For Netflix, Future Growth is Not Guaranteed

As the streaming wars heat up, Netflix is about to lose some of its most popular titles to the competition.
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By  · Published on May 25th, 2019

With the streaming wars heating up, Netflix could be set to lose some of its 149 million subscribers. A recent poll conducted by The Hollywood Reporter revealed that 22 percent of American users would cancel their subscriptions if Marvel movies left the service. Another 20 percent said they’d drop the streamer if Star Wars titles were no longer there. With Disney+ on the way, these departures will be a reality soon enough.

On the TV front, 14 percent of participants said they would cancel their subscriptions if The Office was pulled. Meanwhile, a further 11 percent claimed they would abandon ship if they could no longer watch Friends. With NBCUniversal and Warner Media set to launch their own streaming services in 2020, they want their respective intellectual properties back.

The process of future competitors reclaiming their titles is already in motion. The CW recently announced the end of its Netflix deal. Therefore, it’s safe to assume that Crazy Ex-Girlfriend, The Flash, Arrow, Riverdale, and several other titles will be exclusive to Warner Media next year.

Reader surveys aren’t reliable sources when it comes to representing the entire demographic of Netflix subscribers. That said, the loss of licensed content does leave the streamer in an unfortunate position. As noted by Variety, licensed content accounts for the majority of Netflix’s viewing hours. Furthermore, Variety also discovered that over 40 percent of subscribers watch non-originals exclusively.

Netflix has increased its efforts in recent years to produce original content. However, it’s clear that many users aren’t interested in watching it. This begs the question: how will the loss of some of the most popular licensed films and series affect the company?

Netflix isn’t concerned. According to CEO Reed Hastings (per The Drum), they see this as an opportunity to introduce even more exciting originals to subscribers:

“We’re charging forward. We’ve expected this decline of second window content, been ready for it, anticipated it, and in fact, we’re eager to have more and more of our money be able to do spectacular new titles.”

Still, it’s not unrealistic to expect some Netflix users to defect to alternative services. The main benefit of licensing content is attracting established fanbases. With Disney+ providing access to a host of popular franchises, classics, and series in addition to exclusive content, the House of Mouse will tick a variety of boxes.

Netflix’s aim to be the place of spectacular original content is certainly an exciting notion, though. Millions of people will always continue to seek out fresh entertainment after all. At the same time, the avalanche of exclusive movies and series risks causing viewer fatigue. There’s an abundance of new content to consume on a weekly basis and it feels overwhelming at times. Perhaps this is why many viewers are more inclined to rewatch the classics?

Then there’s the issue of subscription fees. With Netflix pouring billions into producing fresh originals every year, the streamer has been forced to increase its prices. Understandably, some consumers are unhappy about this development. With cheaper alternatives like Disney+ offering excellent content for cheaper, Netflix needs to deliver the goods in a big way.

A recent survey shared by USA Today found that people are unlikely to support more than three streaming services at a time. With enticing competition increasing, Netflix must keep fighting to occupy one of these spots. At the time of writing, though, the company has every reason to feel confident that it can.

Despite the arrival of some big competition in the near future, the first quarter of 2019 saw the company attract a record amount of subscribers. Right now, Netflix is still the provider to beat as Disney+ and all other forthcoming competitors will need time to attract subscribers and recoup the billions of dollars they’ll lose launching their own alternatives.

In the long run, Netflix will be fine. Even if some subscribers go elsewhere, the company will always have plenty of exciting content — original and licensed — to offer hungry consumers. However, that doesn’t mean that the streaming giant doesn’t have a fight on its hands if it wants to continue growing.

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Kieran is a Contributor to the website you're currently reading. He also loves the movie Varsity Blues.