When Netflix reported its results for the final quarter of 2023 on January 23, several financial analysis firms such as Morgan Stanley and Bernstein concluded: There was already a winner in the platform war. In the final three months of the year, the company added 13 million new subscribers worldwide, its second-best quarterly number in history (behind only the numbers it achieved in the midst of the pandemic). More than 29 million new subscribers were added throughout 2023. The total is now 260.28 million. Sales increased 12% year over year. It is the streaming company with the lowest churn percentage compared to its subscriptions, just 2% in the United States, well below its competitors, which average 5.3%, according to the consulting firm. Antenna published in Business Insider.
Last year, the platform war entered a new phase. After a 2022 in which these services faltered with Netflix's first subscriber declines, Wall Street began paying attention in 2023 to whether these services' accounts were healthy and profitable. In this new situation, Netflix was crowned the big winner. There are several factors that have led experts to explain it this way. On the one hand, it is the platform that sets the pace for Internet television. It was the first major streaming service to take its ad-supported subscription to the global level, which already had around 23 million monthly active users at the beginning of the year. It is expected that the elimination of the basic plan without advertising and the price increases on the other options will encourage more and more customers to pay less to watch a few minutes of advertising. It is a business model that has now become established in streaming and is already being applied to almost all platforms. They were also the first to actively oppose the unpopular but ultimately fruitful move to share accounts outside the home. Others, such as Disney+, have also followed suit on this point.
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According to the consulting firm Nielsen, which measures television audiences in the United States, the time Americans spend on Netflix is more than twice that of its closest competitor: Of the total time Americans spent watching TV in December 2023, Netflix accounted for 7.7%, compared to Prime Video's 3.3% or Disney+'s 1.9% (YouTube beats them at 8.5%). The same applies to its competitors.
Content Licenses
Beyond the numbers, there is another factor that shows Netflix's dominance over other on-demand television services. Series like “Two Meters Under”, “Blood Brothers” or, from April, “Sex in New York” – some of the titles that have helped HBO establish itself in the collective imagination as a reference brand in the audiovisual sector are also on Netflix to see. The N company and Disney have also signed an agreement according to which 14 series of the second season, such as “Lost”, “This Is Us” and “How I Met Your Mother”, can also be seen on Netflix in the USA. And a Paramount title as successful as Yellowstone has reached some countries outside the US thanks to Netflix (in Spain, SkyShowtime remains exclusive and will not be available on Netflix). The agreements with Warner and Disney are not exclusivity, so their own digital services will retain these titles.
The HBO series “Blood Brothers” and “The Pacific” are also available on Netflix.
Behind this phenomenon is a change in mentality regarding content exclusivity that could be seen as a return to the beginning. Netflix initially became strong thanks to licensed content. The deal benefited both Netflix, which was strengthened and consolidated by titles produced by third parties and already broadcast, and the studios, which thereby offset the decline in DVD sales and benefited from the new viewers that their titles attracted. Over time, these companies realized that their content was feeding a monster that was about to eat them. When they developed their own video-on-demand services, they ended these licenses to increase exclusivity. In 2017, when Disney wanted to make it clear that it was serious about its streaming commitment, it publicly broke with Netflix. Disney CEO Bob Iger even compared licensed content to “selling nuclear weapons to the enemy.”
In 2023, a new shift in mentality occurred when companies like Warner Bros., Discovery or Disney realized that exclusivity had become a burden that did not allow them to benefit from products that no longer worked on their own platforms. These are essentially win-win arrangements: sellers can gain an economic advantage that helps them combat debts that, in some cases, continue to grow, and buyers can spend more efficiently while having more new content Time after the Hollywood strikes when the slowdown was obvious. According to What's On Netflix, a website that focuses on the platform's content, Netflix released about 130 fewer original programs in 2023 than in 2022, down 16%.
Netflix is aware of the good returns that this change in mentality in the industry will bring them. Ted Sarandos, one of the company's CEOs, used the presentation of the latest results to encourage companies to continue licensing content to them. “We have long helped launch some of television's biggest hits, including Breaking Bad and The Walking Dead, and more recently Schitt's Creek. “Thanks to our recommendation system and our reach, we can revitalize a series like Suits and make it an important milestone in pop culture.” “I think it's great that studios are becoming more open to licensing content again and I love supporting them say we are open to negotiations,” he added.
This is Us is one of the titles included in the deal between Disney and Netflix in the US. NBC (Ron Batzdorff/NBC)
Although these agreements are mutually beneficial, some experts urge sellers to be careful because they could once again be feeding a monster that will start making a lot of profit off other people's content in a few months if it he succeeds and his plan with advertisements comes into effect. Jason Bazinet, a financial analyst quoted by Business Insider in a report on the topic, sums it up this way: “Netflix is making money; everyone else loses it. “Netflix will not license its originals to anyone, but all other Hollywood studios license their content to Netflix.”
The possibilities of their rivals
Not everyone agrees that there is already a winner in the platform war. And if Netflix wins, we still have the most complicated thing ahead: staying in the lead. Prime Video and Disney are the rivals best suited to battle. Experts like Lucas Shaw from Bloomberg point to sports or children's programs as Netflix's weaknesses that competitors can exploit. Analysts say Disney, which has had a lead in these areas for years, is well positioned in these areas, also highlighting the revolution that the integration of advertising with Prime Video in the United States and Canada has brought to the Internet television business. United Kingdom and Germany (it will arrive in Spain during 2024): By default, advertising is provided to all subscribers and there is the option to pay 3 dollars more per month to not see advertising.
Another standout Netflix account is broadcasting live events. Some of his next big missions are aimed in this direction. On Saturday, February 24, Netflix premiered the broadcast of a major awards gala hosted by the Hollywood Screen Actors Guild. A friendly match between Rafael Nadal and Carlos Alcaraz will be broadcast on March 3rd. And from 2025, Netflix will be the home of American wrestling's flagship show, Raw, meaning 52 weeks of live programming in America and the UK. Because even if the streaming war is won, there are still battles to be fought.
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