It is a popular assumption these days that the launch of Disney’s new streaming service is the beginning of the end of Netflix. In fact, everyone I seem to hear talking about it in conversations usually starts off with “Netflix is screwed…” or some other similar term.
I’ve heard all sorts of reasons that Netflix will fail, from not being able to compete with the price to not having the ability to purchase as much content but all these usually end up with Netflix going the way of the dodo bird and becoming extinct in less than 2 years. In fact, I’ve even heard predictions in as little as 8–10 months!
I’m not a media guy, nor am I really a big consumer of streaming services to tell you the truth. I absolutely would not consider myself a fan of either, or TV and movies for that matter, but I do have a family, with 2 kids, run a profitable business, and make my living in the technology sector — all of which makes me at least a little qualified to offer my view of what is happening.
First off, it is my experience that when every average 22-year old is sort of piling on one side the fence, there is room to look opposite. In general, the consumer public is often very wrong on major business strategies (and sports) bets. In fact, it’s the reason so many (including myself) encourage the average investor to stick with index funds for investing. Accurately predicting business success & failure is incredibly hard for those who do it on a daily basis as their profession. For the average plumber, software developer, or accountant, it’s basically impossible. These guys will be quick to tell you “This is what I will do” or “This is what will happen” but let’s face it, the number of people qualified to analyze something like this is in the .001% range.
Secondly, the content quality and amount of the new service is overrated, and mostly because it’s still new. Sure, Disney has all the kids’ movies and superhero franchises, but will that be enough for young adults to cancel Netflix? What about boomers who are retiring and have nothing better to do? How many times can you watch the Simpsons or the Avengers and for those people who are 18–30, they probably have seen all/most of what is on Disney anyways. Kids and parents of young kids will love it for sure, but in order for it to hurt Netflix, it has to cause people to switch from Netflix to Disney. Typically what we see in technology services is that people tend to have multiple services. I mean, Hulu is still around and that content library is often considered terrible. People like edgy and authentic and while Disney makes some great, legendary content, outside of the Avengers, it’s not something that will ever inspire young adults to binge-watch as a whole. Where will shows such as Breaking Bad, Lost, and Shameless go?
Also, we have been approaching a mass cutting the cord event for years now and while we are not there, the Disney offering may be the final shove the consumers need to cut the cable. If they do this, this will offer an influx of subscribers with money to spare and that money will go somewhere. Suddenly with 10’s of millions of new subscribers, Netflix is sure to increase it’s customer base even as the market share goes down. Netflix, after all, makes money on subscribers, not necessarily market share.
Finally, people who have never been business owners often forget one important fact, that there are good leaders on the other side too, and these leaders will pivot/react to this change. Too often I hear arguments for businesses in these situations as if nothing will change, which especially in technology is plain ignorant. Suddenly Disney may become the bad guy, and companies like Amazon, Twitter, Apple, and others may join together to compete. Disney seems like the big kid on the block today, but if Apple or Google were to purchase Netflix and have it built into their ecosystems, suddenly available purchasing power is different. For recent examples, one only has to look at the way Disney has created this monopoly, to begin with, one that I expect the regulatory committees to start looking into eventually.
Overall, I think there is plenty of room for both streaming services to succeed, and that is what I think will happen. I expect a few dips along the way, but the reality is that Netflix has a huge subscriber base already and has learned a lot of lessons along the way, some of which Disney will have to learn as well. As the western cultures continue to have fewer and fewer kids and do so later in life, the need for edgy and original content will continue to rise and the Disney Plus launch may serve as a watershed moment in the industry for new partnerships (Apple + Netflix) that will shape the next 10 years or so.