The cracks are evident in Netflix’s global dominance.
Netflix is still the king of streaming video, but audiences are slowly shifting to new rivals, namely Disney + the Walt Disney Company, according to research by Parrot Analytics.
Netflix’s share of global demand interest – a measure of the popularity of its Parrot-created shows and a key barometer of how many new subscribers a streaming service is likely to attract – fell below 50 percent for the first time in the second quarter of the year.
The “lack of new hit original programming from the company and increased competition from other streamers will ultimately have a negative impact on subscriber growth and retention,” Parrot said in a press release.
The company announced Tuesday that it added 1.5 million new subscribers in the second quarter of the year, surpassing the low bar it set when it told Wall Street it would only add a million.
The company expects to add about 3.5 million new subscribers in the third quarter, less than what investors were expecting about 5.5 million. In after-hours trading, the shares fell by up to 4 percent.
Netflix relies on creating as many different shows and movies for as many different viewers as possible, and the pandemic has messed up that formula and forced productions to be suspended around the world.
Disney + more than doubled its share of demand interest in the second quarter compared to last year, and according to Parrot, Amazon Prime Video, AppleTV + and HBO Max are also winning.
Even as newer entrants have lost the long-standing grip of Netflix, Netflix’s co-head Reed Hastings has dismissed the competition as a contender for the Netflix throne. After being asked by investors in April why the company missed its expectations of new customer acquisition in the first quarter, Mr. Hastings said, “Of course we ask ourselves, ‘Well, wait a minute, we’re sure we haven’t is? Competition?'”
“We really went through all the data and looked at different regions where new competitors are coming in but not coming in,” he continued. “And we just can’t see any difference in our relative growth in these regions, which makes us confident.”
“We’ve been competing with Amazon Prime for 13 years and Hulu for 14 years,” he added. “Even with linear television, it has always been very competitive. So there is no real change that we can see in the competitive environment. It has always been high and remains high. “
In other words, if Disney + hurts us, we haven’t seen it.
The argument that Netflix has long competed with regular TV and other streamers overlooks the fact that new competitors like Disney + and AppleTV + are significantly cheaper than Netflix (and pay TV). And while these services produce far fewer originals than Netflix, they seem to be getting more for their money.
In the second quarter, Disney + received a big boost in demand from “The Falcon and the Winter Soldier,” a series based on the Marvel Cinematic Universe that has thoroughly dominated the box office in recent years. Another Marvel spin-off, Loki, also helped, according to Parrot.
Amazon Prime Video got a boost in time with the release of “Invincible,” an animated superhero series for adults. And AppleTV + has attracted new customers with a trio of originals: Mosquito Coast, a drama based on the 1981 novel; “For All Mankind,” a science fiction series, and “Mythic Quest,” a comedy series set in a game development studio.
Speaking of which, Netflix said this month it was planning to jump into video games. It has hired a gaming manager, Mike Verdu, formerly at Electronic Arts and Facebook, to oversee the development of new games. It’s a potentially significant move for the company that hasn’t strayed far from its TV series and movie formula.