As viewers kick back on the sofa to ‘Netflix and Chill’ the company itself will be doing anything but. As the streaming market becomes more popular, the current King will be pedalling fast to keep ahead of the pack and hold onto its crown.
Most people who want Netflix in the States have already subscribed to the service, so as the US domestic market reaches saturation, Netflix is now judged on its performance overseas. Between the launch of Disney+ and Apple TV+, the end of last year was certainly a bit scary for the company and those who invest in it, and 2020 looks set to be even more competitive in the growing streaming market.
In the last 10 years, Netflix has enjoyed rising popularity and an influx of cash as the share price soared, but it's all beginning to fall a little flat. As the subscriber numbers slow down, its customer base has begun to worry investors.
Netflix now has to sign up people from outside of it's US home market, and it needs to do so before its competitors snap them up. The lion’s share of its international subscribers are in Europe, but its popularity in Asia is helping to boost numbers.
Competition in the streaming sector is fierce, when Disney+ launched in the Autumn, it was able to add 10 million subscribers in its first day and its forecast to sign up over 100 million in the next 5 years.
Netflix is still in debt.
Although the company is profitable, it has spent more than its profits and it has to borrow to be able to put up the cash to spend on expensive new productions. It's blockbuster movie 'The Irishman' cost a whopping $175 million - the company says it was definitely worth the investment - and the Oscar nominations seem to back that up nicely, but film making is a risky business and without having a huge pot of cash to call upon it could only take a few flops to damage the core business.
Making good quality content doesn’t come cheap, last year, Netflix spent $15 billion on content, and its expected to spend at least that in 2020.
Netflix’s head of content Ted Sarandos recently reported that the cost of a typical “very competitive” show increased by roughly 30% between 2018 and 2019.