In the entertainment wars, billions of dollars are being torched. Someone will get hurt
buy Netflix? Speculation on the matter has risen in line with the streaming giant’s own ascent in the past decade. Apple, with its cash hoard, was a frequently rumoured suitor. Or perhaps Amazon, or big distributors likeor Comcast. At one point, industry sources say, Bob Iger of Disney directly asked Reed Hastings, the boss of Netflix, if he would welcome an offer .
Instead all six companies embarked on a series of massive investments that will reshape the landscape of media: who makes entertainment and how people consume it. Since June, Comcast and Disney have spent $215bn in total on acquisitions of, respectively, Time Warner , Sky, a European broadcaster , and much of 21st Century Fox . Each is preparing new streaming services that will launch by early 2020.
The firms are chasing the same prize: recurring revenue from video subscriptions by tens of millions of Americans and, potentially, hundreds of millions of international viewers. It is unclear how many of them can thrive at the same time. More than two, analysts reckon, but not all six. There are only so many $10 monthly subscriptions people will pay for.
For the tech giants, video is a way to lure customers into their online emporiums. Amazon, with 100m Prime households, is ahead of Apple for now. But Applecan push its glitzy new shows to the world’s 1.4bn iDevices. Apple and Amazon have deeper pockets than, Comcast or Disney, so can afford to pour billions annually into streaming-video for years to come. Their platforms are perfect for selling online services including video.
Then there is Netflix. Its head start puts it in a strong position. Its algorithms work out what viewers want and it has the infrastructure to deliver it to ever more people. A recession or rising interest rates could hurt its ability to borrow—Netflix has more than $10bn in debt and burns through $3bn of cash a year. But its lead is such that it could curtail spending on content and still stay ahead of competitors.and Disney face a more complicated challenge.
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