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How Netflix Views Competition in the Streaming Space

Sophia Nicholson - Author
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Aug. 18 2020, Updated 4:39 a.m. ET

Netflix is the content king

In 1Q18, Netflix’s (NFLX) subscriber base reached 125.0 million, up from ~98.8 million subscribers in 1Q17. However, due to the increasing demand for online viewing, some companies have gained influence in the online video streaming market.

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Rivals investing in original content 

Netflix is still the streaming content king, as it plans to invest billions in original content in 2018. The company expects to spend around $7.5 billion–$8.0 billion in content in 2018, as it streams more original programming on its platform. Netflix is making new TV series and movies at a rapid pace and expects to release 80 original movies in 2018, as it announced in October 2017.

In 2017, Netflix’s investments totaled ~$6.0 billion on original content, including nearly 30 new original shows. In 2016, these investments totaled $5.0 billion. Among Netflix’s rivals, Amazon (AMZN) spent $4.5 billion on original and acquired content, and Hulu invested $2.5 billion on content in 2017. 

Four companies have control over online video service Hulu. Fox, Comcast (CMCSA), and Disney each have a 30.0% stake in Hulu. Time Warner (TWX) is the fourth owner and controls a 10.0% stake in Hulu.

Investment in original television services

Investment in online television services could be more appealing to viewers who are moving away from pay-TV subscriptions. According to a Cisco Systems VNI (visual networking index) report, video content could account for 77.0% of all mobile data traffic by 2020 in the United States.

Viewers can pay $100 or more for cable or satellite TV services per month. However, a basic plan for Netflix or Hulu cost only ~$8 per month each. Sony’s PlayStation Vue can be accessed for $50 per month, Alphabet’s (GOOGL) YouTube TV is ~$40 per month, and a basic Sling TV package is available for $20 per month. An Amazon Prime subscription is about $99 per year.

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