The news had been waiting for a long time. when sooner or later the myth of Netflix and its infallibility was put to the test. Now, reality has caught up with speculation, putting the Los Gatos, California, company in a bind. And Apple TV + has a lot to say about it.
How we have changed, with Apple TV + among the protagonists
Netflix promised them very happily when years ago there was hardly any competition. In the past it was believed that Netflix had a kind of monopoly when it came to telling good stories. A huge ability to collect and cultivate them and then put them in front of the eyes of millions of users in an effective way. If you wanted to do something new or exciting in the industry, Netflix was your client.
But today the landscape has changed, as a result of both mergers and acquisitions and the entry of new players, the situation is very different. Disney bought the Marvel and Star Wars franchises, building an endless catalog. HBO is home to Warner and Discovery content following their merger in 2021. Amazon Prime Video has its own worth-watching exclusives.
And then there is Apple TV +, which little by little is setting the pace with its premieres, becoming what HBO was in the 90s: little content, but of great quality. Not surprisingly, this year CODA won the Oscar for best movie making history for streaming services. The incredible season finale of Separation, the arrival on Mars in For all mankind, the good vibes of Ted Lasso or the arrival of psychohistory with Fundación are a few examples of what Apple is achieving with its service.
The undoubted success of Netflix in all this time has attracted numerous competitors. The entertainment cake is too succulent for others not to be attracted. And his arrival is making a dent, since he has just reported a drop of 200,000 subscribers, the first in a decade.
Netflix’s house of cards
Netflix had built a castle that was solid on the surface. But now lies under assault from numerous contenders, albeit with its own internal problems. That they are not minors, exactly. The competition tightens. And with it, getting the best content is no longer so simple. It becomes complicated in negotiations. There are many meetings, conditions, bids that exceed other bids. Netflix is no longer the popular kid of old.
It also does not have infinite pockets and that has been noticed. The increase in competition has been accompanied by increased cost of acquisition and creation of new content. According to its financial results, these costs have increased by an average of 2.9% per quarter. That is, 22.8% in just two years. Similarly, marketing costs have increased by 4.7% on average per quarter and 37.3% in two years.
The general increase in costs could not be tackled in any other way than with constant increases in the price of the subscription. To the point that some users consider that not using it for a month can compensate them to cancel it. The price increase is followed by a content problem, where it seems that quantity prevails over quality. Netflix has a wide catalog where it ends up being difficult to make a decision, because the user does not want to invest his time in something that he is not sure he likes.
Another pending issue is the problem of sharing Netflix accounts, which the company seeks to tackle. It’s over share accounts between multiple people from different households and for this they will offer to increase the main subscription through the so-called sub-accounts. They are also exploring cheaper ad-supported plans.
Apple’s positioning is much more comfortable, since it is not its main business. It has a whole technological ecosystem around it, with a large dairy cow called the iPhone. May much better select the content you want to acquire or finance, because their own existence is not at stake. You can be demanding and you don’t have the same pressure to constantly create new content to fill the catalog with. And the price of 4.99 euros per month makes it almost an impulsive purchase that you later forget about.
The increase in costs and prices point in the same direction: the end of easy growth for Netflix. From now on, the cake is no longer his alone and he will have to face a handful of contenders much better prepared than they were a few years ago.