Netflix is the biggest streaming service right now. But it will fail in the future for the reasons outlined below.
1. Only on Netflix:
Disney plus has all the major films made by different Disney studios. Those movies are made to earn money. They are extremely polished and good movie. It does not matter commercially even if those movies do not show up in Disney+. Those films already made huge money worldwide. Now Disney+ is only a place where viewers can watch those movies online. Disney+ works as a vault for all Disney movies and shows.
Netflix movies are not made for commercial purposes. It is only available on Netflix. If a movie is very good and someone wants to watch it, he/she can subscribe to Netflix for only one month. The price is equal to one movie ticket at the cinema hall. Yet in that one month, this viewer will watch numerous films and movies. So effectively Netflix is subsidizing every show. This approach may be good for growth but not good for sustainability.
2. Customer will not grow forever:
Everything has a saturation point. Netflix’s customer base will not grow forever. As days go, newer and newer competition will hit the market. Splitting customer on different streaming services. Of course, there will be some customers who will subscribe to multiple streaming services but that’s not common.
3. Netflix has twice the overhead cost than Disney+:
Netflix has a wonderful user interface and back-end software. To upkeep those, Netflix has thousands of engineers. On top that Netflix has to keep all the servers up and running all the time. All these things are super expensive. Disney+ also has to endure these costs. So; back-end server, software, and engineering cost the same for both Netflix and Disney+.
But Netflix has another overhead cost. It must produce content or buy content. Netflix does not produce any content for commercial purposes. Whether they make serials or movies, everything is only on Netflix. Disney makes movies, earns a lot of money from the cinema hall. They make TV serials and make money from TV channels commercials. So Disney content already at a profitable state. Whereas Netflix has to spend a lot of money for its original content. On top of that, they also have to spend a ton of money on third party content like serials and movies. This is an extra overhead cost that Disney does not have.
4. Poor content quality:
Netflix has some best original serials. Stranger things, House of cards, orange is the new black, black mirror. There are also a few outstanding documentaries. But the majority of content quality is poor. A Netflix subscriber sometimes scrolls through programs but can’t find anything worthy to watch. Sometimes it feels there is nothing to see on Netflix.
How Netflix going to survive in the long run we don’t know but there is one thing we could think of, lower-priced subscription with an advertisement.
No company survives forever. Netflix will fail one day. But their failure will be sooner than we could imagine.
Few helpful references: