Reed Hastings, Co-Founder and CEO of Netflix, attends a meeting with French President Emmanuel Macron during the “Choose France” summit at the Chateau de Versailles, outside Paris, France, on January 20, 2020.
Benoit Tessier | Pool | Reuters
The alleged plot of the streaming wars goes as follows: Big media, tired of losing customers and relative market value to Netflix, have turned their aging, television-centric businesses into subscription streaming services.
There is no exact start date for these “wars”, but on November 12, 2019, Disney launched Disney + and launched the traditional media attack on Netflix.
Since then, HBO Max by AT&T, Peacock by Comcast NBCUniversal, Paramount + by ViacomCBS, Discovery + by Discovery, and AMC + by AMC Networks have all come to life as Netflix competitors.
Who was the big winner of this new competition?
Netflix.
Since Disney + launched, Netflix shares have risen more than 87%. That dwarfs the profits of all other media companies over the same period.
Netflix is expected to post earnings for the first quarter on Tuesday after close of trading. Analysts expect earnings of $ 2.97 per share, up 89% year over year, on revenue of $ 7.13 billion, up 24%.
Netflix is the foundation
The rise in market value is accompanied by a noticeable increase in subscribers during the coronavirus pandemic. In the first half of 2020, Netflix gained 37 million new customers worldwide. This was a record profit for the company, which hit its 2018 annual high of 28.6 million.
A multitude of Americans believe that Netflix has the best original content among streaming services, according to a recent Morgan Stanley survey. 38 percent of the survey participants voted it number 1 among the streamers – and exceeded Amazon Prime Video with 12 percent by far.
While the streaming wars offer consumers more alternatives to Netflix, they are also cementing Reed Hastings’ business as an anchor product in many US households. If streaming video is now – or soon – at the heart of home entertainment and replacing cable television, Netflix will almost certainly be part of the content diet of a typical household.
Netflix spends all other content streaming services and already has more than 200 million subscribers worldwide. This global reach is a great selling point for developers with a growing list of channel partners.
“Our strategy is simple: if we can keep improving Netflix every day to better excite our members, we can be their first choice for streaming entertainment,” wrote Netflix in its January letter to shareholders. “Last year is evidence of that approach. Disney + had a massive first year (87 million paid subscribers!) And we had the biggest year of paid membership growth in our history.”
The streaming wars sparked many new competitions for Netflix. The bigger shift, however, was more existential – it introduced streaming of video as the dominant form of television as cable television began to wane.
The consequence of this shift is that consumers want Netflix more than ever.
WATCH: Chartmaster says Netflix stocks are about to stream higher after falling flat so far this year
Disclosure: CNBC is owned by Comcast’s NBCUniversal unit.
