![]() Then another competitor, a rich fellow named Jeff Bezos, shows up across the street. And now he's telling your mahogany supplier that he'll pay 50 percent more for the same wood. The unfair fightīut after a while, Reed decides to get into the furniture manufacturing business, too. But the media giants can no longer afford to wait and find out. There's no guarantee Netflix can keep up its big spending without seeing its stock fall back to Earth. We knew we had to disrupt, including disrupting ourselves, or someone else would do it." "We studied AOL and Blockbuster as cautionary tales. "Reed brought 25 or 30 of us together, and we discussed the book," Rothstein said of an executive retreat he remembered nearly a decade ago. By the time the old guard wakes up, it's too late. Over time, the newcomer adds features and builds customer loyalty until it's just as good or better than the incumbent's product. That book, often cited in tech circles, explains how disruptive businesses often start off as cheaper alternatives with lesser functionality, making it difficult for big incumbents to respond without cannibalizing their cash-rich businesses. That's because Hastings bought into the fundamental principle of "The Innovator's Dilemma," the 1997 business strategy book by Harvard Business School professor Clayton Christensen. Hastings has never really feared legacy media, said Neil Rothstein, who worked at Netflix from 2001 to 2012 and eventually ran digital global advertising for the company. While traditional media is racing to catch up, Netflix CEO Reed Hastings is not looking back at the runners he's passed. "The consumer wants great breadth and amazing personalization so they can find something in 30 seconds instead of five minutes." "The consumer doesn't want 100 direct-to-consumer services," he said. Disney is debuting its streaming service next year. Discovery is also pondering its own OTT service, potentially with a global technology company, said other sources. content, according to people familiar with the matter. Comcast, which owns CNBC parent NBCUniversal, has had preliminary talks with AT&T to start an over-the-top digital streaming service with NBCUniversal and Warner Bros. So legacy giants are now beginning to contemplate how to beat Netflix at its own game. "The strategic question is, 'what type of business do I want to be in the next five or 10 years?'" "Not everybody's going to get big," Wells said in an interview. The success of Netflix in the market is why we're seeing "the greatest rearranging of the media industry chessboard in history," according to BTIG media analyst Rich Greenfield.īut chasing scale isn't the answer for every media company, according to Netflix CFO David Wells. It has let Netflix strike deals with everyone from David Letterman to Ryan Murphy to Barack Obama.Īnd the more Netflix spends, the more investors cheer. That dynamic has persuaded investors to believe in Netflix's high-risk business model of running cash-flow negative to outspend traditional media companies for content. Netflix gained 92 million customers in the last five years while the number of people who pay for cable declines year after year. See also: Reed Hastings won by studying Amazon - then running in the opposite directionĬonsumers seem to agree. The 21-year-old company that was once best known for killing DVD rental giant Blockbuster has pivoted its entire business around the idea that streaming video delivered over the internet will replace the linear TV. ![]() Even the internet in general.īut executives at most traditional media companies agree that Netflix, if not directly responsible, is at least holding the murder weapon. Their CEOs won't say it publicly, but they're saying it privately: The pay-TV bundle, the lifeblood of the U.S. There's been a drastic change among legacy media company executives the last two years. ![]() Lionsgate completed its $4.4 billion deal purchase of Starz in December. Discovery closed a $14.6 billion acquisition for Scripps Networks in March. Viacom and CBS continue to dance around merging. Those two deals together could total $100 billion when the bidding is done. It has also outbid Fox for the remaining 61 percent of European pay-TV provider Sky. Personal Loans for 670 Credit Score or LowerĬomcast plans to crash that deal with a higher offer. Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit ![]()
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