The year 2020 gave new heights to the online streaming platform Netflix; however, heading towards 2021 and going through a potential insufficiency of content, the company will have to give a heads up in performing well.
Netflix acknowledged that the subscriber growth has slowed down after reporting its third-quarter earnings. A total of 2.2 million net subscribers have been added in Q3. Not only this, but the platform also gained $6.44 billion of revenue, hitting past its expectations. However, the question for the co-CEOs Reed Hastings and Ted Sarandos remains the same: how are they planning to ensure that Netflix will hold enough content to watch?
No other online streaming platforms could compete with Netflix because of its huge advantage of constant introduction to new shows and movies. The reason behind this was also the completion of most of the shows right before the pandemic took place. Therefore, post-production was concluded remotely, and new shows came up. Unfortunately, it seems like the company is sailing in the same boat as any other streaming platform. Talking about the same, Sarandos and Hastings mentioned the difficulty of getting back to production work in the United States.
According to an analyst at eMarketer, “Netflix was better situated for this, yet it can’t keep going forever.” He also mentioned that if Hollywood closed down for a very long time, it would make up for the lost time to you sooner or later.
If subscriber development proceeds, Netflix can take that extra income and extend its content, financial plan considerably more. Pivotal Research Group’s Jeff Wlodarczak noticed that the more Netflix could reinvest in its original shows, the more it “builds the potential objective market for their service and decreases existing subscriber beat,” as indicated by The Hollywood Reporter.
As argued by Benes, “the company has a huge subscriber base and a massive library. However, cancelation of some shows or movies has turned off certain subscribers. This might not continue in the next quarter, but the company will have to address the issue.”
“For our 2021 record, we keep on expecting the number of Netflix originals to be introduced on the platform. Not only this, but to be up year over year in each quarter of 2021, and we’re certain that we’ll have an energizing scope of programming for our audience, especially compared with other online streaming platforms,” the letter to investors mentioned.
A case could be that the production process doesn’t meet the requirements of the platform. Moreover, if authorizing shows from different networks becomes more troublesome because of expanded competition, Netflix may need to postpone shows and movies to keep up having new content. Such content includes new seasons of The Crown, The Witcher, Stranger Things, etc.
It’s somewhat of a double edged blade: the organization needs many movies and series to compete; however, those shows need to hold subscribers, and cost needs to remain generally low. On the other hand, if the organization hits a reasonable period in subscriber development while likewise managing issues welcomed by the pandemic, Netflix needs to discover different approaches to build its income to keep spending how the group does.
According to Benes, Netflix doesn’t ask much in comparison to the other platforms, also mentioning that “people get a lot of content for not a whole lot of money.” If it wants, Netflix can ask for an extra dollar or two, and people will still be willing to pay. Some people might refuse.
Finally, it comes down to the conclusion that it will be more difficult than ever for the company. It also means that even if the organization keeps delivering quality content, it’ll become tougher and tougher.
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