Is Netflix US Going to Ultimately Crash & Burn?

                                                               Image credit: Netflix

“ Netflix US is projected to lose market share to competitors over the next several years” [1]

In the words of Bob Dylan: the times they are a-changin,' and Netflix is on the top of the menu, as hard-hitting, innovative new streaming competitors such as OONA TV, Amazon Prime and Hulu, show their colours on the playing field.

The Latest Findings

A recent eMarketer study focusing on American OTT consumers, shows that this year: 55.3% of the population (182.5 million people), will watch content by using OTT subscription services [1]. And the competition is really heating up, as platforms such as OONA US OTT TV, which is set to launch next month, is offering “Free Unlimited Entertainment 4 Life,” with its SVOD Trilogy: Live/VOD TV, Music, & Gaming, all of which can be used on-the-go via a mobile device, or on a home TV via casting/ OONA's android box.  

According to Eric Haggstrom, eMarketer's forecasting analyst: “New entrants Apple and Disney+ are ultimately starting from zero subscribers, and it will take a while to take subscribers from Netflix" [1], but in the meantime, all kinds of partnerships can be formed... Haggstrom also draws attention to the fact that: "Netflix has faced years of strong competition for viewers, coming from streaming video platforms, pay TV services and even video games [and] while there is no true ‘Netflix killer’ on the market, Disney’s upcoming bundle with Disney+, Hulu and ESPN+ probably comes closest” [1]. Clearly, Netflix's answer has been to stand by its guns, and consistently outspent the competition with original/licensed content, and boast a subscription price within many people's budget [1]. But, as history shows us, in a changing environment, successful strategies do not last forever. Watch CNBC's video: "Apple, Disney and other media giants are ready for battle against Netflix."

As Netflix Gets Hit, Others Enjoy the Video Wave

“Netflix remains the top streamer with nearly 159 million subscribers” [1] But...

Remarking on eMarketer's forecast, Forbes notes that: Hulu is gaining (it will surpass 40% of paid subscribers), as Netflix's lion's share slowly melts away. Further, eMarketer estimates that in the US this year: “Hulu will reach 75.8 million viewers, accounting for 41.5% of subscription OTT video service users. The number of individual viewers will grow by 17.5%... [1].

In the case of Amazon Prime Video: this year in the US, it will: “remain the second-largest subscription OTT provider by viewers (52.9% penetration). In total, Amazon will have 96.5 million viewers, which is 8.8% higher than in 2018. By 2021, the number of Amazon Prime Video viewers will reach one-third of the U.S. Population” [1].

                                                  Image credit: Tech How, YouTube

Netflix is Still Staying Afloat - For Now...

So it is not all gloom and doom. - Right now, in the US, Netflix still ranks as the country's favorite OTT subscription service. This year it boasts 158.8 million viewers, and it is estimated that by 2023, this number will climb to 177.5 million. Moreover, although Netflix Q2 subscriber growth predictions have failed, eMarketer anticipates robust growth for the rest of this year (with an increase of 7.6% from 2018) [1], but only time will tell...  

Anyone in Vegas Knows that Gambling Doesn't Always Pay Off

                                     Image credit: The Guardian Allstar/Cinetext

“Netflix Plans to Raise $2 Billion More Through Bonds, Bringing Debt Load to Over $12 Billion” [2]

Netflix is placing a huge gamble by making mega investments in original movies. For example, The Irishman featuring Al Pacino and Robert De Niro, has set it back between $173 and $200 million [1]. And when it comes to creditors, when high rolling borrowers such as Netflix, are heavily in the red, they can be as tough as the Cosa Nostra.

Growing Pains

Although in the US, Netflix is predicted to increase its percentage of subscribers, its superiority is nonetheless, likely to keep falling. For example: “In 2014, it captured 90% of the market. This year, its share will be 87%, as smaller rivals [such as OONA OTT TV, are likely to] lead to the decline of its dominance” [1]. Although, as Haggstrom remarks: “It’s [actually] more about it becoming more difficult for Netflix to grow its U.S. subscribers and the competition will put pricing pressure on Netflix. They won’t be able to raise prices as they have, which is usually every six quarters” [1].

A Stateside Saturation Point

Haggstrom also highlights the point that it is more about the platform reaching a saturation point in the US, as opposed to hemorrhaging subscribers, as it has in Q2, this year. He remarks: “The company is still gaining and growing subscribers, but the rate of growth is slower than in years past. Though last quarter was weak, the streamer is expected to have more growth during the back half of 2019. However, this growth will be at a decelerating rate from past years. So, it’s slowing down but it’s not going to turn negative for the full year” [1].

Will Netflix Have to get on the Ad Wagon? 

“How is Netflix going to create a growth story that will keep Wall Street happy without advertising? The answer is they cannot” [1]

Chief Attribution Officer at C3 Metrics, Jeff Greenfield, makes the succinct point that: “Netflix has not lost market share yet, but it’s coming. There’s nothing yet for consumers to sign up for except incredible promises and low prices. Once Disney+ and the multitude of others [such as OONA US] roll out their content, and there’s one or two hit shows that your neighbor or cousin tells you to watch, that’s when Netflix will lose market share” [1]. This scenario seems very probable, but once again, only time will tell... And as Greenfield adds: “even if they don’t, they need advertising” [1]. So will the Netflix creditors give them advice they can't refuse?

More About OONA 

OONA offers an unrivalled 3-in-1 FREE Unlimited Entertainment Bundle: Live VOD/TV, Video Games & Music Channels; the chance to earn daily virtual currency tcoin rewards for interacting & watching what they love; & fun tools & stickers for sharing & editing their favourite shows, music and games.  

OONA's free ad-supported, next generation virtual entertainment platform is a first of its kind. - It consolidates the most popular apps with live TV, SVOD, TVOD, music, games and YouTube channels in a singular platform operating on iOS and Android smartphones, Android TV and Smart TV applications. Using cutting-edge user engagement technology, OONA generates customized ads for viewers and rewards them with a virtual currency called tcoins® as part of a loyalty reward system which can be redeemed for popular branded goods and services.

To enhance the user experience, OONA offers multiple features including a genie-in-the-app known as OONAbot, to personalize the user journey as well as unique tools and stickers to use while interacting with friends & family, and sharing on social media platforms. As the vMVPD of the future, OONA is set to revolutionize the way we consume content with much more control, flexibility and monetary benefits for consumers and businesses. Currently, OONA has over 250 subscription-free channels including movies, TV programs, live sports, documentaries, and local and global breaking news, which is available in Indonesia and set to roll out in 2019 Q3 across Vietnam, the Philippines, US, and the Middle East.

References

[1]. Feldman, Dana (2019). "Netflix’s Dominance In U.S. Wanes As Hulu, Amazon Gain Subscribers."

https://www.forbes.com/sites/danafeldman/2019/08/21/netflix-is-expected-to-lose-us-share-as-rivals-gain/#33e0136966d6   Accessed 22 Aug. 2019.

[2]. Spangler, Todd (2019). “Netflix Plans to Raise $2 Billion More Through Bonds, Bringing Debt Load to Over $12 Billion.” Variety.

https://variety.com/2019/digital/news/netflix-2-billion-debt-load-1203195285/  Accessed 22 Aug. 2019.