Netflix Business Standing

It would be easy to think that the recent announcement that Netflix beat out pay television for the rights to Disney/Marvel/Pixar/LucasFilm releases is a positive step forward, but the good news is more of a bandaid than a cure-all. Even forgetting that they won’t see new releases from Disney until 2016, the core problem for Netflix is spelled out brilliantly over at Tech Crunch by Armando Kirwin: they’re now a small fish swimming in a giant pond that they built themselves.

On the business side of things, a ton of major players in other industries have jumped into the deep end of streaming, stealing a lot of potential revenue. On the fan side of things, Netflix remains a repository of mostly middling independent work, direct-to options, a handful of older films and a golden kernel of flicks that are only a year or so old.

That’s the half-empty way to look at it. Of course the reality is a lot more complex, especially considering that the above graph, while accurate, is more a representation of what larger companies are able to do with a safety netted streaming service while Netflix swims alone. However, it’s not easy to imagine that Netflix’s saving grace will be in its ability to make deals like the one with Disney that make sense to its core users.

Earlier in the year, there was speculation that investor Carl Icahn (the man who buys substantial stakes in companies and then does a terrible job at making them operate better) had his eye on Netflix, and there was even talk of a Microsoft buyout. After a disastrous, Qwikster-studded year in 2011, Netflix can still rely on its near-ubiquitous nature (there are even remotes with little red Netflix buttons) and the gamble of pivoting to original content like House of Cards — making it essentially a streaming version of HBO.

If they can make excellent programming that a ton of viewers want to watch, it will give the company even more leverage. Original content is exclusive content, and while it’s financially risky upfront for a company that’s not yet in the production game, it beats merely being the middle man in a lot of ways.

Still, the question looms as large as the bars on the graph above. With so many giant players in the game, when will Netflix be pushed or bought out? It’s certainly not inevitable, and it would be a bit sad to see considering they were the ones who invented the game in the first place and saved all of us from late fees. Unfortunately, if Netflix is unable to bring premium content to its ranks and/or make its original programming hit big, there’s a continuing chance that they’ll be dwarfed — boxed out of their own business by bigger names no matter how big their current userbase is.


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