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Netflix Idea Proposal (NFLX)

Netflix Idea Proposal (NFLX)

Will Netflix’s price increase open the door for a growing set of competitors to steal subscribers?

Report Available: January 18, 2018


Blueshift’s initial research found NFLX thriving with millions of new subscribers, but numerous competitive threats looming. NFLX is raising prices for its standard and premium packages. DIS’s purchase of FOXA gives the company the majority share in Hulu to take on NFLX as a streaming option and it is also pulling some premium content from NFLX’s platform. The competition among streaming services like HBO Now, as well as skinny bundles from Pay-TV operators like DirecTV Now, continues to heat up, with AMZN making some gains on NFLX in Europe. FB is getting into the fray with a new free video platform, and AAPL has set a $1 billion budget for original content.



  1. NFLX continues to hum along with Q3 revenues climbing 30% to nearly $3 billion as the subscription video service added an eye-popping 5.3 million new subscribers, up 49% from a year ago. NFLX plans to spend $7 billion to $8 billion on original content next year to add to its stable of hit shows.
  2. NFLX’s price increases are going into effect as 2017 winds down. Those who pay for the standard $9.99 service will see a $1 bump per month while premium subscribers will see their costs go up from $11.99 to $13.99 per month.
  3. DIS’s purchase of FOXA pushes its stake in Hulu to 60%. While the deal won’t be finalized for at least a year, Hulu represents a major opportunity for DIS to get into the streaming business and compete with NFLX, taking advantage of a market hungry for more original content. DIS also announced that it will be starting two of its own streaming services, one centered on ESPN sports programming and another with content from its Disney and Pixar movie studios.
  4. DIS said it would stop licensing that Disney/Pixar content to NFLX by 2019. DIS is a content juggernaut – all five of the top grossing movies in 2016 were from DIS, which set a global record by breaking $7 billion in box office sales. Its movie franchises include Toy Story, Star Wars, and Marvel Comics, while its TV networks include ABC and the kid-focused Disney channels.  Some fear that its decision to pull content from NFLX will lead other major content producers to do the same.
  5. The competition among streaming video providers continues to get more intense with players like Hulu, T’s DirecTV Now, CBS’s All Access, GOOG/GOOGL’s YouTube, TWX’s HBO Now and numerous others all vying for eyeballs. AMZN will spend an estimated $4.5 billion on original content this year and is reportedly making significant gains on NFLX in top European markets.
  6. The proliferation of streaming services continues to take its toll on traditional pay-TV providers like DISH, CMCSA and CHTR. Pay-TV operators lost nearly a million subscribers last quarter alone as consumers – especially younger ones – shun expensive TV packages in favor of cheaper streaming options. However, the streaming video landscape remains a sometimes frustrating hodgepodge of different services, making it difficult to find specific shows or movies.
  7. To further complicate the landscape, FB is rolling out its Watch tab, a new page dedicated to free video content with partners like MLB, A&E, Time Inc. and others. It could overtake YouTube as the biggest video platform. The social media giant is also investing in original shows. Meanwhile, AAPL is reported to be spending $1 billion to acquire original TV and movie content while hiring two longtime Sony Pictures Television executives.
  8. Some have raised concerns that the FTC’s repeal of net neutrality regulations will harm NFLX by slowing down internet speeds and limiting access to websites. NFLX said it does not expect the new rules to affect its business since its size gives it leverage with internet service providers and its popularity puts it less at risk of paid prioritization by ISPs.


What effect is the price increase having on NFLX subscribers? What does DIS’s purchase of FOXA mean for NFLX? What will DIS’s new streaming services mean for NFLX? How big a threat will Hulu become now? Will other big content owners follow DIS’s lead and stop licensing shows and movies to NFLX?  What kind of traction will DIS’s new streaming services get? Will DIS withhold more content from NFLX? How big a threat is AMZN Video to NFLX in the U.S.? Will FB’s Watch have a meaningful impact on viewing habits? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Pay-TV operators, TV advertising executives, Streaming video technology developers, and Industry specialists.


Companies: Netflix Inc. (NFLX), Walt Disney Co. (DIS), Alphabet Inc. (GOOG/GOOGL), Apple Inc. (AAPL), Inc. (AMZN), AT&T Inc. (T), CBS Corp. (CBS), Charter Communications Inc. (CHTR), Comcast Corp. (CMCSA), Facebook Inc. (FB), Time Warner Inc. (TWX)


Research Begins: January 2, 2018