Netflix Plans to Spend $7B on Content in 2018
streamingobserver.com
streamingobserver.com
Instead we have streaming companies getting into media and media companies getting into streaming. Multiple platforms each with their exclusive media content, each with their exclusive software and streaming protocols. Not exactly what I had in mind...
The golden age of streaming is over IMO, now content will be increasingly divided into their own streaming services. I wish that streaming video were regulated like radio, with a flat rate per minute that gets paid back to the license owner. I can dream...
Honestly, Netflix had a chance to really damage piracy by costing the product at the market rate not the "We can get away with this because we own government" lobbiest rate (It's called the Mickey Mouse Act for a reason after all).
The incumbents decided they didn't want that, so instead they'll split into a whole bunch of services that combined cost more than netflix would have done for the same amount of content and the people who would have paid a fair price but not an unfair price will just go back to torrenting or whatever Blockchain(TM) DarkNet(TM) thing replaces it.
If I was running the government (perish the thought), I'd actually be wary about cracking down too hard on copyright infringement (on the consumer side at least) because it will push users towards solutions that are genuinely anonymous (porn and movies will do that, expressing their democratic rights..probably not) and frankly as the sole voting member of Noirlord-topia that'd scare the shit out of me a lot more than Disney been pissed they made slightly less.
I don't watch much TV tbh (I'm in the UK and I don't have a TV license, haven't had for years) and I still have a Netflix subscription because occasionally I'll watch the odd movie, it's worth 7.99 a month to watch the odd film once or twice a month plus the occasional TV show, it's not worth 4.99 * 6 services.
I think I'd actually prefer a "£0.5 per episode, valid for 60 days" model to that.
Think is I can go watch a movie for £4.99 at the local cinema that has some absurd 8K screen, 27 speaker surround and comfy seats, why would I pay so much more to watch the odd movie.
I simply wouldn't.
It's kinda a tragedy of the commons, they all want to be Netflix without realising that Netflix only works with a large back catalogue of content from multiple places.
Some of the least techiest people I know have Kodi/Exodus boxes.
I don't even have a Kodi box and I have a fast linux PC connected to the living room TV.
However, I am not at all ready to pay that sum to 4 or 5 services.
Sadly, savage download seems to be the most convenient option.
Back to discs, for me.
A year ago, when I saw how large my friends' collection of Bluerays and DVD's had grown, I thought they were taking things a bit far.
Now, not so much. At least, for content you want to watch more than once.
Since I moved, my local library is a significant drive away. But I've also been meaning to get over there and have a look at the current state of their collection, as well.
I don't need to see the latest thing, right away. So, this will work well, for me.
P.S. My friends have a rather nice viewing set up. And if it's the two of them, that's getting up towards $20 for two tickets to the theater -- for first releases. Invite a couple of friends over to their place, and even with Blueray purchases, they've already saved over the price of tickets. And... no unwanted distractions.
Side note: Last night I was in a hotel with hundreds of channels including HBO, and there was nothing to watch, so I watched Netflix, which costs probably less than 10% of what I would pay for the hotel's selection at home.
I'd be happy to pay by the hour.
Maybe that's my bad attitude and I should pay what it costs. Or Amazon is pricing these too high for some reason.
Also, I'd need to see the first few episodes of any show before I pay up. I start a lot of shows, and hive up on most of them.
In the streaming business you lure people into paying more than they otherwise would (on average - your mileage may vary) by giving them a feeling that they get so much content for the money. Even though in practice they then actually find a quite limited amount of content they actually enjoy. Also there's the typical trick of subscription services that "you can cancel at any time (but you wont)", which makes the purchase feel more affordable.
I'm all for competition so I hope both companies succeed, but its pretty evident that Netflix needed Disney more than Disney needed Netflix.
I'm also all for the democratization of great content thats happening on YouTube et al.
Hint: answer is not boolean, but float.
There's a reason Disney keeps fighting to extend copyright, despite how much of their own material is derived from works based on expired copyright.
Daffy Duck was referenced in Babylon 5 which plays in the 2250s and it felt believable. Shakespeare plays are still popular and adapted today, that's even longer ago.
I don't think that Disney and its IP will go away any time soon.
One reason might be because the US company has an exclusive streaming contract in the US with a different provider. (In Disney's case, Netflix.)
[0] https://www.geekwire.com/2017/disney-cut-ties-netflix-launch...
And don't think they also don't have staggering content costs. ESPN paid $3.5B just for NFL and NBA rights alone[1].
Ultimately their share holders will decide how much their willing to subsidize the service.
1. https://www.si.com/extra-mustard/2017/06/26/espn-sports-righ...
If you take Disney (less ESPN) and HBO specifically, they're pretty much diametrically different brands so it's pretty easy to see them coexisting.
Some of the most ambitious players right now may have to scale back, and the "deliver it all to the same place" problem that's been present ever since cable-alternatives started popping up is mostly unsolved (though some of them are starting to tackle this, as are companies like Apple and Roku) but the number of channels is hardly new.
Amazon and Netflix are the wildcards given their smaller original content.
Though perhaps with the advantage of advanced technology in editing and video capture.
With millennials, they loved their good ole' streaming services.
With Gen Z, they love their smartphones. Does this mean the next big thing will be micro POV content tailored towards Gen Z? That could be the most accessible and democratized content there has ever been.
Tailored block buster content, aimed to be consumed in 10-15 minute doses. Could be something for the Facebook's video endeavors.
The user experience does kinda suck, but I think Apple TV, Roku, and other meta-streaming-platforms will solve most of that in the long run. They'll be the new cable companies, essentially. But I bet you'll get less bundling than cable has now. Although I constantly see people saying that they want bundling. "I'd love to just pay $100 / month for every tv show, movie, song, etc. out there..." That's the ultimate bundling :)
Also, for the people who keep saying they want to just pay for a single show, can't you do that on iTunes and Amazon? Buy a season pass for a show? I haven't really done this much, so maybe it's outlandishly expensive, or they have poor coverage of shows people want.
People are crazy to pay over $100/month. A half a dozen similar services + Netflix would already exceed any cable TV plan I've ever had.
And for less than $60/mo, I will get more content than I would if I just sign up for individual services. The reason I don't bother is that the content is pretty poor regardless.
This is exactly what happened with print media. Why is film media immune from the internet revolution?
That hasn't happened in television and film. To the contrary, peoples' expectations have only gone up. The production value (and production costs!) of television shows these days is up there with that of movies 10-15 years ago. Netflix's pivot to original content shows that consumers want high-budget, high-production-quality original content more than ever.
Another big thing happened there: the Internet radically expanded total text content production. The median price of consumed text content plunged toward zero, while its production soared. I'd suspect a direct correlation between those two things, the NYT acquired immense new text competition in terms of the reader's attention across every possible quality & segment level.
In 1960, I could read the NYT, I couldn't read my friend's cooking blog, much less 8,207 cooking blogs. I may derive far more entertainment value or enjoyment out of those blogs than the NYT. Multiply that concept by a million fold.
Video production + Internet simply has drastically greater barriers to entry, almost at any scale (whether we're talking about Jenna Marbles or Comedians in Cars). Almost anybody can publish formatted, routine textual content online, via services like Wordpress. With a modest amount of effort (or just shelling out $50 for a theme) a blog can look decent. It takes far greater effort to get a video production to look decent.
That's absolutely true. Although relatively speaking generating at least indie-level video content has dropped drastically in cost/effort as well.
I can easily forego watching a TV series. There are only a couple of "must watch" TV shows at any given time.
I already have a huge backlog of shows to watch/finish. I honestly don't care if I never watch a new TV show again
Though of course i am a public radio funder.
It's outlandishly expensive on iTunes and Google Play for shows - movies are okay. Also, the quality of the file is horrendous. We're talking full length movies at less than 2GB. You can get better from a torrent, easily. That's why I don't use it for movies.
Not sure I like the direction the new order is taking, really look more and more like the old order to me. Before you need to pay for cable packages to get a random set of channels. The new order is that you pay various providers offering a random set of exclusive shows. It is still cheaper at the moment though.
What I'm hoping to see is big streaming network starting to use exclusive content as currency between themselves to share their catalogs. However, I'm not sure what would be their differentiator. Netflix is superior to DVD and the channel delivery mode of cable. However, Netflix vs Hulu vs HBO vs ... there is not much more to fight than price. Keeping their content exclusive on the other hand is very easy to sell.
Not really, HBO was always an add-on. In the new order, Internet access = basic cable, streaming services = premium channels.
E.g. Is Uber a tech company or logistics. Is AirBnB tech or hospitality. Etc.
Now, I'd be very much interested to see how the expenses and org makeup has shifted. I'd predict that much of their budget has been shifted to purchasing and producing content. The question then is, how much of their actual org is doing that work? Is that work outsourced? Are they merely spending money on contractors and production teams in LA/etc? Or is it in-house?
If they're outsourcing the actual content production, then I imagine it requires a small subset of the org to lead acquisition and curation of this content. Thus I'd lean towards saying they're still mostly a technology company. But if the vast majority of their budget is spent on content acquisition, then maybe it's more of a media production company at that point.
Another good heuristic for deciding what a company "is" is to look at the part of the business that once removed would redefine or cripple the business the most. What seems more valuable? A Netflix that only produces content that is then streamed through someone else that handles the technology? Or the Netflix of old that only streams content they had no hand in creating? Whatever's more valuable is most certainly the direction the business will go, and consequently gives you the framing for how the company would define itself.
What separates a traditional company from a tech company these days really just revolves around how much the company values tech. Do they have a CIO who goes to IBM and asks them to use cognitive computing to transform their business, or do they have engineers in house to build machine learning models to keep customers engaged with the company as a whole.
I dunno; netflix has nice tech, but it's hardly without competition. I don't think you could even consider their tech a differentiator for customers; they could switch onto whatever tech HBO uses and leverage their existing content without subscribers even noticing.
Every large company has a tech component. Why do you think outsourcing data analysis vs doing it in house changes how an outsider should evaluate the business? What matters are why people pay them.
The tech stack in itself can be cool for an engineer to work on, but business wise it has little value. The only way to progress in this market is to focus on content. That's what makes (or breaks) a service.
I disagree; subscribers would definitively notice if Netflix lost its global ISP-hosted dynamically-allocated caching network, for example: https://openconnect.netflix.com/en/
There's more tech than what's visible on the surface.
Netflix has 100M.
Furthermore, this is highly cacheable content. Again, netflix's tech is impressive, but at its core caching is a problem that has been solved and solved again. You aren't going to differentiate yourself by being a dumb pipe.
I highly, highly, highly doubt that netflix's tech is going to be a differentiating factor when people choose them so they can watch Kimmy Schmidt.
This is the crux of the matter. Why roll your own tech when you can buy off the shelf?
Off the shelf tech is, by definition, old tech. If you roll your own you can have a new feature, optimisation or bug fix in production the same day it comes out of QA. The lead time for vendor tech can be months, or even years. If you prioritise a new feature likewise you can have your devs working on it the same day it gets green lit. Try that with a vendor. Controlling your own technology stack, sometimes even developing your own dev tooling internally, can be a decisive competitive advantage.
I expect that a branded streaming-as-a-service platform will absolutely exist at some point relatively soon. But I'm not aware of examples today.
That said, I'll bet on the company with the content rather than the company with an incrementally whiz-bangier streaming platform.
Today it's less clear that the tech is still as compelling a differentiator relative to the content.
That's true generally, though. That doesn't distinguish "tech" companies from "non-tech" companies.
Netflix is a video/entertainment provider using newer technology to deliver better, faster and cheaper than others. The modernity of the technology is a spectrum that varies for each company and building-vs-buying to accomplish a goal has nothing to do with tech but is a tenant of running a business as old as the discipline itself.
Netflix is clearly a "technology + entertainment" company.
The "technology" distinction isn't mutually exclusive with another vertical—exactly the opposite. Companies can outmaneuver competitors by applying "technology" to a specific vertical. The reason Netflix has been able to crush competitors is both because they get entertainment AND because they get technology.
The only pure "technology" companies I can think of are developer tooling products, or research labs.
Why are we supposed to care about this classification?
A lot of companies are realising that for technology to be a competitive advantage it has to be more than just off the shelf. Banks are pushed this way partly due to regulatory pressure - they can't simply outsource their legal obligations or therefore the technology that implements them. But that's just an additional pressure pushing them that way. It's certainly not the only one. Nowadays lots of service companies are going this way.
I was talking to my boss the other day and he said that I was pretty modest compared to some of the programmers he'd dealt with at out sourcing firms over the years (they tried that first, it didn't end well), I think my response tickled him "I'm just a negative plumber with a keyboard, if I do my job right at this end shit doesn't come out the other".
I think the hubris of "We must do world changing things/disrupt everything" to provide tangible value is a by-product of the hype around the startup scene and 'entrepreneurs' (that is people who set out to be an entrepreneur first and figure out at what later).
I've never wanted that, I've only ever wanted to be compensated decently and work at a job where I can see measurable value in what I do, in my case that's writing production/factory management software that saves more money than it costs and makes the life of the end users more pleasant, it's also not particularly stressful and I go in at 9 and leave at 5 every day with complete technical freedom and time for that rarest of rare things, documentation.
After spending the last 5 years in high pressure, insane demand environments I'm never going back, I'll go do something else before I go back to that, it's simply not worth it (to me).
heh. This reminds me of "teams" where everyone is "qa" or everyone is a "developer". What's your mission if you're on the QA team? To QA all the things? That's not a mission.
What is a "technology" company's mission? It'meaningless. Technology is just a means to an end. Consumers don't buy technology - they buy products.
Netflix sells content. Using some cool tech, sure.
Netflix costs between $7-$12 per month. Many of those subscribers will not last the whole year. It is awesome they are spending basically 100% of their revenue on new content, but this model is not sustainable.
While their US rates may be $7-$12 per subscriber, their international revenue projections may be quite different. For example at current exchange rates I'm paying just under $15 USD for my account in Australia(though I'm sure not every country is so expensive).
If on average you're getting ~$10/user/month, that's $120/user/year of which you're just spending $70/user/year, and thus have gross profits of ~$50/user/year. In other words, you're getting $12B in revenue, $7B of which you're spending on content to ensure that churn stays low and people continue to re-subscribe.
Get ready for the ads. Cable was ad-free in the early days too.
What's your goal and what kind of content do you want to make?
Make a short video and post it on youtube, then monetize that video. Make enough Youtube videos and other creators will hit you up / listen to proposals to work together or you can use it as a portfolio for jobs.
I unsubscribed because there is far too much content and I never know what to watch
To the younger generation I am sure they already are considered equal to or better than HBO, they are less likely to factor in any legacy content.