B&T recently reported on the potential for Netflix to make billions from showing ads on the platform.
And perhaps the likelihood of seeing ads on Netflix is higher than we thought, with one analyst heralding the streaming service’s doomsday in the same week it was announced classic sitcom Friends was moving to WarnerMedia’s new HBO Max service.
“Netflix’s glory days are over,” says editor of the RiskHedge Report Stephen McBride, in an article published on Forbes.
“And what’s coming next won’t be pleasant if you own Netflix stock.”
The One Where We Have To Say Goodbye.
We’re sorry to see Friends go to Warner's streaming service at the beginning of 2020 (in The US). Thanks for the memories, gang ☕
— Netflix US (@netflix) July 9, 2019
McBride points to the ‘awakening’ of powerful media companies like WarnerMedia and Disney, that have recently launched their own streaming services to rival Netflix.
“In the early 2010s, Netflix signed deals with movie and TV makers like Disney and NBC,” McBride says.
“For a small fee, Netflix bought the rights to air wildly popular content like the Marvel Avengers movies… and hit comedies like The Office and Friends.
“In other words, Netflix built its business on the back of other companies’ content.”
And the jig is now up for Netflix, according to McBride, with Netflix’s competitors ending their contracts with the service and launching their own alternatives.
McBride predicted Netflix’s library will be “gutted” over the next two years.
He gives the example of Disney’s streaming option Disney+, set to launch later this year at a better price than Netflix, pointing out the three best-selling movies in 2017, 2018 and so far in 2019 have all belonged to Disney.
In terms of quantifying the potential damage, McBride has this to say: “Even in the most generous scenario, within a couple of years I can’t see it being worth more than $US100 billion.
“That would put its stock price at about $US225/share—or about 40 per cent below its current price.
“Again, that’s a rosy scenario. Don’t be surprised if Netflix stock gets cut in half, or worse, in the next year or two.”
There is no doubt that Netflix knew this day would come, hence why we see spates of original content like 13 Reasons Why, House of Cards and Orange is the New Black.
However, this original content will now define the overall success of the company, as streaming options become more plentiful for viewers.
In Australia, there are growing calls for Netflix to face the same local content quotas that television broadcasters are faced with.
The current percentage of Australian content on Netflix is around 2.5 per cent.