Over the last few years, one of the standout companies of internet streaming services has been Netflix. Not only are they an industry leader in streaming but they are also making many big production companies nervous with their heavy investment in Netflix originals like ‘Making a Murderer’ and ‘Stranger Things’ which have been massive box office hits. However with companies like Disney announcing its very own streaming service what is Netflix going to put into motion to remain competitive with the other large companies that are looking to move into streaming?
New content streaming deals
Many people are still using broadband as well as streaming services, and with companies like broadband choices making it incredibly easy to choose the best deals and packages for you; it isn’t any wonder that people will continue to use both. But if Netflix wants to try and corner more of the market they need to do something drastic. Identifying the new place they have carved themselves out in the market, Netflix is set to invest over $15.7billion in new shows over the next few years in streaming deals. It isn’t a surprise to anyone that Netflix has just decided to make this move. Disney has recently announced that they are going to create its own in house content streaming service which means that Netflix will lose the right to all of its existing Disney content. While this may not seem like something that will have an enormous impact on the business, it is worth remembering that if Disney is going to do this, then other companies may well follow. Disney also owns the rights to a lot of popular films that people forget are part of their brand – like the Star Wars films. It remains to be seen how a deal will be navigated for the changes between the relationship of Netflix and Disney but it does not look like it will result in Netflix retaining any content.
What does this mean for prices?
For UK consumers – there are many things in the future are set to have an impact on the Netflix prices. Brexit is likely to see the UK government have to broker new deals with streaming services which are something that is likely to make the prices increase in the next few years. If the other markets are anything to go by it certainly looks like prices could rise in the UK to contribute to the overheads of moving into creating original content.
In recent months the prices in Canada and Australia have increased. America currently has three tiers of pricing, and the high-end prices still have a successful amount of subscribers, so it is unlikely the American markets will have any major price hikes in the near future. This could indicate that the UK is next as they are one of the largest markets for Netflix.
How does this affect the company and the share price?
Last year Netflix’s share price rose 40%. This was before any of the announcements were made about investment into original productions, and it was also long before the success of Netflix original shows. It has been quite a year for the production arm of the streaming service with successes like Riverdale, 13 Reasons Why, Stranger Things and Making a Murderer under their belt.
One thing they seem to do incredibly well is producing shows that are popular with young audiences who are willing to share their opinions on social media. Already the second season of many Netflix shows is creating a buzz in the media months before they are released. With an army of fans for most of its original shows already there is little to question
With an army of fans for most of its original shows already there is little to question the logic of investing in making new seasons of existing shows and new original content. What remains to be seen is if Netflix can continue to recreate the magic of their successful shows well into the future or if the bubble will burst and they will be left with a large investment in a commodity that simply is not making any profit. Either way, the news of the investment will be welcome to consumers who are worried about the effect Brexit may have on their subscription services.