Netflix isn’t impressed with any of the media companies it can buy


Several large entertainment companies are teaming up with competitors to make themselves more attractive to customers. Netflix, however, is not one of those companies. The streaming giant says it’s pretty appealing on its own.

In May, WarnerMedia and Discovery announced their intention to merge. A week later, Amazon said it wanted to buy Hollywood studio MGM to bolster its streaming service. These pending deals kicked off a new wave of media consolidation, following Disney’s purchase of the entertainment assets of Fox and the merger of CBS and Viacom in 2019.

Netflix doesn’t seem to be threatened by any of this. “We don’t think this consolidation has affected our growth much, if at all,” the company said in an investor letter (pdf) on July 20, as part of its second quarter earnings report. “As we continually assess opportunities, we don’t see any asset as ‘must-have’ and we haven’t yet found one on a large scale convincing enough to act. “

Burn. Experts have suggested that Netflix could buy a media asset as big as Sony Pictures, or as small as A24, the best-known Oscar-winning boutique film studio. The streaming service has nearly $ 10 billion in cash, more than the total value of many assets that would be for sale. But he doesn’t need it right now. After conquering much of the US market, Netflix is ​​expanding rapidly to other parts of the world like Asia and Latin America, making it the world’s largest streaming service with 210 million subscribers in the world.

Netflix wins the streaming war

Netflix, which launched its national streaming service in 2007 and expanded internationally in 2011, has taken a big lead in the streaming war by being the first to hit the market. Much of the media consolidation has happened specifically to compete with it. But Netflix doesn’t believe rivals’ mergers will erode their substantial lead. Its closest competitor, Disney +, has around 110 million subscribers (although it launched just two years ago).

“Disney’s purchase of Fox has helped Disney become more of a general entertainment service, rather than just a kid and their family. [service]”Netflix Co-CEO Reed Hastings said on today’s earnings call.” WarnerMedia-Discovery, if it comes to fruition, it helps some, but it’s not as important that I would say Disney-Fox. For the other three, how they combine or not combine, or how they will work, it’s not clear.

Ted Sarandos, head of content for Netflix and other co-CEOs, added that mergers like the ones in question won’t necessarily amount to something more than the sum of their parts. “When these consolidations one and one equal three, or one and one equal four?” He asked rhetorically. “Most of them tend to be one and one equals two.”

Still, there is new pressure on Netflix to keep growing. He actually lost 400,000 subscribers in the United States this quarter, the first time since 2019. It added just about 1.5 million subscribers globally, one of its slowest growth quarters in a decade. The company attributed this to the “pull-forward” effect of all consumers who signed up for the service at the start of the pandemic, pushing potential new customers away from the current growth. Netflix also said its content pipeline was lighter than usual again, in part due to production delays linked to the pandemic.

To counter the slowing growth, Netflix has confirmed reports that it will add games to its subscription service at no additional cost to consumers. Games, as well as other businesses that Netflix continues to be involved in, such as consumer products, are not designed to be profitable on their own. Instead, they’re meant to make Netflix’s core product more appealing to potential subscribers and more important to those who are already subscribers.

Netflix expects a better second half, as new seasons of some of its blockbuster movies like The witcher back to service. But after a disappointing quarter or two, the company may have to start seriously considering the idea of ​​joining the consolidation group.

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