Netflix post pandemic risk materialized in Amazon and Disney
Diupdate
The news from Netflix this morning should not be a surprise to anyone, the company's executives had expressed two years ago during the peak of the pandemic that conditions were as good as they would get. With an increasing number of competitors coming under their skirt, Netflix is now reverting to the mean.
It would appear the third generation rule might be validating itself, as Netflix was the innovator and paved the way for other well-capitalized and more diversified competitors such as #AmazonPrime and #DisneyPlus the latter which has been punished for pushing radical progressive policies.
The key difference between Netflix and Disney is a multi-generational all-American brand, it is well entrenched in the global culture and has a massive war chest from diversified physical operations, cruise ships, music parks, and royalties across other entertainment segments.
Amazon has clearly a massive advantage being the owner of the largest cloud service AWS which in fact is used by Netflix for their operations. In essence, you can argue that Netflix is subsidizing Amazon Prime via operating expenses at USD6B. Amazon Prime asymmetric advantages combined with the largest capital reserves from the largest online store, placing Netflix at the mercy of AWS.
In fact, we forecast that Netflix revenues and cash flows will continue to deteriorate to the point of no return within the next 24 months, placing itself as a target for Amazon.
It would appear the third generation rule might be validating itself, as Netflix was the innovator and paved the way for other well-capitalized and more diversified competitors such as #AmazonPrime and #DisneyPlus the latter which has been punished for pushing radical progressive policies.
The key difference between Netflix and Disney is a multi-generational all-American brand, it is well entrenched in the global culture and has a massive war chest from diversified physical operations, cruise ships, music parks, and royalties across other entertainment segments.
Amazon has clearly a massive advantage being the owner of the largest cloud service AWS which in fact is used by Netflix for their operations. In essence, you can argue that Netflix is subsidizing Amazon Prime via operating expenses at USD6B. Amazon Prime asymmetric advantages combined with the largest capital reserves from the largest online store, placing Netflix at the mercy of AWS.
In fact, we forecast that Netflix revenues and cash flows will continue to deteriorate to the point of no return within the next 24 months, placing itself as a target for Amazon.
Catatan
Some ideas to consider by the board and management to reverse the current trends are:1-Allocate CAPEX to develop it own cloud infrastructure to stop bleeding 1/3 of the revenues to support the competition
2-Create a tiered service subscription model to cater to different clients individual for less and families for more, etc.
3-Diversify into other areas of virtual entertainment gaming being the logic choice, where they can leverage their business model, and new cloud infrastructure.
4-Remove any content alienating the core customer base 90% by favoring small minorities >5%.
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