Netflix co-founder and CEO Reed Hastings is attending a meeting with French President Emmanuel Macron during the ‘Choose France’ summit, on January 20, 2020 at the Chateau de Versailles, outside Paris, France.
Benoit Tessier | Swimming Pool | Reuters
The alleged plot of the power wars reads as follows: Sick of losing customers and relative market value for Netflix, big media has shifted their aging television-focused businesses to focus on subscriber streaming services instead.
There is no exact launch date for these ‘wars’, but on November 12, 2019, Disney launched Disney + and launched the attack on traditional media on Netflix.
Since then, AT & T’s HBO Max, Comcast NBCUniversal’s Peacock, ViacomCBS ‘Paramount +, Discovery’s Discovery + and AMC Networks’ AMC + have all come to life as Netflix competitors.
So who was the biggest winner of all this new competition?
Netflix.
Since the day Disney + was launched, Netflix shares have risen more than 87%. It dwarfs profits by every other media company during the same period.
Netflix reports earnings in the first quarter Tuesday after the deal. Analysts expect earnings of $ 2.97 per share, an increase of 89% from last year, with revenue of $ 7.13 billion, an increase of 24%.
Netflix is the foundation
The jump in market value goes hand in hand with striking additions of subscribers during the pandemic. In the first half of 2020, Netflix added 37 million new global customers. This was a record profit for the company, of which the previous annual high was 28.6 million in 2018.
According to a recent survey by Morgan Stanley, a number of Americans believe that Netflix has the best original content among streaming services. Thirty-eight percent of respondents rated it as no. 1 among streamers – which surpasses the Amazon Prime Video at number 2 by 12%.
While the current wars are offering consumers more alternatives to Netflix, they are also cementing Reed Hastings’ company as an anchor product in many U.S. households. If streaming video is now – or soon to be – the center of home entertainment replacing cable TV, Netflix will surely be part of a typical household’s content diet.
Netflix devotes all other streaming services to content and already has over 200 million global subscribers. Having such kind of global reach is a big selling point for creators who have a growing list of distribution partners.
“Our strategy is simple: if we can continue to improve Netflix every day to better entertain our members, we can be their first choice for the stream of entertainment,” Netflix wrote in its January shareholders’ letter. “The past year is a testament to this approach. Disney + has had a massive first year (87 million paid subscribers!) And we have recorded the largest year of paid membership in our history.”
The streaming wars have sparked much new competition for Netflix. But the bigger shift was more existential – the introduction of video streaming as the dominant form of television, as cable TV’s importance slowly disappeared.
The result of the move is that consumers want Netflix more than ever before.
WATCH: Chartmaster says Netflix shares are set to flow higher after falling flat so far this year
Disclosure: CNBC is owned by Comcast’s NBCUniversal Unit.