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” s pretty crazy looking back just a couple of years. How netflix really took the the world by storm you know i mean it brought binge. Watching to the mainstream used to have to wait for a show to come out on dvd to do that he had to change the disk every couple of episodes. He had to get up from the couch.
That s insane. It was a whole thing. Very very hard times for lazy people. I can t even count the number of times.
I fell asleep watching the office and just woke up to the sounds of the dvd menu just looping over and over and over again. But then netflix came along and they re like no we re putting out all these episodes out here at once and we just want you to sit there and watch. We re gonna check in once in a while to make sure you haven t fallen asleep. And then we re gonna get right back on the train and by train.
I mean just sit there and don t ever move. There was also a whole big netflix and chill thing that happened where you d invite somebody over for kissy times. While kevin spacey lingered in the background on your tv. Little weird and retrospect.
Netflix also created some massively popular content stranger things house of cards orange is the new black glow. Narcos. The ryan george comedy hour. Oh how did that get in there.
That s weird. I guess. That s what could have been if they ever answered my emails anyway. The haunting of hill house daredevil ozark bojack horseman.
The list goes on and on and on and on. But there s some stuff happening right now that s making it seem like maybe netflix s heyday could be coming to an end i hope it s not we ve had some good times me and netflix. But but after i lay out all this stuff in this video. I can t help but feel like you re gonna be wondering the same thing as me here hey netflix you uh you okay buddy losing subscribers.
I m gonna use some business terms here. Okay. I don t necessarily understand them. But i m gonna say some stuff like like q3 and profits so if you find that stuff boring.
I m gonna make sure to plop a little dancing skeleton up on screen from time to time okay look at him. He s trying his best to entertain. And i respect that okay so in the second quarter of 2019 q2 for the very first time since 2011. Netflix lost subscribers in the united states and in 2011.
There was a good reason for that they did this weird thing where they tried to split their dvd and streaming stuff. They had this dvd delivery. Only service called quick stir people were like no what do you know don t do that no more of that old dvd stuff just kill that and just stream. And since then things have been on the up and up for netflix.
Everything s been great until just now in 2019 and unless. They re giving qwikster. Another chance that means that something is going on they had forecast gaining 309 thousand new us subscribers in that three month period. But instead they lost a hundred and twenty six thousand so you know that didn t go so well and they should definitely get a refund from their business psychic.
That s some amateur work also netflix is stock went down ten percent. Now i don t know anything about the stock market. But red is bad right you don t like if you re a stock broker. And you see red.
You re like oh no get that get that out of here. I don t like that so why did this happen well a couple of things one thing is that during this period. They raised their prices by two dollars a month. That s a whole to knee and for non canadian.
People a two knee is a 2 coin. There is a polar bear on it and when they first came out in 1996. Everybody was trying to pop the middle out cuz apparently that could happen from time to time. If you squeezed hard enough.
This has been a canadian heritage minute. And i hope you enjoyed it anyway. Maybe you remember that just a couple of years ago. Netflix cost to like eight dollars.
It was great. But that price has been going up so maybe. A group of people got annoyed that their netflix subscription is now like. 13 a month that might have been the straw that broke the camel s back for some people you know they realize that okay.
These prices are just gonna keep going up aren t they and netflix acknowledges that yes prices did go up during this quarter. But they don t think that s the real reason they lost subscribers instead they said this in their results announcement rather we think you twos content slate drove less growth and paid net ads than we anticipated that that feels like kind of a weird thing to say right like oh no it s because our content wasn t exciting. But but you made that right there is a pretty good reason for them saying that though which i ll get to later the truth is that maybe their subscriber loss was a combination of those things. But also some people might be jumping ship.
Because well some new players are entering the space. Pretty soon. Netflix had what s called a first mover advantage. They were the pioneers of streaming movies and tv.
And they proved that we are all in to it we re like yep. We re not getting up just shove that content right into our faces. All at once give it right here and so now that it s perfectly clear that that is a thing that people like other companies want a piece of the pie companies love pie. Once the pie is a sure sure sure thing pie companies love a sure thing pie.
There are some serious netflix competitors out there now and some really big ones on the way. A real big looming threat coming. Very very soon. The threat of disney plus streaming services are popping up all over the place now.
And it s easy to dismiss them as a joke. I mean some of them have some good original shows and a grab bag of movies. But disney is about to join the party and they they don t mess around. I know that mickey is their main mascot.
But man they are much more of a thanos kind of character netflix has been fighting off streaming services for years but the big threat is coming and it is a serious one think of it this way you start a lemonade stand right and stuff is going very well everybody likes your lemonade. It is good lemonade. But then disney shows up like hey this thing seems to be going well we will also be making a lemonade stand. I mean chances are you gonna be like oh okay crap.
I m i m in trouble because you just know that even though people like your lemonade stand. It s gonna be hard to resist the disney lemonade stand you know they re probably gonna have like a roller coaster connected to it they re gonna have like dwayne. The rock johnson freshly squeezing the lemons. He s gonna say stuff like can you smell what the rock is cooking it s lemonade enjoy it s gonna be a fantastic lemonade stand because disney is a beast and a money making machine ten of the top 15 global box office hits they came from them and in november 2019 they re entering the streaming service game with disney plus and you know they might not even be entering the game.
So much is just making it their game here s what disney ceo. Bob iger said about the launch. It is going to be treated as the most important product. The company has ever launched whoa okay.
He also said what we are putting forward is an aggressive strategy. We ve been all in from the beginning. We are really committed to this that s basically the corporate speak version of an army general getting his troops pumped up for war bob smells blood in the air. And he s coming for it.
He is hungry. He is rich and his name is bob that is a no nonsense name. There s no time for you to call me. Robert just call me bob so here s what disney s bringing to the table for 699.
A month you get access to disney plus. Their big old library of existing movies and shows and original shows and movies and some of your favorite franchises. A bunch of new marvel shows starring the actual stars from the big screen falcon and winter soldier loki scarlet witch. There s also the mandalorian a star wars show from creator jon favreau all this stuff at a price cheaper.
The netflix has ever been and hey if you re okay with paying a little more here s what you get for. 1299 a month 300 movies 7000. Tv episodes you get the bundle pack thing that includes access to disney abc espn pixar marvel star wars fx 20th century fox fox searchlight national geographic star and even freaking. Hulu.
You get all that for the exact same price as the current netflix subscription. Which by the way bob iger says is a coincidence okay bob what a what a wacky coincidence. It is so crazy that that accidentally happened what what are the odds and not only is disney bringing all that stuff to the table. It s also snatching away a significant amount of stuff from netflix s table marvel and star wars in all disney movies.
All that stuff is being lifted off of netflix and heading over to disney plus. They re also losing the office not to disney. But still that s going away and i m gonna miss it the point is there s gonna be a big old voip opping up on netflix pretty soon and if it comes down to a choice say you only have 13 dollars a month to spend on a streaming service are you gonna go with the one that has a big old void or the one that gives you a big old shebang disney anticipates getting between 60 and 90 million subscribers by the end of 2024. Which by the way despite all the money that they re spending on this stuff is when they forecast.
They re gonna start making a profit off of disney. Plus now not making money off something for five years sounds like a problem. But it s not the fact that disney has that sort of a timeline is actually incredible especially when you compare it to another major thing that netflix is going up against just so much debt you ever wonder how netflix is profitable. I mean they don t run ads and subscriptions only cover so much right.
But they keep putting out multi million dollar shows and movies and signing people to crazy deals. How do they do that well the truth is netflix has had negative cash flow since 2011. That s how they ve always been able to make so much content. They re like yeah.
No we re gonna make money one day. Just you know not now not soon. But one day. Which is weird cuz.
The bank turned down my business proposal of maybe money someday netflix is something like 10 billion dollars in debt. According to forbes and they have so many deals in place for future content obligations that it adds up to closer to 30 billion dollars of debt and now they re in kind of a sticky situation for people to keep investing in them and for banks to keep lending. The money in whatever they need to be profitable. One day these people aren t investing because they really want to see what happens on the next season of stranger things.
But to be profitable one day netflix needs to do two things keep growing their subscriber base and gradually keep increasing prices over the years if those things don t keep happening they re not getting out of that 30 billion dollar hole unless they start putting commercials in between their shows. But that would probably make that subscriber number drop quite a bit and this is probably why netflix pulled that weird move of blaming their subscriber loss on the content not being exciting enough last quarter. They can t say that increasing prices led to losing subscribers. This whole thing is hinging on both those numbers going up together not one going down.
Because the other one went up so really the only way for them to keep growing their subscriber base and keep increasing their prices is to continue spending more money on more content. That s always been the game plan for them nobody was willing to spend as much money as them on content. And so they make great stuff and people subscribe and the numbers grow. But that model of spending a bunch on content because nobody else is doing that isn t gonna work as smoothly with a company like disney stepping into the game they have the money and they re ready to spend it and they re going to and they are and that s bad news is netflix gonna be okay so is netflix gonna survive maybe many people that are much smarter than me are analyzing this and i m sure they have better answers.
But from my perspective. They definitely have some hurdles to overcome like figuring out how to increase their prices while still gaining a bunch of subscribers for years and years to come while trying to not keep increasing their spending on content. Too much and at the same time their content needs to be better than the stuff. Disney s making and the stuff that disney is taking away.
It s i don t know it s gonna be tricky. I don t think netflix is gonna die at least not right away. I mean they have a lot of cool stuff on the way they have some existing shows that are huge hits they have deals with some great talent. But maybe netflix s glory days might be coming to an end maybe they ll be acquired by disney in the next ten years who knows it s all gonna kind of hinge on how this disney plus thing plays out.
But i gotta say i am tempted to sign up for it thanks for watching that video guys i hope you enjoyed it do you think netflix is gonna be able to survive with a player like disney entering the streaming game are you signing up for disney plus. When it comes out let me know your thoughts in the comment section. Thanks again for watching. And we ll see you soon with a new video.
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