Streaming Competition Will Force Netflix to Rethink on Ads

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The growing market for original content on streaming services may change the future of Netflix


“For those of us looking to climb to the top of the food chain, there can be no mercy. There is but one rule: hunt or be hunted.”

This classic Frank Underwood line from the hit Netflix series “House of Cards” is an allusion to power in politics. However, with the growing competition of original digital content, Underwood might as well be speaking about the hierarchy of streaming services.

Of course, there are the Amazon Prime, Hulu, and Crackle platforms, but new companies have entered the fray over the past month.

YouTube announced the YouTube TV, a television streaming service that will offer a mix of live-streams and cable television programming (and access to YouTube Red content).

Facebook is preparing to launch a brand-new, free-to-watch video platform, with original video, including episodic content.

Yet, through all the announcements, Netflix maintains it will remain an ad-free experience.

“There's not a big conflict yet,” Reed Hastings, CEO at Netflix, said Wednesday at Recode's annual Code Conference. “They're not doing ‘House of Cards.' We're not bidding on the same shows. So not a big deal there.”

Consider the usage of the word, “yet.” While Netflix clearly does not see these new streaming services as competition, it understands there is the likelihood of a power struggle in the future.

Sure, analysts at PiperJaffray, predict that, if Netflix maintains its expected growth,  the number of international subscribers will hit 98.2 million in the fourth quarter of 2020.

However, this is predicated on Netflix maintaining its current trajectory.

What if Netflix doesn't? What if the competition takes away subscribers?

One could only assume that if, and more poignantly when, Netflix experiences competition from the new streaming services, it will be forced to consider ads to bolster its revenue stream.

Sure there isn't a “big conflict” yet, but you can bet when there is, Netflix will take no mercy in ensuring its place at the top of the streaming service food chain.

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