In Focus: Netflix Home of Viral Hits
We have a terrible obsession with new. We want new, we crave new, we seek out new. Once we find new we champion it before we even know what it is. It's new, and all we think we need is something new.
New usually causes old to overreact. New causes old to take chances normally ignored, and swing at pitches way out of their zone. Then those overreactions, those chances, those swings out of the zone that don't connect turn old into irrelevant.
Netflix (NFLX) should be applauded for not doing what old companies do. No overreaction, no crazy changes, no swings at pitches outside the zone, they continued doing what they were doing, and put the pressure on the new companies entering the streaming world.
But that's not how the story was told several months ago. As we ended 2019 it was Netflix that needed to do something different to match Disney Plus (DIS), Apple TV Plus (AAPL) and eventually HBO Max (T). Even I wrote a piece explaining why it would be smart for Netflix to acquire a music streaming service.
Disney Plus debuted in the U.S.on November 12, 2019 and has given the world one viral moment since it's debut. Baby Yoda dominated social media for weeks, pressuring anyone who didn't instantly subscribe to Disney Plus to subscribe in order to understand what the fuss was about. Baby Yoda worked phenomenally, and Disney Plus was able to gain 28.6 million subscribers by February. But now what?
In a conversation with several friends a little over a month ago, one mentioned that they hadn't logged into Disney Plus since the ending of The Mandalorian. Disney Plus hasn't been able to release anything else that can captivate an adult audience. Since the end of The Mandalorian there have been no viral moments for Disney Plus, no conversation starters, nothing that provides the company with millions of dollars of free advertising.
Netflix on the other hand didn't flinch on the creation of Disney Plus, they just kept throwing spaghetti at the wall, waiting for a noodle to stick, which sounds more demeaning than it is. Throwing spaghetti has been the Netflix business model since it started creating its own content, and it's the only business model that I could see working when there are so many different tastes to please.
While we've been locked down and practicing social distancing Netflix released another viral hit, the Tiger King. With an IMDB rating of 8/10 and a Rotten Tomato score of 92%, it's safe to say people love the Tiger King. (No spoilers ahead, I promise)
The documentary has spawned so many memes, so many conversations, so many articles, and so many phone calls to the Hillsborough County Sheriff's Department. It has been the type of exposure that money can't buy. More importantly it's been what Netflix has always done, green light lots of content, put it out there, and let the people decide. No overreactions to Disney Plus, no crazy changes or acquisitions, and no swings at pitches out of the zone.
Slow and steady always wins the race in the long run. Even when analysts presumed that Netflix lost over 1 million subscribers to Disney Plus, Netflix didn't flinch and it paid off. In the fourth quarter of 2019 Netflix added 8.8 million subscribers despite competition from Disney and Apple's streaming services.
From the time Disney announced Disney Plus, November 8, 2018 to the date Disney Plus went live, November 12, 2019, Netflix lost ~8% of its value. Since Disney Plus' debut Netflix has gained ~14% in value, which isn't bad for a company that was going to be replaced by the new streaming service and left for dead.
With the Tiger King, Netflix has proven again that it can make captivating entertainment, it can make viral entertainment, and it can compete and win against Disney, AT&T, and others.
Netflix remains my long-term winner of the streaming wars because of their ability to make interesting and entertaining content. The pressure is on Disney, Apple, and AT&T to prove that they are on Netflix's level.