars #EntertainmentIndustry #BusinessStrategy

🚀 How Netflix Triumphed in the Streaming Wars 🌐 After a turbulent 2022, Netflix has reclaimed its leading position in the streaming landscape. With innovative strategies like cracking down on password sharing and launching an ad-supported service, they've gained 45 million new subscribers since May 2023. 📈 Under new leadership from Greg Peters and Ted Sarandos, the company continues to evolve while maintaining strong growth—surpassing legacy studios still struggling with profitability. Despite challenges ahead—including fierce competition from platforms like Amazon and YouTube—Netflix's commitment to engaging content keeps it at the forefront of viewers' minds. From live sports events to reality shows, they’re redefining entertainment for a new era. As we move forward into this dynamic industry landscape, one thing is clear: Netflix remains a force to be reckoned with! 💪🎬 Source: https://lnkd.in/e4hC7jvY #StreamingWars #NetflixSuccess #InnovationInEntertainment

In a world where streaming giants continually redefine innovation, Netflix's strategic decision to stop regularly reporting subscriber numbers marks a bold shift. This move places a greater emphasis on financial metrics, revenue, and profit growth, positioning Netflix for potential expansions into advertising and video gaming. Mirroring the evolutionary steps of tech behemoths like Amazon and Apple, Netflix's focus on broader success measures signals a significant evolution from a pure-play streaming service to a multifaceted, tech-forward entity. However, this raises questions about data transparency and competition among streaming services. In the ever-evolving media landscape, this strategy not only showcases Netflix's readiness for future industry shifts but also challenges the established norms of entertainment and technology. For media and tech industry leaders, it serves as a clarion call to rethink what constitutes success in the digital age. As Netflix explores new sectors, adopts financial metrics, and evolves beyond traditional streaming, it underscores the importance of strategic planning and competitive positioning. What are your thoughts on the future of data transparency and competition in the streaming services sector? How do you think Netflix's strategy will reshape the competitive landscape and potentially signal future technological advancements in media? Share your insights and comments below. #Netflix #StreamingServices #MediaInnovation #TechTrends #DigitalStrategy #EntertainmentIndustry #VideoGaming #Advertising https://lnkd.in/dh7e9VQJ

From the NYT: Streaming has long been hailed as a promising business, because companies like Netflix can add additional subscribers at little extra cost. The more paying subscribers a service has, the more the company’s costs can be spread out over a large base, lowering the cost per subscriber. But those subscribers want lots of options, and the costs of making enough programming can be enormous. As a result, a #streaming service’s profitability depends in large part on how many paying subscribers are needed before those #TV shows and movies become cost-effective. There was a time when industry executives hoped that number might be as low as 100 million. But now the consensus among many of the executives interviewed is that the number is at least 200 million, and possibly more. “If you’re going to be a full entertainment service with live sports and tent-pole blockbusters today, 200 million is a number that can give you the scale with the hope for growth over time,” Mr. Hopkins of Amazon said. Netflix has reached that, and then some, with about 270 million paying subscribers. $50 Million an Episode, Over and Over The costs of attracting — and keeping — those millions of customers is no cheap feat. Overall, Netflix has said it will spend about $17 billion this year on programming, about what it did before last year’s Hollywood strikes depressed production. “It’s a tall order to entertain the world,” Mr. Sarandos of Netflix said. “You have to do it with regularity and dependably.” For Netflix, $17 billion represents only about half of its total revenue. But almost no competitor can match that spending level, the executives said, except for maybe Amazon. Not all of those pay off. But when they do, the impact can be huge, like wildcatters when they hit a gusher. Play Ball Adding to the cost pressure, the executives said, is the soaring cost of #sports programming. Even in the bygone era of traditional television, the broad appeal of sports was obvious. But that was before streaming and the arrival of the deep-pocketed #tech giants. The appeal of live sports is both unique and twofold: They attract new streaming subscribers and reduce churn since viewers want to watch sports live. It is also a big draw for advertisers as streaming services look to grow their ad businesses. #Advertising to the Rescue? “It’s a nice way to get price-sensitive consumers,” said Mr. Chapek “Heavy users will still come and pay the higher monthly fee.” Mr. Chapek acknowledged that advertisers covet — and will pay more for — mass audiences. As a result, the streaming services have a strong incentive to produce programs with broad appeal instead of more niche content, including some of the kind that generates critical acclaim. Who Will Survive? “Can your current business be a successful player and have long-term wealth generation, or are you going to be roadkill?” Mr. Malone mused. “I think all the small players will have to shrink down or go away.”

Media titans, including John Malone, Brian Roberts, Barry Diller, Ted Sarandos, and Mike Hopkins, share their predictions on the future of streaming. Here are some of the key insights offered by them: ➤ The number of subscribers needed to be successful is at least 200 million, with only Netflix, Disney, and Amazon having reached that milestone. ➤ Spending on content will remain significant, with some shows costing well over $100 million per season, to combat churn that is as high as 7% for some of the smaller streaming services. ➤ More of the content spend will be devoted to live sports, resulting in bidding wars unlike anything experienced before in the media industry. ➤ Companies are likely to continue raising prices aggressively on ad-free tiers in an effort to drive consumers to ad-supported versions. ➤ Bundling may help reduce churn but will lead to a decline in average revenue per user. ➤ Only three or four streaming services will survive in the long-term. Read more about the future of streaming in The New York Times: