While the competition fights for live sports rights, Netflix closes the doorand the streaming service dives into even more advertising subscriptions. Thisis evident from remarks made by co-CEO Ted Sarandos during a conference.
Netflix is still at the forefront of the streaming war, but the bigHollywood studios and entertainment giants are breathing down the company.
Where is the growth for Netflix?
Currently, Netflix has about 73 million subscribers in the United States.Analysts estimate that the streaming service can tap 90 million in the nextfive years, but that’s where it ends. The stretch of explosive growth istherefore somewhat over, and the number of new markets in which the servicecan be rolled out is also slowly running out.
It is not for nothing that the company focuses increasingly on how profitableit has become in its communication to shareholders. The boasting ofastronomical growth figures is simply not sustainable.
Is live sports the solution?
Netflix will need to tap into new segments to keep growing. The subscriberswho like shows like Stranger Things and Wednesday keep are now on board.Rumors have been circulating for years that Netflix wants to buy the streamingrights of Formula 1, for example. Especially given the success of Drive toSurvive seems like a no brainer. But yes: live broadcasts are different thanit on demand model that Netflix is known for.
Meanwhile, Amazon, Apple and Google are also throwing themselves into sportswith their streaming services. All three want the rights to the Sunday TicketPackage of the NFL score, resulting in a fierce bargaining battle. PrimeVideo already has NFLs Thursday Night Football a deal that costs Amazon $1billion a year but also led to a record number of new subscribers.
TedSarandos and his wife (Image: Chris Delmas / AFP)
Co-CEO closes the door
The question remains: what will Netflix do? Co-CEO Ted Sarandos was a guestthis week at a conference in New York City, the UBS Global TMT Conference. Youcan quickly forget that name, but a few of his comments there stand out.
The CEO explained that live sports don’t make sense for the streaming businessmodel, as the programming is more suited to pay TV. Sarandos said thestreaming service “could double its size without sports”. Ambitious!
“We have not seen a profit path in major sports rentals,” Sarandos said at theconference. “We are not against sports, we are just pro profit.” This is nota CEO questioning a strategic choice. This sounds like a door being slammedshut pretty loudly. Without even a crack.
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Netflix will go live
Chris Rock will host Netflix’s first-ever live stream next year. Not withsports, but through his new stand-up special. You can read more about that inthis article.
Even more ads
Okay, so all those Formula 1 and sports rumors around Netflix will probablyremain rumors. But how is the streaming service going to keep its shareholdershappy? Sarandas also had a concrete answer to that question: advertisements.
The streaming service has already rolled out a new subscription with ads in anumber of markets. Thanks to the lower price, the company is thus addressing anew segment of potential subscribers. It won’t stop there: Sarandos droppedduring the conference that the company is looking at multiple adsubscriptions.
“We have multiple subscriptions these days, so it’s likely we’ll have multiplead tiers over time as well, but there’s nothing I can share right now,”Sarandos said. “And the product itself, I suspect, will evolve quitedramatically, but slowly, gradually.”
Christian Bale solves murder case in your next favorite Netflix movie
Way to more subscribers
Despite the claim that live sports will not yield anything for the company,the co-CEO of Netflix is still confident in the future. Twice as manysubscribers, new subscriptions: so a lot is going to change. In fact, thefirst not-so-secret weapon that Netflix will deploy next year has already beenannounced.
Unfortunately, the streaming service is finally going to put an end to accountsharing, which we are all guilty of. The question is: will this result in manynew subscribers, or will consumers flock to the cheaper competition? On to