Netflix Has Started A War With Its Suppliers

The battle for peak TV has just begun

Netflix ended the quarter with a cliffhanger. Well, not really. They just fell off a cliff. International growth stalled and they lost a net 130,000 subscribers in the US.

So according to Hastings, people just didn’t like their shows. Which makes sense, I didn’t watch anything notable on Netflix besides Our Planet. But his statement contains a contradiction. If shows are what matter, then of course competition is a factor.

It’s not like people stopped watching TV. We watched Game Of Thrones (HBO), Chernobyl (HBO) and Good Omens (Amazon). They just weren’t on Netflix. If that’s not competition, I don’t know what is.

Hastings said the competitive landscape hasn’t changed, and that may be narrowly true for Q1. Right now Netflix is only fighting on one front — mostly against direct competitors and also HBO. Over the rest of the year, however, a whole new front is opening in the video wars.

Netflix is going to war with its suppliers.

Netflix began as a mail-order DVD store. A distributor. Then it began streaming. Still a distributor.

Then, in 2013, they did something revolutionary. They began producing their own content, starting with House Of Cards, then accelerating towards $15 billion dollars this year. This is a bit like a drug dealer cutting off their supplier and going straight to Columbia. It’s prone to start wars.

There must have been a lot of board meetings at Disney and NBC in 2013, wondering what the hell was going on. This is how Hastings described the journey, and where they ended up:

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