The multi trillion dollar competition for the streaming service throne

By: Reed Morris

Image created by author

The Background

Netflix has become a household name for most of the western world. With almost 200 million subscribers worldwide, it’s no surprise that the company is leading the world in paid video streaming. Recently however, Netflix’s throne atop the mountain of the streaming giants has begun to teeter. More and more of Netflix’s market share has started to slip away to other services such as: Amazon’s ‘Prime Video’, Disney+, Apple TV+, Hulu, and HBO Max. This shift of market share was expected, but Netflix just might not be able to keep up.

The Paradigm Shift

Image taken from: https://www.netflix.com/

While Netflix has been in the lead for years now, the content that consumers are looking for has started to change. In the past, most streaming services focused on recycled content. Netflix and other streaming services have focused their money and resources on licensing and advertising, which in itself cost a lot of money. The problem for Netflix is that this model of streaming is becoming more and more outdated. Most new content seen on streaming services is shifting towards original productions.

Netflix has seen many large successes in original content such as shows like ‘Outer Banks’ and ‘Squid Game’, but those were extremely viral outliers. Most of Netflix’s original content goes mostly unseen or ignored. The biggest problem for Netflix, regarding original content, is the cost. The cost to write, produce, and finish a TV show or movie well exceeds the amount of money needed to buy the licensing rights to a TV show or movie that already exists.

The Competition

The main reason Netflix doesn’t have a huge chance at staying atop the streaming throne is due to who they’re competing with. While Netflix is currently valued at a market cap of $166 Billion, it’s competing against global tech conglomerates such as Apple, valued at $2.8 Trillion, and Amazon, valued at $1.65 Trillion, as well as entertainment superpower Disney, valued at a more manageable $253.9 Billion. Netflix does not stand any sort of chance against companies with such unimaginably deep pockets.

The Rise of Amazon Prime Video

As of March 2022, Amazon has struck a deal with the massive production company Metro-Goldwyn-Mayer (MGM) to purchase the company for $8.5 Billion. This buyout brings up a lot of questions about anti-trust, and extreme monopolistic behaviors in itself, but that’s a problem for another day.

This buyout by Amazon is a huge threat to Netflix and every other streaming platform out there. Not only does the acquisition of a professional and self sustainable film studio give Amazon a huge advantage over other services, they also carried over all of the intellectual property owned by MGM. This includes franchises such as James Bond, Rocky, and Stargate. Similarly, a myriad of other iconic films and TV shows were acquired through the buyout. Amazon, a trillion dollar company, can now produce large amounts of quality original content for both streaming and theaters, cementing Amazon’s place as a future leader in the streaming industry.

The Future

Like most other massive corporate buyouts, a lot of ethics and legalities are brought into question. Even though the FTC has yet to rubber stamp the acquisition, based on similar (questionably monopolistic) buyouts earlier this year, they won’t have a problem in doing so. If it does go through, Amazon will start to pump out more and more original content for consumers to watch. Unless Netflix can pull off something similar, their throne at the top will be toppled, and Amazon Prime Video will take the throne as the new King.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s