After a decade of keeping its promise to keep content ad free, welcome to the new streaming norm: higher subscription prices, walled content, more ads. Are we peak streaming yet?
Great article! I’m going to share this with my wife. I have long felt it is no longer worth it and that we should go back to accumulating DVDs of our favorite shows and movies. Not glamorous by any means, but I hate being bombarded with adds and propaganda.
Thanks Simon, glad you enjoyed the post. I think increasingly people are going back to accumulating DVDs, especially as there is no guarantee that the streaming service is going to renew the rights for your favorite TV shows and movies in the following year. Not to mention, the quality of new content is getting flatter, and many people are complaining that they simply get bored scrolling through what to watch and not finding anything subsequentlly.
Yes - I think we're entering a period where there is going to be a lot more of watching ads on these platforms. It will become the new norm just as cable TV once said there would be no ads but eventually folded. Which streaming services do you folks subscribe to?
My girlfriend and I just had this exact discussion about DVDs this weekend after we couldn't find one of our favorite shows on any streaming platforms anymore!
Just recently, the German business newspaper Handelsblatt reported that analysts believe Netflix makes more money from an ad-supported subscription than from the more expensive ad-free ones. Really interesting topic.
It is fascinating indeed. From what I gathered from quickly looking over Netflix's Q2 earnings, the management did say that it expects its $6.99/month ad-supported plan to generate more revenue than $15.49/month plan over the coming years, especially as it builds out its in-house ad tech platform to gain better ad-targeting and measurement capabilities. It's definitely a paradigm shift in consumer preferences, especially as we are seeing more consumers choose the cheaper deal in exchange for ads.
I will continue to cancel any paid streaming service with ads. There is already more ad-free content than I could watch in a lifetime, and it's so mediocre they should pay me for the opportunity cost of my time in trying to find anything worth watching.
Great point. It's like we get stuck in this doom loop of searching for something to watch and then feel so demoralized sometimes after half hour of scrolling because we didnt find anything interesting and the popcorn got cold.
I wonder if their scheme will work or backfire. I can't help but think there were a lot of people just paying Netflix every month without really thinking about it. When I was faced with the new options I chose to cancel my account for all of the reasons you outline. I guess we'll see.
I think the saving grace for Netflix, as a business is whether they can actually grow their ad-tier subscription by attracting new users or converting some existing ones (who are tired of paying higher subscription prices) into the lower ad-tier. For me, I think we are also entering a time where the quality of content is becoming quite "flat", so there is a certain aspect of boredom creeping in when it comes to the whole content discovery process on these streaming platforms.
That would indeed seem to be their plan. Unfortunately, your last point is the most pertinent. I would have happily paid for ad-free service if I felt like I was getting value for money. To put it mildly, Netflix offerings suck.
Jul 18·edited Jul 18Liked by Uttam Dey, Amrita Roy
Well, for some reason I had not been getting notifications of your recent posts; reckon I have some catching up to do LOL
I 'cut the cord' in 2013, and I had a lot of hope for streaming; not so much about the Netflix / Hulu Amazon Prime models, but with live television. I thought it was a real opportunity to FINALLY break the stranglehold cable networks have with their carriage agreements, through standalone channel options; Sling TV hinted at that early on with targeted packages, but alas... the cable-carriage model eventually won out, even online.
Now, the prices for 'Live Streaming Services' (Hulu Plus Live, YouTube Live TV, etc.) are close to cable prices, and you get less channels. Philo is reasonably priced (but the lack of news channels renders it useless to me), and Frndly TV is VERY inexpensive, but again... not many channels of interest. So I will occasionally watch live channels on Rumble, and have subs to a couple of standalones channels, for which I pay monthly fees.
To be honest, I have learned to live with less viewing, which has given more time to write AND be in that magical place called 'outside.' LOL I also think the use of programming for social-agenda peddling (especially with Pluses Paramount and Disney) has hit them harder than expected as well; turns out, people want entertainment with the fictional programs, not sermons.
Anyhow, I've rambled on enough - high-quality work, as always! *salute
It's good to hear from you Stone, I am actually curious, are you not receiving my emails in your inbox? The reason I am asking is because I have noticed my open rate has suddenly dropped quite a bit over the last couple of months, especially after Google did something that I don't even understand, which could be pushing newsletter emails to non-primary inboxes.
Anyhow, thank you for your comment and restacking our post. Learning to live with less viewing is indeed very peaceful. Although I don't do streaming, I do sometimes get into the rut of YouTube shorts and Reels, and it is terrifying how much energy it drains from the brain, mind and soul. Like you said, content overall is becoming very flat, and people are realizing that by choosing cheaper plans instead or just cutting the cord altogether and finding renewed purpose in life by breathing fresh air and connecting with people in meaningful communities.
Thanks Stone - Its the same with me as well - Since I started writing, I just spend a lot more time, reading, analyzing datasets, thinking about how to write what I write, and then writing. I had actually set up my own media server a while back but I still dont see myself using my media server very often, so as a consumer, Streaming is not MYCOT for now. But I still keep up with whats going on.
I cut the cord on cable years ago with no intention of going back. My problem now that all the providers let you access other providers, is keeping up with what I subscribed where. I have to keep a constant vigil to keep the costs in check. And, honestly, sometime I wish we could go back to the days of three channels! There’s so much content to choose from now, it can get exhausting.
hahaha, the simplicity of the 3 channels days, yes I remember my early childhood too (in India, where cable TV hadn't fully penetrated every household in the early the 90's, or may be my parents didn't want me to get distracted by TV). You are right about the "exhausting" part of selecting what to watch, for most of the time, I would watch a few trailers here and there, and just go back to re-watching something that I had previously watched, not to mention, I feel like the quality of the content is getting quite flat. What all services are you subscribed to, and have you reduced your number of subscriptions lately?
I do the same thing, Amrita. Click, click, click… for the moment it’s Netflix, Hulu and Prime mainly. I add others if there’s a particular program we want to watch. “Silo” on Apple TV, for example. My wife is addicted to YouTube. Admittedly, we watch a lot of true crime shows there like 48 Hours and one called Just Thought Lounge. I think those qualify us as old! 😀
Ha, ha. My wife watches thrift shopping shows and French chateau's being rennovated shows all the time! It's amazing how large an audience these YouTubers can acquire for the most mundane stuff.
😆😆.. Apart from a few Turkish TV shows she watches on YouTube (uploaded for free).. Amrita spends hours at night sometimes watch people taking their cats to the doctor and seeing how cats throw tantrums - that is her favorite thing of all to watch...(sorry I let your secret out Amrita🥸)
Dear lord! LOL And I bet those people have 1,000s of subscribers and views and rake in the ad dollars! I have got to find some topic to do that with. I'm convinced there's an audience for everything. The thrift shows my wife watches (she owns a boutique vintage and collectibles shop btw, which explains her "addiction) consists of people going into Goodwill stores and thrift shops, looking at items, and either putting them in the cart or back on the shelf. That's it! Unbelievable.
Is FAST an acronym for something? I find myself using services like TUBI and Roku more and more.
Netflix, Hulu, Disney…etc now cost too much for someone like me who doesn’t have much time to watch TV. I imagine as the price of paid services rises, more people will come to this conclusion.
PSA: If there is something you really want to watch, try your local library….basically this is my go-to now. My library has a mountain of DVDs and several streaming services like Hoopla that will have stuff if you are willing to wait a few months.
Oh yes - the personal library is a great point too at least for those who had been building and investing in buying dvds over time. I have a small collection too - I use Plex for all media management.
I actually thought Plex had the best UI to help us manage our entire library of content. I felt like it got better over time up until the last few years. They have a good knowledge base of how to set up your own media server and its easy to do it - i just had to spend time ripping my DVDs into mp4s. You can install their client apps easily on a Roku, FireStick, AppleTV device easily and watch your content just like your own personal Netflix.
They also have their own version of free ad supported channels many of which are live.
The one caveat I will add here is Plex makes 100% sense if you go for the Plex Pass. They usually run discounts on Black Friday but I see the prices have risen. I purchased my Lifetime Plex Pass at $79 in 2017. I see that is now gone up to $120.
Hey JK. FAST = Free Ad Supported Television and like you pointed out Roku and Tubi are all classified as FAST TV channels because you dont pay a dime but watch slightly aged out content which can keep evolving over time in exchange for ads. And also like you said - as the price of streaming rises, I believe as well that value proposition between streaming and cable diminishes, lines start to blur and they both look a lot similar.
Hey Uttam and Amrita, I read the 2-minute version. My comment isn't about streaming (I've never had Roku, Netflix, etc. and don't know the ins and outs of the business). I just want to stress yet again how important it is to be a shareholder. Consumers are always screwed. We get promised one thing but end up having to pay more when companies' profits sink. Be a consumer (to a point) but above all, be a shareholder.
Thanks for the perspective, Denis - I actually dont believe the consumer is screwed in this case - the point of the post was to think about how the consumer is changing their consumption behaviors in light of the the recent string of price hikes. If you have been noticing, consumers are in one of the most powerful positions they have ever been because they're not afraid to cancel a brand or a franchise if they dont see that value being justified - so far thats not being shown in Netflix yet in this new leg rally as we can see with other franchises such as food brands like MCD, SBUX or clothing brands like NKE etc... In fact if you look closely at the market share by number of minutes consumers spent on the platform, you'll notice Netflix does have marginal market share increase which implies some small degree of market penetration - that does signal some market benefit to a large player like Netflix. We just wrote this from a consumer behavior perspective - should be writing one up next week from a business standpoint.
Interesting as ever. I'm in the UK and don't know the stats but there is general dissatisfaction with the way live football (soccer) has been diced up and distributed across many different streaming providers, necessitating multiple (increasingly expensive) subscriptions to watch Premier league. It looks and sounds like a golden goose being slaughtered!
Oh yes - I keep up with how EPL got divvied up between streaming platforms - its basically Skysports, TNT or you head to the pub each weekend to watch the matches😎😉, correct?
Very good point. Showing movies and series ad-free was a key competitive differentiator. It is a much more immersive experience. At the moment, ads are not very intrusive on e.g. Amazon Prime – Streaming platforms will have to be very careful about protecting their value proposition.
Thanks for your insight Econolog - Spot on - the ad-free experience was a key differentiator. I think that differentiation now has moved entirely to content side now - who makes the based content and is award-winning, engaging etc. Sounds like you have Amazon Prime? Hows it on your streaming platform?
Ad content is moderate. Seems they still try to keep it as an intro to movies, and just 1-2 spots. Went through LOTR trilogy a few weeks ago, there was I think 1 break BUT it felt really intrusive. Curious how far they will push it.
Streaming really explains the current wacky business climate. People are so obsessed with market disruptions, they’re “disrupting” themselves right out of business. Streaming is a perfect example. All these media companies jumped on board and now they’re reverting to their old mode, but with lower margins and less control.
Exactly its like innovations come full circle. And streaming is one example of that. Except - I think they're doing it with more margins. Take Netflix for example. Before the pandemic, Netflix was able to collect between $7-11 dollars in operating profits for every $100 it made. Now it collects almost $24 per $ 100 of revenue in operating profits - more than twice the profits it made before the pandemic.
Netflix is definitely squeezing more money out of each customer. I just wonder how scalable that is over time. They announced they're no longer going to release subscriber numbers. I assume that means they are no longer interested in growth and will just try to increase revenue elsewhere through ads within the content. But you're right, Netflix is the only winner in streaming at the moment.
You are correct on your perspectives on Netflix's new direction of growth. They're not interested in growing that end since they have reached some levels of saturation and will move to growing revenue and margins just like any other mature-stage company does. Except if Netflix does find the next big product hit - lets say like video games or their own Netflix TVs (hypothetical ideas).. but for now its revenue growth and ads plays a big part. The scalability is being answered because customers are responding well at the moment and churn looks minimal pointing to a situation where everday users lament the situation but eventually end up continuing their subscription or downgrading to ad-tiers which actually is working in Netflix's favor for now.
Not only are they squeezing and plucking more out of your wallet, but their content seems to be waning too. I haven’t found much of interest on Netflix in a while.
Netflix has not made strong indications yet in sports - but theyve clearly said that any sport that hinges on the border of entertainment is where they would be interested - they felt WWE would fit their audience so that was something where they made a deal with WWE. On the recent earnings call Netflix CEO said they would be interested in "buzzy live entertainment."
Netflix just announced that both the Christmas Day games will be aired on Netflix - so theyre still testing this out.
Amrita - deeply appreciate this and your time. last question I promise - when you mean sports and its connection to NFLX, do you mean, theater ? like scripted sports (i.e. WWE). do you think NFLX will have any appetite for completely unscripted sports ?
Its all about experimentation, Deepak. I think Netflix is being reasonable enough to test the waters before going all-in. Their initial tests maybe showed that scripted shows would work hence the WWE deal. I cant speak for Netflix so I dont know whether they will branch out of unscripted sports yet - hence the tests for Christmas Day NFL games
Amrita - can you tell us your thoughts on streaming services as it pertains to sports ? Like prime and Thursday night football … ? Are we gonna get more of that ? Am specifically interested in the NFL and NBA
Yes - I think as someone pointed out... the key differentiation factors between streaming TV and Cable was the ad-free experience, one-stop shop content library and personalization. Over time, services are still trying to scale personalization especially in the AI age, the one-stop shop content library fell apart after Disney and other content studios pulled their libraries - now its moved more to a nicher royalty and licensing model. And streaming brands are introducing ads and raising prices..
So it appears, that everyone is now entirely pivoting to offering more content - and live content falls in that bucket as well. Netflix inked a deal earlier this year for WWE, Disney and Amazon are fighting for NBA, all the important NFL are already available on most streaming platforms - so this is already an area where they are competing
Great article! I’m going to share this with my wife. I have long felt it is no longer worth it and that we should go back to accumulating DVDs of our favorite shows and movies. Not glamorous by any means, but I hate being bombarded with adds and propaganda.
Thanks Simon, glad you enjoyed the post. I think increasingly people are going back to accumulating DVDs, especially as there is no guarantee that the streaming service is going to renew the rights for your favorite TV shows and movies in the following year. Not to mention, the quality of new content is getting flatter, and many people are complaining that they simply get bored scrolling through what to watch and not finding anything subsequentlly.
🎯💯🎯
Yes - I think we're entering a period where there is going to be a lot more of watching ads on these platforms. It will become the new norm just as cable TV once said there would be no ads but eventually folded. Which streaming services do you folks subscribe to?
My girlfriend and I just had this exact discussion about DVDs this weekend after we couldn't find one of our favorite shows on any streaming platforms anymore!
💯💯💯
You know how highly I think of your work. This latest edition only re-enforces that high opinion. Excellent piece, as always!
Thanks Greg for your encouragement, always boosts my morale to continue producing the best work possible on my end.
Just recently, the German business newspaper Handelsblatt reported that analysts believe Netflix makes more money from an ad-supported subscription than from the more expensive ad-free ones. Really interesting topic.
It is fascinating indeed. From what I gathered from quickly looking over Netflix's Q2 earnings, the management did say that it expects its $6.99/month ad-supported plan to generate more revenue than $15.49/month plan over the coming years, especially as it builds out its in-house ad tech platform to gain better ad-targeting and measurement capabilities. It's definitely a paradigm shift in consumer preferences, especially as we are seeing more consumers choose the cheaper deal in exchange for ads.
I will continue to cancel any paid streaming service with ads. There is already more ad-free content than I could watch in a lifetime, and it's so mediocre they should pay me for the opportunity cost of my time in trying to find anything worth watching.
Great point. It's like we get stuck in this doom loop of searching for something to watch and then feel so demoralized sometimes after half hour of scrolling because we didnt find anything interesting and the popcorn got cold.
I wonder if their scheme will work or backfire. I can't help but think there were a lot of people just paying Netflix every month without really thinking about it. When I was faced with the new options I chose to cancel my account for all of the reasons you outline. I guess we'll see.
I think the saving grace for Netflix, as a business is whether they can actually grow their ad-tier subscription by attracting new users or converting some existing ones (who are tired of paying higher subscription prices) into the lower ad-tier. For me, I think we are also entering a time where the quality of content is becoming quite "flat", so there is a certain aspect of boredom creeping in when it comes to the whole content discovery process on these streaming platforms.
That would indeed seem to be their plan. Unfortunately, your last point is the most pertinent. I would have happily paid for ad-free service if I felt like I was getting value for money. To put it mildly, Netflix offerings suck.
Same. I wouldn't even have thought about it, just kept paying, until they changed the deal.
I think highly of your work too … and this was a great read !!
Thanks Deepak, glad you liked the post.
Well, for some reason I had not been getting notifications of your recent posts; reckon I have some catching up to do LOL
I 'cut the cord' in 2013, and I had a lot of hope for streaming; not so much about the Netflix / Hulu Amazon Prime models, but with live television. I thought it was a real opportunity to FINALLY break the stranglehold cable networks have with their carriage agreements, through standalone channel options; Sling TV hinted at that early on with targeted packages, but alas... the cable-carriage model eventually won out, even online.
Now, the prices for 'Live Streaming Services' (Hulu Plus Live, YouTube Live TV, etc.) are close to cable prices, and you get less channels. Philo is reasonably priced (but the lack of news channels renders it useless to me), and Frndly TV is VERY inexpensive, but again... not many channels of interest. So I will occasionally watch live channels on Rumble, and have subs to a couple of standalones channels, for which I pay monthly fees.
To be honest, I have learned to live with less viewing, which has given more time to write AND be in that magical place called 'outside.' LOL I also think the use of programming for social-agenda peddling (especially with Pluses Paramount and Disney) has hit them harder than expected as well; turns out, people want entertainment with the fictional programs, not sermons.
Anyhow, I've rambled on enough - high-quality work, as always! *salute
It's good to hear from you Stone, I am actually curious, are you not receiving my emails in your inbox? The reason I am asking is because I have noticed my open rate has suddenly dropped quite a bit over the last couple of months, especially after Google did something that I don't even understand, which could be pushing newsletter emails to non-primary inboxes.
Anyhow, thank you for your comment and restacking our post. Learning to live with less viewing is indeed very peaceful. Although I don't do streaming, I do sometimes get into the rut of YouTube shorts and Reels, and it is terrifying how much energy it drains from the brain, mind and soul. Like you said, content overall is becoming very flat, and people are realizing that by choosing cheaper plans instead or just cutting the cord altogether and finding renewed purpose in life by breathing fresh air and connecting with people in meaningful communities.
Thanks Stone - Its the same with me as well - Since I started writing, I just spend a lot more time, reading, analyzing datasets, thinking about how to write what I write, and then writing. I had actually set up my own media server a while back but I still dont see myself using my media server very often, so as a consumer, Streaming is not MYCOT for now. But I still keep up with whats going on.
I cut the cord on cable years ago with no intention of going back. My problem now that all the providers let you access other providers, is keeping up with what I subscribed where. I have to keep a constant vigil to keep the costs in check. And, honestly, sometime I wish we could go back to the days of three channels! There’s so much content to choose from now, it can get exhausting.
hahaha, the simplicity of the 3 channels days, yes I remember my early childhood too (in India, where cable TV hadn't fully penetrated every household in the early the 90's, or may be my parents didn't want me to get distracted by TV). You are right about the "exhausting" part of selecting what to watch, for most of the time, I would watch a few trailers here and there, and just go back to re-watching something that I had previously watched, not to mention, I feel like the quality of the content is getting quite flat. What all services are you subscribed to, and have you reduced your number of subscriptions lately?
I do the same thing, Amrita. Click, click, click… for the moment it’s Netflix, Hulu and Prime mainly. I add others if there’s a particular program we want to watch. “Silo” on Apple TV, for example. My wife is addicted to YouTube. Admittedly, we watch a lot of true crime shows there like 48 Hours and one called Just Thought Lounge. I think those qualify us as old! 😀
Even Amrita is addicted to YouTube. It's her go-to for everything nowadays.😁
Ha, ha. My wife watches thrift shopping shows and French chateau's being rennovated shows all the time! It's amazing how large an audience these YouTubers can acquire for the most mundane stuff.
😆😆.. Apart from a few Turkish TV shows she watches on YouTube (uploaded for free).. Amrita spends hours at night sometimes watch people taking their cats to the doctor and seeing how cats throw tantrums - that is her favorite thing of all to watch...(sorry I let your secret out Amrita🥸)
Dear lord! LOL And I bet those people have 1,000s of subscribers and views and rake in the ad dollars! I have got to find some topic to do that with. I'm convinced there's an audience for everything. The thrift shows my wife watches (she owns a boutique vintage and collectibles shop btw, which explains her "addiction) consists of people going into Goodwill stores and thrift shops, looking at items, and either putting them in the cart or back on the shelf. That's it! Unbelievable.
Is FAST an acronym for something? I find myself using services like TUBI and Roku more and more.
Netflix, Hulu, Disney…etc now cost too much for someone like me who doesn’t have much time to watch TV. I imagine as the price of paid services rises, more people will come to this conclusion.
PSA: If there is something you really want to watch, try your local library….basically this is my go-to now. My library has a mountain of DVDs and several streaming services like Hoopla that will have stuff if you are willing to wait a few months.
Oh yes - the personal library is a great point too at least for those who had been building and investing in buying dvds over time. I have a small collection too - I use Plex for all media management.
How is plex? I keep meaning to try it but I am not very "techi"
I actually thought Plex had the best UI to help us manage our entire library of content. I felt like it got better over time up until the last few years. They have a good knowledge base of how to set up your own media server and its easy to do it - i just had to spend time ripping my DVDs into mp4s. You can install their client apps easily on a Roku, FireStick, AppleTV device easily and watch your content just like your own personal Netflix.
They also have their own version of free ad supported channels many of which are live.
The one caveat I will add here is Plex makes 100% sense if you go for the Plex Pass. They usually run discounts on Black Friday but I see the prices have risen. I purchased my Lifetime Plex Pass at $79 in 2017. I see that is now gone up to $120.
Hey JK. FAST = Free Ad Supported Television and like you pointed out Roku and Tubi are all classified as FAST TV channels because you dont pay a dime but watch slightly aged out content which can keep evolving over time in exchange for ads. And also like you said - as the price of streaming rises, I believe as well that value proposition between streaming and cable diminishes, lines start to blur and they both look a lot similar.
Now sure if you saw this…Comcast now offering streaming bundles LOL…things are coming full circle…https://corporate.comcast.com/press/releases/comcast-introduces-peacock-netflix-and-apple-tv-streaming-bundle
Wow. This is just like how Cable would bundle up packages and price them off to customers.
Hey Uttam and Amrita, I read the 2-minute version. My comment isn't about streaming (I've never had Roku, Netflix, etc. and don't know the ins and outs of the business). I just want to stress yet again how important it is to be a shareholder. Consumers are always screwed. We get promised one thing but end up having to pay more when companies' profits sink. Be a consumer (to a point) but above all, be a shareholder.
Thanks for the perspective, Denis - I actually dont believe the consumer is screwed in this case - the point of the post was to think about how the consumer is changing their consumption behaviors in light of the the recent string of price hikes. If you have been noticing, consumers are in one of the most powerful positions they have ever been because they're not afraid to cancel a brand or a franchise if they dont see that value being justified - so far thats not being shown in Netflix yet in this new leg rally as we can see with other franchises such as food brands like MCD, SBUX or clothing brands like NKE etc... In fact if you look closely at the market share by number of minutes consumers spent on the platform, you'll notice Netflix does have marginal market share increase which implies some small degree of market penetration - that does signal some market benefit to a large player like Netflix. We just wrote this from a consumer behavior perspective - should be writing one up next week from a business standpoint.
Thanks Uttam. Very interesting.
Interesting as ever. I'm in the UK and don't know the stats but there is general dissatisfaction with the way live football (soccer) has been diced up and distributed across many different streaming providers, necessitating multiple (increasingly expensive) subscriptions to watch Premier league. It looks and sounds like a golden goose being slaughtered!
Oh yes - I keep up with how EPL got divvied up between streaming platforms - its basically Skysports, TNT or you head to the pub each weekend to watch the matches😎😉, correct?
Very good point. Showing movies and series ad-free was a key competitive differentiator. It is a much more immersive experience. At the moment, ads are not very intrusive on e.g. Amazon Prime – Streaming platforms will have to be very careful about protecting their value proposition.
Thanks for your insight Econolog - Spot on - the ad-free experience was a key differentiator. I think that differentiation now has moved entirely to content side now - who makes the based content and is award-winning, engaging etc. Sounds like you have Amazon Prime? Hows it on your streaming platform?
Ad content is moderate. Seems they still try to keep it as an intro to movies, and just 1-2 spots. Went through LOTR trilogy a few weeks ago, there was I think 1 break BUT it felt really intrusive. Curious how far they will push it.
When I watch the LOTR trilogy. I need no ad breaks. It deserves my full attention. 😁😁🥸
Streaming really explains the current wacky business climate. People are so obsessed with market disruptions, they’re “disrupting” themselves right out of business. Streaming is a perfect example. All these media companies jumped on board and now they’re reverting to their old mode, but with lower margins and less control.
Exactly its like innovations come full circle. And streaming is one example of that. Except - I think they're doing it with more margins. Take Netflix for example. Before the pandemic, Netflix was able to collect between $7-11 dollars in operating profits for every $100 it made. Now it collects almost $24 per $ 100 of revenue in operating profits - more than twice the profits it made before the pandemic.
Netflix is definitely squeezing more money out of each customer. I just wonder how scalable that is over time. They announced they're no longer going to release subscriber numbers. I assume that means they are no longer interested in growth and will just try to increase revenue elsewhere through ads within the content. But you're right, Netflix is the only winner in streaming at the moment.
You are correct on your perspectives on Netflix's new direction of growth. They're not interested in growing that end since they have reached some levels of saturation and will move to growing revenue and margins just like any other mature-stage company does. Except if Netflix does find the next big product hit - lets say like video games or their own Netflix TVs (hypothetical ideas).. but for now its revenue growth and ads plays a big part. The scalability is being answered because customers are responding well at the moment and churn looks minimal pointing to a situation where everday users lament the situation but eventually end up continuing their subscription or downgrading to ad-tiers which actually is working in Netflix's favor for now.
Not only are they squeezing and plucking more out of your wallet, but their content seems to be waning too. I haven’t found much of interest on Netflix in a while.
Why can’t NFLX get into sports ?
Netflix has not made strong indications yet in sports - but theyve clearly said that any sport that hinges on the border of entertainment is where they would be interested - they felt WWE would fit their audience so that was something where they made a deal with WWE. On the recent earnings call Netflix CEO said they would be interested in "buzzy live entertainment."
Netflix just announced that both the Christmas Day games will be aired on Netflix - so theyre still testing this out.
Amrita - deeply appreciate this and your time. last question I promise - when you mean sports and its connection to NFLX, do you mean, theater ? like scripted sports (i.e. WWE). do you think NFLX will have any appetite for completely unscripted sports ?
Its all about experimentation, Deepak. I think Netflix is being reasonable enough to test the waters before going all-in. Their initial tests maybe showed that scripted shows would work hence the WWE deal. I cant speak for Netflix so I dont know whether they will branch out of unscripted sports yet - hence the tests for Christmas Day NFL games
Amrita - can you tell us your thoughts on streaming services as it pertains to sports ? Like prime and Thursday night football … ? Are we gonna get more of that ? Am specifically interested in the NFL and NBA
Yes - I think as someone pointed out... the key differentiation factors between streaming TV and Cable was the ad-free experience, one-stop shop content library and personalization. Over time, services are still trying to scale personalization especially in the AI age, the one-stop shop content library fell apart after Disney and other content studios pulled their libraries - now its moved more to a nicher royalty and licensing model. And streaming brands are introducing ads and raising prices..
So it appears, that everyone is now entirely pivoting to offering more content - and live content falls in that bucket as well. Netflix inked a deal earlier this year for WWE, Disney and Amazon are fighting for NBA, all the important NFL are already available on most streaming platforms - so this is already an area where they are competing
but the streaming or TV rights - they are locked in for years right? so, there is that hurdle yeah ?
Great work. I unequivocally and indisputably agree with the premise. Thank you for letting me know about Tubi and Roki channels.