Competition in global video on demand service or Over the top (OTT) media service markets intensifies. Netflix, which has been a leader in this market, is about to lose its status.
Netflix’s market share in the U.S. OTT market will fall to 87 percent in 2019. Down from 90 percent in 2014, according to a recent Netflix Subscriber Analysis Report published by eMarketer. It is an analysis firm affiliated with German media company Axel Springer. The report forecast that Netflix’s OTT market share will fall to 86.3 percent in 2023.
The biggest reason is that companies with strong content are jumping into the OTT business. In addition to existing OTT service providers such as Hulu, Amazon Prime, HBONow and Sling TV, rivals such as Disney+ and Apple TV are expected to launch services this year.
“Netflix has to compete with very strong competitors and viewers for many years,” said Eric Haggstrom. As an e-marketer who conducted the analysis, he has a lot to say for the American company. “There are no strong competitors among them that can be called ‘Netflix Killer’. But this would be threatening if Disney+, Hulu and ESPN+ are served together.”
Threatening competitors but helplessness clouds over Netflix to boost up market share
Another reason for the erosion of market share was the fact that Netflix can hardly do anything other than a bleeding response. Which places prices low on such competitors’ challenges. Instead, the company spends very much on its original content.
In fact, Netflix said in its second-quarter earnings report that the number of subscribers has declined for the first time in the past decade. In the second quarter, 2.7 million new subscribers came in, only about half of the 5 million they expected.
Since then, Netflix shares have fallen around 23 percent. Just two years ago, people like Scott Galloway expected Netflix to become the next IT company. As a professor at the Stern School of Business at New York University, he estimated more than $300 billion worth of business value after Apple. And now Netflix’s market capitalization stands at around $150 billion.
Worse, Disney+ has hold of the most popular contents in Netflix. Including movies and series from Disney itself, 21st Century Fox and above all, Marvel. Original content might not be enough for Netflix to boost up its market share. As Disney+, along with Marvel, has scheduled a chain of Marvel Cinematic Universe for the next two years.