How Netflix And YouTube Changed Entertainment Forever | CNBC Marathon
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The Evolution of Netflix and the Challenges Ahead
- Theaters and streaming platforms can coexist, similar to how people have kitchens but still go out to eat in restaurants.
- Netflix was once a juggernaut in the streaming industry, with a large subscriber base and significant market cap.
- However, in 2022, Netflix's growth has slowed, with lower revenue growth and a decline in stock value.
- The company lost nearly 1 million subscribers and faces increasing competition from other streaming platforms.
- Netflix's success can be attributed to its decision to focus solely on rental and subscription-based models, abandoning DVD sales.
- Blockbuster, once a major competitor, ignored Netflix's potential and underestimated the impact of online streaming.
- The future of Netflix's growth is uncertain, and investors and industry watchers are questioning if the company's astronomical growth is over.
The Evolution of Netflix: From DVD Rentals to Streaming Giant
- In 2007, Netflix introduced streaming and invested $40 million in data centers.
- The "watch now" feature became popular, leading to a shift from DVD rentals to streaming.
- Netflix capitalized on the unfamiliarity of studios with licensing for streaming, striking cheap deals.
- The company offered to pay millions for content not currently live on TV, attracting producers.
- Netflix sought stacking rights to show entire libraries at once, previously held by studios and cable companies.
- Amazon and Hulu also entered the streaming market in 2007, increasing competition.
- Netflix's expansion and content offerings in the next decade led to significant growth.
- Original shows like Lilyhammer and House of Cards introduced the binge-watching model.
The Changing Landscape of Streaming Services and Netflix's Challenges
- Legacy media companies lost millions of customers to Netflix between 2012 and 2020.
- Media companies like Disney, NBCUniversal, Paramount Global, and Warner Media decided to create their own streaming services and pull back their content from Netflix.
- Netflix anticipated this move and started focusing on producing its own original content since 2016.
- Licensed content still holds value for Netflix, but it is quickly being moved off the platform.
- Netflix remains the dominant streamer with 220.7 million subscribers, but Disney Plus is catching up with 152.1 million subscribers.
- In Q1 of 2022, Netflix reported a loss of 200,000 subscribers, while Disney+ gained 14.4 million new subscribers in its last quarter.
Challenges and Strategies for Netflix in the Streaming Wars
- Netflix faces competition from platforms that offer a variety of services like sports, news, and bundled offerings.
- Disney's bundle includes sports, local news, ABC, Hulu, ESPN, and even theme park tickets.
- Paramount Plus has partnered with Walmart Plus to create an appealing bundle.
- Amazon and Apple also offer bundles with various services and discounts.
- Netflix has cut jobs and reduced spending growth, but still plans to invest $17 billion in content.
- Wall Street may start valuing Netflix based on metrics like net income or revenue instead of just subscriber growth.
- Netflix's stock has seen significant fluctuations, peaking at over $690 per share in 2021 but dropping to $175 per share in 2022.
The Challenges and Potential of Netflix and AMC in the Streaming Industry
- Netflix aims to reach up to 800 million subscribers worldwide, but some believe this goal is too aggressive.
- Netflix revolutionized content distribution and consumption but faces uncertainties about its future.
- The pandemic caused movie theaters to suffer, with domestic box office numbers plummeting and films being released on streaming platforms.
- AMC, initially struggling, was saved by the 2021 'APE' meme movement and plans to expand beyond being a pure movie theater play.
- AMC's history dates back to 1920, and its multi-theater approach was a game-changer in the industry.
The Evolution and Challenges of AMC Theaters
- AMC has been at the forefront of seating innovations, with larger seats and cup holders.
- The company implemented loyalty programs like the Stubs program and introduced a subscription-based purchasing ability.
- In 2012, Dalian Wanda Group acquired AMC for $2.6 billion and invested $500 million to renovate all AMC theaters, making it the largest theater chain globally.
- From fiscal year 2013 to 2016, AMC tripled its number of theaters and operated over 1000 theaters worldwide by 2019.
- AMC experienced steady revenue growth and made heavy investments in their theaters, adding restaurants, IMAX and Dolby screens, and establishing their own film distribution company, Open Road Films.
The Impact of Streaming Services and the Revitalization of Movie Theaters
- Legacy streamers like Netflix, Amazon, and Hulu were joined by new players like Disney+, Apple TV+, HBO Max, Peacock, and Paramount Plus.
- Different streaming services tested various business models, such as premier access, simultaneous streaming and theatrical releases, and no extra cost streaming for theatrical releases.
- The theatrical window for movies decreased from 90 days to 45 days, which could impact smaller theater chains that rely on revenue from a longer window.
- Around 1000 screens out of 42,000 closed in 2021, affecting smaller theaters and art house theaters.
- Box office revenues nearly doubled in 2021, signaling a return of the movie theater experience.
The Future of Movie Theaters and AMC's Comeback
- Audiences are ready to come back to the movies, with a 35% increase in attendance in July 2019.
- Business models for streamers like Disney+ and HBO Max are now focusing on theatrical releases.
- Studios will produce more content and determine whether it belongs on streaming platforms or in theaters based on audience preferences.
- AMC Entertainment is expanding beyond being a movie theater operator, investing in a gold mine and launching a retail popcorn and concessions business.
- In Q2 of 2022, AMC earned nearly $1.2 billion in revenue, showing significant growth compared to previous years.
- AMC announced the creation of $517 million in preferred APE shares with the same voting rights as common stock, ensuring financial flexibility.
- Theaters are still crucial for streaming services as they need audiences to return to theaters first.
The Evolution and Impact of YouTube
- YouTube is a dominant force, representing over 20% of time spent on connected television.
- With over 500 hours of video uploaded every minute and 1,000,000,000 hours watched daily, YouTube is the world's second largest search engine.
- It revolutionized the way people create and share video content online, making it easy to post and share videos.
- YouTube has over 2 billion monthly users and generated $15 billion in revenue in 2019, expected to surpass that in 2020.
- It offers endless entertainment and diverse content, from how-to videos to comedy.
- YouTube has faced controversies, lawsuits, and growing competition over the years.
- The platform started as a video online dating site but pivoted due to difficulties in getting enough uploads.
The Rise and Success of YouTube
- YouTube initially faced skepticism in the industry but has become an essential platform for visibility and promotion.
- Google acquired YouTube in 2006 for $1.65 billion, which proved to be a highly successful investment.
- YouTube's founders were young, and the platform became a hub for quick videos and immense fortunes.
- The partnership with Google boosted YouTube's growth and profitability.
- YouTube evolved from a platform for sharing funny videos to a place for artists and creators to showcase their talents.
- The introduction of the YouTube partner program allowed users to monetize their channels, leading to new career opportunities.
- Early YouTubers built lucrative careers on the platform, with some earning millions of dollars per month.
- YouTube actively supports creators and provides tools for building and distributing content.
The Evolution and Challenges of YouTube
- YouTube's success can be attributed to its recommendation engine that suggests content based on user preferences.
- The platform has created its own original content, but it has not gained as much traction as competitors like Netflix.
- YouTube has introduced paid subscriptions like YouTube Premium and YouTube TV, but these businesses are relatively small compared to ad-supported content.
- Music is a major category on YouTube, with music videos being some of the most viewed content.
- YouTube has expanded its advertising capabilities to make ads interactive and allow direct purchases.
- Live streaming is a unique feature of YouTube, and kids' content is also popular on the platform.
- As YouTube grows, it faces challenges in managing the massive amount of content being uploaded.
Challenges Faced by YouTube in Content Moderation and Legal Issues
- YouTube has faced numerous lawsuits, including a prominent $1 billion suit by Viacom for copyright infringement.
- The introduction of content ID technology has allowed rights holders to track and understand their content posted on YouTube.
- Content moderation has been a significant hurdle for YouTube, with the challenge of determining which posts to remove and which ones to keep.
- YouTube has made policy changes to address issues like conspiracy theory videos and hate-filled content, but these changes have faced backlash.
- The debate around repealing Section 230, which protects social networks from user-posted content, has intensified.
- Misinformation has been a challenge for YouTube, with the platform taking steps to ban false medical claims and preparing policies for COVID-19 vaccine misinformation.
YouTube's Position in the Market and Potential Threats
- YouTube has the right to terminate and suspend channels based on their discretion.
- YouTube has been quick to respond to controversies compared to other social media platforms.
- YouTube faces competition from social media giants like Facebook, TikTok, and SNAP, as well as streaming services like Netflix, Amazon, and Disney+.
- YouTube dominates 70% of the total time spent watching top entertainment apps on mobile.
- YouTube's advantage lies in free content rather than premium paid-for content like Netflix or Amazon Prime.
- TikTok poses a potential threat to YouTube as it features short-form content reminiscent of YouTube's early days.
- YouTube has rolled out Shorts, a short form video app similar to TikTok.
The Coexistence of Theaters and Streaming Platforms, and the Challenges Faced by Netflix and AMC Theaters
- Netflix's growth has slowed in 2022, with lower revenue growth and a decline in stock value.
- The company lost nearly 1 million subscribers and faces increasing competition from other streaming platforms.
- Netflix's success can be attributed to its focus on rental and subscription-based models and its shift from DVD rentals to streaming.
- Legacy media companies have created their own streaming services, pulling back their content from Netflix.
- Disney Plus is catching up to Netflix in terms of subscribers, and Netflix's competitors offer more appealing content and bundled offerings.
- Netflix plans to introduce an advertising-supported tier and crack down on password sharing to regain its position in the streaming wars.
- AMC Theaters, initially struggling, was saved by the 2021 'APE' meme movement and plans to expand beyond being a pure movie theater play.
- AMC has a long history in the industry and has implemented seating innovations, loyalty programs, and investments in theater renovations.
- The COVID-19 pandemic led to the closure of AMC and other theater chains in 2020.
The Evolution and Challenges of YouTube
- Legacy streamers like Netflix, Amazon, and Hulu have been joined by new players like Disney+, Apple TV+, HBO Max, Peacock, and Paramount Plus.
- Different streaming services have tested various business models, such as premier access and simultaneous streaming and theatrical releases.
- The theatrical window for movies has decreased from 90 days to 45 days, impacting smaller theater chains.
- Around 1000 screens out of 42,000 closed in 2021, affecting smaller and art house theaters.
- Box office revenues nearly doubled in 2021, signaling a return of the movie theater experience.
- Audiences are ready to come back to the movies, with a 35% increase in attendance in July 2019.
- Business models for streamers like Disney+ and HBO Max are now focusing on theatrical releases.
- Studios will produce more content and determine whether it belongs on streaming platforms or in theaters based on audience preferences.
- AMC Entertainment is expanding beyond being a movie theater operator, investing in a gold mine and launching a retail popcorn and concessions business.
- In Q2 of 2022, AMC earned nearly $1.2 billion in revenue, showing significant growth compared to previous years.
- AMC announced the creation of $517 million in preferred APE shares with the same voting rights as common stock, ensuring financial flexibility.
- Theaters are still crucial for streaming services as they need audiences to return to theaters first.
- YouTube is a dominant force, representing over 20% of time spent on connected television.
- With over 500 hours of video uploaded every minute and 1,000,000,000 hours watched daily, YouTube is the world's second largest search engine.
YouTube's Position in the Digital Landscape and Competition from TikTok
- YouTube has the authority to terminate and suspend channels at their discretion.
- Compared to other social media platforms, YouTube is known for its swift response to controversies.
- YouTube faces competition from social media giants like Facebook, TikTok, and SNAP, as well as streaming services like Netflix, Amazon, and Disney+.
- YouTube dominates 70% of the total time spent watching top entertainment apps on mobile.