Which of its competitors is Netflix focussed on? The answer might surprise you!
Streaming Video on Demand (SVOD) market leader Netflix is fresh off reporting a strong set of quarterly results. Having also announced a price hike that pleased investors, and didn’t seem to bother viewers, it’s worth considering who the company has in its sights. The answer might surprise you: it’s not Hulu or Amazon… rather, it’s the video game industry. And specifically, run away shoot-em-up success Fortnite!
Incredibly, Netflix’s share price has appreciated by 32% year to date – despite January not yet being over!
Source: Yahoo Finance
Netflix has 140 million subscribers around the world, but the company doesn’t see itself as just competing against other streaming services or television packages for their custom – it’s thinking about screen time more broadly.
According to CEO Reed Hastings, the US (Netflix’s domestic market) sees about a billion hours of content watched every day. Netflix, he says, accounts for about 10% of it. But rather than solely focussing on that billion hours, Hastings believes broadening Netflix’s reach through innovations like the recent “choose your own adventure” edition of Black Mirror offers another way to get audiences’ attention. On the company’s last earnings call he said:
“I think about it really as us winning entertainment time away from other activities... Xbox, 'Fortnite,' or HBO or a long list. We compete so broadly with all these different providers.”
NDP Group video games industry analyst Mat Piscatella agrees with Hastings’ assessment, saying: “The idea is that time is a lot more finite than money seems to be, so getting people engaged and stuck is how you can generate dollars. I think people like to be participatory instead of sitting back; although sitting back definitely has its time and place. We are starting to see Netflix figure out interactive elements. It will be fun to watch.”
Dominion holds Netflix in its Global Trends Ecommerce Fund.
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