The cracks are evident in Netflix’s global dominance.
Netflix is still the king of streaming video, but audiences are slowly shifting to new rivals, namely Disney + the Walt Disney Company, according to a study by Parrot analysis.
Netflix’s share of global demand interest – a measure up the popularity of its Parrot-created shows and a key barometer of how many new subscribers a streaming service is likely to attract – fell below 50 percent for the first time in the second quarter of the year.
The company’s “lack of new hit original programming and increasing competition from other streamers will ultimately have a negative impact on subscriber growth and retention,” Parrot said in a press release.
Netflix relies on creating as many different shows and movies for as many different audiences as possible, and the pandemic has messed up that formula and forced productions to be suspended around the world.
The company is due to announce its second quarter financial results Tuesday afternoon and has already told investors not to expect too much. It set a surprisingly low bar for the quarter when it announced it to Wall Street expected one million new subscribers, a meager increase to the current total of 207 million customers. (It’s worth noting that lower expectations are easier to beat, and that beating expectations can even grow a company’s stock by a hair.)
Disney + more than doubled its share of demand interest in the second quarter compared to last year, and according to Parrot, Amazon Prime Video, AppleTV + and HBO Max are also winning.
Even as newer entrants have lost the long-standing grip of Netflix, Netflix’s co-head Reed Hastings has dismissed the competition as a contender for the Netflix throne. In April, when Mr. Hastings was asked by investors why the company missed its expectations of new customer acquisition in the first quarter, he said, “Of course we ask ourselves, ‘Well, wait a minute, we’re sure we haven’t is? Competition?'”
“We really went through all the data and looked at different regions where new competitors are coming in but not coming in,” he continued. “And we just can’t see any difference in our relative growth in these regions, which makes us confident.”
“We’ve been competing with Amazon Prime for 13 years and Hulu for 14 years,” he added. “Even with linear television, it has always been very competitive. So there is no real change that we can see in the competitive environment. It has always been high and remains high. “
In other words: If Disney + hurt us, we didn’t see it.
The argument that Netflix has long competed with regular TV and other streamers overlooks the fact that new competitors like Disney + and AppleTV + are much cheaper than Netflix (and pay TV). And while these services produce far fewer originals than Netflix, they seem to be getting more for their money.
In the second quarter, Disney + received a huge boost in demand from “The Falcon and the Winter Soldier,” a series based on the Marvel Cinematic Universe that has thoroughly dominated the box office in recent years. Another Marvel spin-off, Loki, also helped, according to Parrot.
Amazon Prime Video got a boost in time with the release of “Invincible,” an animated superhero series for adults. And AppleTV + has attracted new customers with a trio of originals: Mosquito Coast, a drama based on the 1981 novel; “For All Mankind,” a science fiction series, and “Mythic Quest,” a comedy series set in a game development studio.
Speaking of which, Netflix announced this month it was getting into video games. It has hired a gaming manager, Mike Verdu, formerly at Electronic Arts and Facebook, to oversee new game development. It’s a potentially significant move for the company that hasn’t strayed far from its TV series and movie formula.