(The Big Disrupt) Netflix: The Fall of Netflix? by captainmidnight

(The Big Disrupt) Netflix: Why Disney Are No Real Threat To Netflix

With the news of Disney's plans to remove all their film content from Netflix and launch two streaming services in the next two years, there has been a lot of talk that this could be a major threat to Netflix dominance of the SVOD market but, in truth, Disney planned entrance into the marketplace should not keep Netflix executives awake at night. 

However, that's not to say that they shouldn't take notice. Disney has arguably the strongest and most prized content library ever and should it's planned ESPN or Disney movies streaming services take off, Netflix could have a real problem on its hands. The last thing Netflix needs is to find itself competing with a company that's nearly twice its size with a larger content library and deeper pockets as it already has Amazon, a company four times its size by market cap with even deep pockets than Disney, breathing down its neck forcing them to spend even more money on licensing and creating original content at increasingly unsustainable levels.   

With Amazon and now Disney nipping at its heels, Netflix are increasingly looking like a company that's skilfully punching above its weight against opponents who simply have to stay in the fight long enough to pick them off in the later rounds. Yet despite being smaller than both these great companies, Netflix will likely see off the threat posed by Disney. Netflix is an incredibly well-run operation with a large content library, a growing stable of popular and critically acclaimed shows it produces itself not to mention 104 million subscribers globally but the reason why Disney are going to have a hard time knocking Netflix off top spot or even making a dent in its dominance is Netflix have a considerable head start it simply isn't going to give up. 

The reason why Netflix are so far ahead of everybody else in the SVOD marketplace is because they're better at retaining subscribers thanks to the data they collect about customer viewing preferences which allows them to create shows that reach large demographics inside and outside their platform (thus attracting new subscribers) and suggest other content on their platform subscribers may enjoy based on past viewing which has the effect of keeping customers on the platform to the point that Netflix is starting to compete with something we all love, sleep. 

Because of this, Disney will have a hard time taking customers from Netflix which won't be much of a problem for its ESPN streaming service as it will serve a different audience entirely but for its movie based streaming service, it's crucial that it takes customers off the Los Gatos based company or at least force customers to cough up a little extra from their pocketbook for their service. 

If Disney's movie streaming service can't pull this off, it will die a slow and expensive death. In truth, the real story however is Disney finally entering the sports streaming marketplace which puts it in direct competition with Amazon who acquired rights to stream Thursday night NFL games for prime subscribers which should give everybody at Disney and ESPN sleepless nights. While Disney can use ESPN's declining but still large Pay TV subscriber base promote the service, it will be going up against a company that has rights to stream NFL content to an extremely loyal customer base that's growing a year ahead of its launch. 

By that time, Amazon will have established a head start it won't give up with by far the most popular and lucrative sports content on the market. To make things worse, Facebook is expanding its live sports offering which means Disney and ESPN's already large sports programming costs are going to shoot up at a time where ESPN's large content spend is getting harder to justify. 

What all this means is that Disney is the last of Netflix's problems as Disney's move into the SVOD space smells of desperation.

(TV) Pay TV: The Pay TV apocalypse continues

It's no secret that we're the golden age of television but its also no state secret that cable and satellite Pay TV providers have been taking a pounding for years which has culminated this week with the worst quarter in the history of the industry with Pay TV providers losing a whopping 762,00 subscribers. 

Why Pay TV providers are losing subscribers at a record rate isn't rocket science with the combination of skyrocketing price hikes, an increasingly unpopular business model, and better digital alternatives offering by SVOD services such as Netflix, Amazon and Hulu, it was only a matter of time before quarters like this become the new normal.

What's worse is that Pay TV providers are in no position to do much about it as they contend with soaring programming costs largely fuelled by the increasing value of sports content. Pay TV providers have for years passed  this cost onto customers without much to sweeten the deal which has seen an customer cut their cords at record rates for the best part of  a decade.  

It's always concerning when an industry can't keep its customers and even more so when can't attract new ones but the pay TV industry recent bloodletting has shown that can't do either which is why an already mature market is now showing signs of atrophy.

The decision to pay lengthy and expensive premiums for sports TV rights has cost Pay TV providers dearly but rationale behind pay TV's bet on live sport made sense as live sport events such as the Super Bowl or march madness have proved to be the most reliable content for getting bums on sofas across the land at the same time but as the last NFL regular season proved, sports content is showing signs of losing its lustre. The 7% dip in regular season viewing and a drop in Super Bowl viewership for the second year running saw many executives clamouring for answers to why NFL ratings dropped from a highly divisive presidential edition to Colin Kaepernick's stance (or lack thereof) during the national anthem. 

However, despite the complicated and varying factors that negatively affected NFL viewership during both regular and postseason games, the fact remains that pay TV's costly bet on sports programming is starting to unravel and it's unclear whether last year was a blip or a start of a very grave trend.  

Despite their recent struggles, Pay TV providers aren't sitting on their hands and idly watching their industry crumble before their eyes with  pay TV operators increasing their digital footprint with skinny bundles and even SVOD offerings that appeal to cord cutters and cord nevers who enjoy the power of watching TV where, how, and when they want to. 

However, Pay TV providers fight in keeping and attracting new customers is taking a turn for the worse with Amazon and Facebook picking up live sports content deals. This development should scare the life out of pay TV executives everywhere as While Amazon's deal in particular involves the ecommerce giant airing much maligned Thursday night games, should Amazon attract large audiences for Thursday night NFL matchups or at least larger viewership number than their cable counterparts. It could see live sport content providers hosting more of their content with online partners. 

This would be a disaster for Pay TV providers and networks as they'll have to outspend deep pocketed behemoths for live sports content when the cost for live sports TV rights are already high. Pay TV providers will be forced to pass even more costs onto a customer base already looking for a reason to jump ship.  

However, what should keep pay TV executives up at night is that whether Amazon or Facebook attract large audiences for NFL or MLS games or not is what they'll learn about sports viewers. The reason why both Facebook and Amazon have largely pulled away from their direct competitors and send shivers down the spine of executives everywhere when they so much as hint about entering their market is because both companies are become very good at using data from their users to provide a more personalized service to the point they know their customers better inside out, literally. 

It's why both companies have abnormally high customer retention rates and never have trouble attracting new users as their ability to implicitly meet the needs of their users through data keeps current users hooked with new features and services which in turn provides Amazon and Facebook new opportunities to learn even more about their users habits. 

What all this means is should Amazon and Facebook deliver impressive viewership numbers, Pay TV will have a hard time getting those customers back. This alone will put a steak through the hearts of Pay TV providers everywhere who will continue to lose customers, spend and lose millions trying to get them back and surrender their future customer base to SVOD services. 

In sum, there has been much talk about the future of Television but now the chatter should cease as the future is here and it's going to be brutal.