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How Netflix Is Preparing for a Potential Content Exodus

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May. 16 2019, Published 3:11 p.m. ET

Netflix is preparing its media arsenal

Netflix’s (NFLX) competition with media companies has been intensifying, with most media giants having already unveiled their own streaming services. This means that they will either strip their content from Netflix (as in Disney’s case) or charge the service a premium to license their content.

Netflix had to pay a whopping $100 million to AT&T’s Time Warner to keep the popular sitcom Friends on its platform. However, that deal is set to end later this year. Time Warner is launching its own streaming service, where Friends and other Time Warner shows are likely to end up.

Similarly, all Disney and Marvel movies will be available exclusively on Disney+. Meanwhile, NBCUniversal’s The Office is still the most-watched show on Netflix.

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Netflix may have to pay a premium to keep popular shows

To keep such popular shows, Netflix will have to pay its streaming competitors premiums similar to or higher than the sum it forked over to keep Friends—and that’s only if these media companies decide to license their content.

However, Netflix is preparing for such a situation. The company is spending billions of dollars each year to ramp up its already impressive library of quality original content. If Netflix doesn’t want to fork out the hundreds of millions the studios are asking for to license their famous shows, Netflix likely still has enough content to retain at least most of its subscribers.

Netflix has added a whopping 18.4 million paid subscribers in the last two quarters, but it says it expects to add only 5 million paid subscribers in the current quarter.

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