From Forbes:

Quote:Netflix changed how we watch TV, but it didn’t really change what we watch…

Netflix has achieved its incredible growth by taking distribution away from cable companies. Instead of watching The Office on cable, people now watch The Office on Netflix.

This edge isn’t sustainable.

In a world where you can watch practically anything whenever you want, dominance in distribution is very fragile.

Quote:To fund its new shows, Netflix is borrowing huge sums of debt. It currently owes creditors $10.4 billion, which is 59% more than it owed this time last year.

The problem is that no matter how much Netflix spends, it has no chance to catch up with its biggest rival…

Quote:But over the past decade a core part of its business has been disrupted.

More than a third of Disney’s revenue comes from its cable business. As you may know, Disney owns leading sports network ESPN and ABC News.

It makes money delivering this content to millions of Americans through cable providers like AT&T. As you can imagine, cord cutting has hit this business hard.

Disney’s cable business has stagnated over the past seven years. But in about 175 days, Disney is set to launch its own streaming service called Disney+.

It’s going to charge $6.99/month—around $6 cheaper than Netflix.

And it’s pulling all its content off of Netflix.

This is a big deal.

I'm just bringing this up because Disney+ and ESPN+ will likely be bundled together for a discount price.

So Disney/ESPN is probably going to get richer in the next several years as they have become both a content creator and a content supplier. The only thing they won't own is the distribution side...cable or internet infrastructure. But who knows? They might find a way to jump into that as well.

If Disney essentially destroys the market share of Netflix then that's a very interesting scenario and one that could affect sports rights fees.

I remember when the Palm Pre was going to put an end to the iPhone.

Netflix will be fine. But cable might as well be dead.

(05-21-2019 02:55 PM)Yosef Himself Wrote:  I remember when the Palm Pre was going to put an end to the iPhone.

Hmmmm... I don’t know if that’s a great comparison. If anything, Disney is in the Apple position in the sense that there’s an unusually high devotion and loyalty to anything that the company releases compared to its competitors (where product preferences are much more transactional in nature). Disney and Apple have loyalty from a critical mass of passionate devotees in a way that, say, Comcast/Universal and Samsung don’t have and probably will never have.

That being said, the argument in the OP link is a bit too simple. While Netflix does rely on third party content more than it would like to admit, it still has essentially a decade-long head start on streaming and they’ve been adjusting their model to rely less on third party content for many years at this point.

Disney+ definitely has some killer top end content (Marvel, Star Wars, Disney Animation, Pixar), but I think it will end up being complementary to Netflix as opposed to replacing it for most households.

We’re also starting to see the end of the “arbitrage period” where streaming is clearly less expensive than getting rid of cable. When Netflix was essentially a one-stop-shop for movies and old TV shows in its earliest streaming days, it was an unbelievable deal compared to cable. Now, you essentially need Netflix, Amazon Prime, Hulu and Disney+ subscriptions to replicate what a single Netflix subscription used to achieve... and Comcast and AT&T/Time Warner are going to start their own streaming services, too. As I’ve been saying for a few years, we’re eventually going to end up paying more for the same content that we had receive previously with a basic cable subscription and that time might be coming even earlier than expected. Streaming is what is causing huge losses to the cable bundle, but we’re going to end up needing a bundle of all of the newstreaming services.

(05-21-2019 02:39 PM)AllTideUp Wrote:  

Quote:To fund its new shows, Netflix is borrowing huge sums of debt. It currently owes creditors $10.4 billion, which is 59% more than it owed this time last year.

$10.4 billion in long-term debt very modest for a company with a market capitalization of $154.9 billion.

That means they're 6% debt funded.

By the way, it’s too bad that Hulu’s ownership and control is getting consolidated under Disney from a consumer standpoint. I thought Hulu had the best chance of being a legit top-to-bottom service competitor since Disney, Comcast, Fox and Time Warner all had direct shares in the platform. The Disney - Fox and AT&T - Time Warner deals changed all of that. Now, we’re going to see separate streaming platforms from Comcast and Time Warner, which is going to spread more content around in different places when the consumer is going to increasingly clamor for a more streamlined option. I think many households can handle subscriptions to Netflix, Prime and a “Disney bundle” (Disney+, ESPN+ and Hulu), but asking them for even more streaming services on top of them is probably going to be too much.

I'm at work so I don't have the article with me. I read an article the other day about Disney buying out Comcast on the ownership of Hulu. Hulu was mentioned as part of the bundle with Disney+ and ESPN+.

(05-21-2019 03:39 PM)TardisCaptain Wrote:  I'm at work so I don't have the article with me. I read an article the other day about Disney buying out Comcast on the ownership of Hulu. Hulu was mentioned as part of the bundle with Disney+ and ESPN+.

Yes, Disney gets full control of Hulu in exchange for Comcast effectively having a put option to sell its share over the next few years at the greater of a price based on today’s valuation or the then-current market price, whichever is higher. So, Comcast still has its ownership interest and can sell its share over the next few years essentially risk free (locking in today’s valuation if the market goes down while getting the benefit of the higher price if the market rises), but it no longer has any real say in the management of Hulu.

I watch Netflix for the original programming really, basically nothing else.

So they won't lose me no matter how many times Disney+ can show Avengers movies.

The loss for Netflix is the Marvel stuff which isn’t a big deal since they are only a slim amount of content. Also, Disney isn’t going to show other networks shows so that limits their scope for Disney +.

Their original programming has been boosted since they saw this coming yeasts ago. They also have deals with other content providers.

(05-21-2019 03:39 PM)TardisCaptain Wrote:  I'm at work so I don't have the article with me. I read an article the other day about Disney buying out Comcast on the ownership of Hulu. Hulu was mentioned as part of the bundle with Disney+ and ESPN+.

That will be interesting because Hulu also has a Hulu + Live TV service that includes access to Hulu plus a streaming TV service like YouTubeTV, PlayStation Vue, Sling, etc. If Disney offers a bundle of that service with Disney+ and ESPN+, at a price that's a discount on purchasing all 3 services separately, that's pretty serious competition for a lot of services in addition to Netflix.

Also, IIRC, Disney's CEO said they have already budgeted to lose billions on Disney+ in its first few years, which implies they plan to undercut Netflix on price and to first build a loyal customer base instead of profit, like Amazon did.

(05-21-2019 03:28 PM)Frank the Tank Wrote:  . When Netflix was essentially a one-stop-shop for movies and old TV shows in its earliest streaming days, it was an unbelievable deal compared to cable. Now, you essentially need Netflix, Amazon Prime, Hulu and Disney+ subscriptions to replicate what a single Netflix subscription used to achieve... and Comcast and AT&T/Time Warner are going to start their own streaming services, too. As I’ve been saying for a few years, we’re eventually going to end up paying more for the same content that we had receive previously with a basic cable subscription and that time might be coming even earlier than expected. Streaming is what is causing huge losses to the cable bundle, but we’re going to end up needing a bundle of all of the newstreaming services.

Yes. Netflix also has a follow the hard factor to it as the mainstay. A lot of of Netflix subscribers also are cable subscribers yet too

It really isnt about the money when someone has Netflix, Amazon Prime, Hulu and HBO Go. It's about the sociability. People will happily allow themselves to be nicked and dimed.

Disney has a lot of baggage. For one the brand is linked to kiddie films. On the other side of spectrum it's the birthplace of Miley Cyrus the grand satan for some.

A much as ESPN is belittled as the monolith by sporting fans the content is still valued. It's a non starter for many if it's not part of the package.

So yes I dont think Disney as a 6.99 entrant, 8 dollars with taxes is a serious disruptor to the Netflix base most who wouldn't care if its 25 a month.

(05-21-2019 04:34 PM)MWC Tex Wrote:  The loss for Netflix is the Marvel stuff which isn’t a big deal since they are only a slim amount of content. Also, Disney isn’t going to show other networks shows so that limits their scope for Disney +.

Disney banked hard on an endless slew of billion dollar Marvel movies but I just don't see those type of sales sustainable without Robert Downey Jr. in the picture.

He only played a substantial character in 9 movies but the other marvel films were on the coattails of the larger avenger story. Otherwise there is no way Ant Man is pulling 600 mill at the box office for example.

This last movie was the big blowout, the end of the peak marvel era from Avengers one until this one. Now its downhill for phase 4.

(05-21-2019 05:28 PM)Kit-Cat Wrote:  

(05-21-2019 04:34 PM)MWC Tex Wrote:  The loss for Netflix is the Marvel stuff which isn’t a big deal since they are only a slim amount of content. Also, Disney isn’t going to show other networks shows so that limits their scope for Disney +.

Disney banked hard on an endless slew of billion dollar Marvel movies but I just don't see those type of sales sustainable without Robert Downey Jr. in the picture.

He only played a substantial character in 9 movies but the other marvel films were on the coattails of the larger avenger story. Otherwise there is no way Ant Man is pulling 600 mill at the box office for example.

This last movie was the big blowout, the end of the peak marvel era from Avengers one until this one. Now its downhill for phase 4.

Which is the run up to phase 5, avengers vs x-men.

These storylines are endless and the comics have always led the way in cross overs, guest appearances, and reboot/plot twists. Like Bond they won't be running out of steam anytime soon.

Disney streaming offers little for households without children. Netflix will be fine. It will simply market itself as a service for adults. Unless you’re into cartoons or some syfy nerd, Disney streaming has little to offer.

(05-21-2019 05:56 PM)Foreverandever Wrote:  

(05-21-2019 05:28 PM)Kit-Cat Wrote:  

(05-21-2019 04:34 PM)MWC Tex Wrote:  The loss for Netflix is the Marvel stuff which isn’t a big deal since they are only a slim amount of content. Also, Disney isn’t going to show other networks shows so that limits their scope for Disney +.

Disney banked hard on an endless slew of billion dollar Marvel movies but I just don't see those type of sales sustainable without Robert Downey Jr. in the picture.

He only played a substantial character in 9 movies but the other marvel films were on the coattails of the larger avenger story. Otherwise there is no way Ant Man is pulling 600 mill at the box office for example.

This last movie was the big blowout, the end of the peak marvel era from Avengers one until this one. Now its downhill for phase 4.

Which is the run up to phase 5, avengers vs x-men.

These storylines are endless and the comics have always led the way in cross overs, guest appearances, and reboot/plot twists. Like Bond they won't be running out of steam anytime soon.

Ant-Man/Wasp, Dr. Strange, Guardians 2 (863.8-622 million)

Avengers, Age of Ultron, Infinity War, Endgame (2.62-1.47 billion)

Avengers have hauled down triple of the b list character movies.

Robert Downey Jr in a costume without a plot can haul down as much as the b-list films. Avengers put a story and supporting cast around him.

That last avenger movie cost 356 billion dollars to make. I just question if Marvel can hang in with no Ironman or Captain America. Digging up The Eternals for the next story arc reeks of desperation.

It's not just about Marvel or Star Wars as far as what Disney can offer.

Disney will have their entire team of studios from here on out focused on creating content for this service. That and remember, they just bought a ton of content from FOX so basically everything with a FOX label on it that's been created in the last few decades is now under Disney control. They've got National Geographic now as well. Their library will be much bigger than the blockbuster franchises that have come to garner the headlines.

More than that, the real reason those particular franchises were mentioned in the article is because of the flexibility they give Disney to move their films away from movie theaters and make them exclusive(or at least have joint releases) to the streaming service. That's potentially huge leverage in the marketplace. Rumors have been swirling for a while now that production companies might be moving in that direction. The theater industry will absolutely hate that innovation, but they are under threat just as much if not more than cable companies.

The strength of this streaming product is actually its diversity. Couple that with a sports offering in ESPN+ and they could very well dominate the market. Yes I know, ESPN+ doesn't have a ton of great sports on there right now, but that will change. The current product is an experiment more than anything.

It's probably premature to say Netflix will be run out of business, but I think the thesis of the article is a sound one. What Netflix did was alter the delivery method for content, it didn't alter what people actually watched. Sure, Netflix has people working on new shows and movies all the time, but you have to look at the profit margins of their new investments. Much of the value that Netflix built was created in a world where they just leased content made by someone else and then reaped the rewards of renting it to millions of people around the world. That can't be their business model going forward, however, because Disney and just about everyone else is creating their own platform. When everyone is doing what Netflix is doing then Netflix isn't special anymore.

Also, when you have companies like Disney that have the capital to not only create content but outright purchase some of the largest producers of content then that is something a new company like Netflix can't just counter.

Time will tell, but even if Netflix isn't substantially hurt by this move then that doesn't mean Disney+ won't be a huge success. And if ESPN reaps the rewards of that increase in market share then that could alter the sports landscape as well in a more significant way...which is really why I posted the article.

(05-21-2019 03:28 PM)Frank the Tank Wrote:  

(05-21-2019 02:55 PM)Yosef Himself Wrote:  I remember when the Palm Pre was going to put an end to the iPhone.

Hmmmm... I don’t know if that’s a great comparison. If anything, Disney is in the Apple position in the sense that there’s an unusually high devotion and loyalty to anything that the company releases compared to its competitors (where product preferences are much more transactional in nature). Disney and Apple have loyalty from a critical mass of passionate devotees in a way that, say, Comcast/Universal and Samsung don’t have and probably will never have.

That being said, the argument in the OP link is a bit too simple. While Netflix does rely on third party content more than it would like to admit, it still has essentially a decade-long head start on streaming and they’ve been adjusting their model to rely less on third party content for many years at this point.

Disney+ definitely has some killer top end content (Marvel, Star Wars, Disney Animation, Pixar), but I think it will end up being complementary to Netflix as opposed to replacing it for most households.

We’re also starting to see the end of the “arbitrage period” where streaming is clearly less expensive than getting rid of cable. When Netflix was essentially a one-stop-shop for movies and old TV shows in its earliest streaming days, it was an unbelievable deal compared to cable. Now, you essentially need Netflix, Amazon Prime, Hulu and Disney+ subscriptions to replicate what a single Netflix subscription used to achieve... and Comcast and AT&T/Time Warner are going to start their own streaming services, too. As I’ve been saying for a few years, we’re eventually going to end up paying more for the same content that we had receive previously with a basic cable subscription and that time might be coming even earlier than expected. Streaming is what is causing huge losses to the cable bundle, but we’re going to end up needing a bundle of all of the newstreaming services.

It’s simpler than that. Disney is a content owner and the content producer. Netflix is just a platform. Without the content—the platform is just another website with cat videos. There is a reason Netflix is rolling up debt trying to build a library of wholly owned content. It’s the only way Netflix can guarantee their own survival if content becomes Balkanized on hundreds of proprietary streaming sites. ESPN is basically in the same boat. They have to have a big chunk of every league in order to preserve their position as the “go to” network of record for sports.

Absolutely agree with the rest of the post. We will end paying for a myriad of streaming options in order to access the same content we get today with bundles. It will end up costing us as much or more to access less—-we will end up wishing for the cable bundle to return.

Ironic that Frank mentions platforms starting their own streaming. Spectrum just launched its first original content streaming series. LA Finest with Gabriella Union and Jessica Alba. Haven’t read anything about it or watched an episode yet. Interested to see if it catches on.

(05-21-2019 03:27 PM)hawghiggs Wrote:  Netflix will be fine. But cable might as well be dead.

+1

Netflix is more of a world market I'd say. A lot of their 'new content' these days is stuff that aired first overseas (Korea, China, Mexico, Spain, etc.).

Ironically though, their demise lately is because they sort of have drifted into ESPN territory, throwing away money left and right on pretty average programming. They need another Stranger Things hit or two.

Some of these new shows have god-awful writing. The worst culprit is the new Twilight Zone reboot on CBS All-Access. That's just brutal - I keep waiting for an episode to come close to the original classics.

I was an early subscriber to DirecTV and was with them at least 15 years before cutting the cords almost 5 years ago. Haven't looked back once. When I need my sports fix, I'll watch it live, on an over-the-air channel or through my computer.