“People like to say everything is a Netflix killer,” says REDEF CEO Jason Hirschhorn. “Netflix is the market leader and they’re the one to beat. I think the only difference is the hunter has become the hunted. Netflix really understands what’s going on in media right now. They foresaw that content would be pulled and that’s why they upped the number of originals they were doing. They have forgotten more about product and technology than these new services have built.”
Netflix Really Understands What’s Going On In Media Right Now
People like to say everything is a Netflix killer. Netflix is the market leader and they’re the one to beat. I think the only difference is the hunter has become the hunted. Netflix really understands what’s going on in media right now. They foresaw that content would be pulled and that’s why they upped the number of originals they were doing. They have forgotten more about product and technology than these new services have built. The ATT’s of the world at Warner or some of these other companies, even Apple, have not done direct-to-consumer services before. I just think they have a leg up.
I’d also say that there’s not a lot of talk about international. The amount of minutes that are lost in US television is not satiated by the amount of content that’s available today. Netflix still has a lot of growth in the US. But in addition to that, in Europe, they’re still only 5 percent of viewing. There’s a lot of upside there. I don’t think that’s priced into the stock. Netflix CEO Reed Hastings has recently said that they’re going to up production and the amount of stuff that’s coming up in the UK. Catalog for these services breed engagement but it’s really the number of originals that get new subscribers.
The Key Is the Velocity At Which Netflix Releases Stuff
We’re happy (as consumers) because let them kill each other and we get all this great programming. It is an arms race. Right now, specifically in the US, Netflix and Amazon Prime are really the bedrock of the home. On average, a cable home may have three services. Going forward though, depending on economic strata and the way the economy works out and frankly tastes, many homes will have four, five, six, and seven services. These businesses will also have a role. If you look at what Stars has done globally under the CEO of Jeff Hirsch, he’s built a really good OTT business and it’s a niche business.
What they understand differently than some of the other new services and I think have to learn is the velocity at which Netflix releases stuff. You have it in your mind that I don’t want to let go of Netflix because during Christmas and in other places they’re just dumping a tremendous amount of things out there. Tonight I’m going to the premiere of the Irishman. That is a Netflix movie directed by Martin Scorsese and starring Robert De Niro and Pacino. They’re making moves in film. Media is is cyclical. I still think that they need to make moves against the movie theaters. What you’re seeing with Apple’s announcement today that they’re releasing movies in theaters is really about appeasing artists who still want that big-screen debut.
You Have To Think Of Netflix As a Bundle Like Spectrum
Netflix has overpaid for things because they were playing a different game. They were going for a land grab, not for shows and not for networks, but for the entire video space. Just look at what happened. They were the first service that has 150 million subs worldwide. Ultimately, when they got to 50 million they have pricing power. Often when you’re building a show and you go to a production company and Netflix says we love what you have, they’ll say cost plus 15 or 20 percent. So it’s been capped for the creators. But there’s going to be a lot of people working in the media business in the next couple years as this arms race continues.
Disney and Apple services are different. Disney is super-serving specific genres and people. Netflix is video. They are building big shows like Stranger Things but also smaller shows that address smaller audiences. You have to think of Netflix (in cable terms) as a bundle like Spectrum. if you have to use the example of cable they are spectacularly is a bundle yeah it’s a bundle. It doesn’t have channels on it, they’re genres.