Media Netflix

Netflix unconcerned over losing licensed content as it boasts subscriber growth

By Andrew Blustein, Reporter

April 17, 2019 | 4 min read

As the streaming space grows, so does an underlying tension over ownership of programming.

Netflix adds more users as streaming field crowds

Netflix adds more users as streaming field crowds

In an earnings call, Netflix chief executive officer Reed Hastings said the company has prepared for the loss of "second window," or licensed content.

"[Our original content] is not filling in for anything else. It's setting a bold new vision of what programming can be," said Hastings.

"We're charging forward. We've expected this decline of second window content, been ready for it, anticipated it, and in fact we're eager to have more and more of our money be able to do spectacular new titles."

This becomes more important as media giants Apple and Disney set to launch their subscription services, which are centered around original content. NBC Universal also plans to launch a streaming service by 2020, which will house its catalog of shows and movies.

Ted Sarandos, chief content officer at Netflix, said the top 10 most-watched shows on Netflix are all original programs, and only four non-Netflix are in the top 25.

In its earnings release, Netflix shared it now has nearly 149m subscribers globally, up almost 10m from last quarter. Over 60m of those subscribers are in the US.

Even with these strong subscriber numbers, Netflix stock dropped as much as 5% on the day as the rest of the industry questioned how it can compete. OpenX chief brand officer Dallas Lawrence believes Netflix should "prepare for battle".

"Consumers will continue to opt for OTT services, but as Netflix continues pushing to these new audiences both in the US and internationally, only time will tell if they can maintain their subscription base and rapid growth alongside alternatives that can offer cheaper rates or exclusive access to premium content," said Lawrence.

Netflix has upped its subscription cost, which will be reinvested in original content. Eric Haggstrom, forecasting analyst at eMarketer, believes this will "solidify its status as a 'must have' for consumers" compared to competitors.

Netflix is also eyeing global growth, namely in India. The company's chief product officer, Greg Peters, said Netflix will look into finding a lower price tier to "broaden accessibility" in India.

"We'll see what the right mix of features is, because there is a bit of magic to try and get the right set of features at the right price point in a way the consumer can relate to," said Peters.

The Netflix brand

Already without a chief marketer, the streaming giant plans to pull back its overall marketing spend.

"We're continuing to scale our business in terms of some combination of content and marketing spend, in particular, growing at a slower rate than revenue," said Netflix chief financial officer Spencer Neumann, who added that the company's marketing budget will "level off" compared to last year's growth.

In March, WarnerMedia chairman Bob Greenblatt said Netflix "Netflix doesn't have a brand". When asked to respond, Hastings said consumers see Netflix as an innovator and "great comfort food" that they can "curl up and enjoy".

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