THE FUTURE OF NETFLIX – TECHNOLOGY

Netflix faces a new reality for the future of its streaming service, due to the plans of AT&T’s WarnerMedia, Walt Disney, and Comcast’s NBC Universal who are all entering the streaming video arena, big-time.

The problem for Netflix, however, isn’t in the fact that there will be more competition but that its primary competitors own much of the programming content that Netflix currently uses.  And the owners plan to use their products in their own streaming and, thus, will be withdrawing their use from the Netflix line-up.  That’s really bad news for Netflix’s future – programming owned by these three competitors makes up 40% of the current viewing on Netflix.  And eight of the ten shows that Netflix’s U.S. customers spent most time viewing last year were reruns of old hits – and, thus, owned by one of the major studios, not Netflix.  Nielsen data shows that 72% of the minutes people spent watching Netflix in October, 2018  were spent on “library programming” – that is, on the old shows and reruns, not on the “original programming” that Netlix is currently touting.  During the last few years, Netflix has been attempting to bump up its brand by producing original programming of its own shows.  But, that’s a slow-moving process.  Even though Netflix has production capability in-house, it is not a Hollywood production studio like Disney, where there are long years of knowledge resident in the skilled talent that can be tapped at a minute’s notice for the making of new films or a new series.  Thus, when the three major studios pull their products from Netflix, probably as early as the beginning of next year, Netflix will truly be behind the eight-ball to try to fill in the gaps in their programming.  This, in face of the reality that the number one show viewed on Netflix currently is “The Office” – definitely not owned by Netflix, but by NBCUniversal and rented to Netflix.  And, it’s certain, that, with “The Office” so popular among viewers – who will find it easy to switch steaming services –  NBCUniversal will want it in their exclusive lineup when they begin their streaming service.  Some analysts have speculated that the large movie studios will need to think carefully about removing content from Netflix because: 1 – they’ll be giving up the income from the Netflix rental; and 2 – they’ll want to ensure that the “profit participants” – that is, the show creators – get a fair deal in the process.  My response to that concern would be: Oh, please – the studios wouldn’t have gone down this road if they didn’t have those kind of details worked out well in advance.  And these are studios with vast amounts of resources, so one shouldn’t think that losing the small-change fees that accrue from the rentals, in the face of all the other income that the studios bring in, with their new movies and new series, can be a relevant factor in the decision -making process.  All in all, this will definitely be an interesting future scenario to observe, in the making, so-to-speak.

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