Netflix was the main contributor to the “cord cutting” movement in which households opted to end their cable subscriptions to rely solely on much cheaper streaming services. This has worked out great for Netflix as their stock has increased 8,000 % since 2009, but according to one top stock analyst, the end may be near for the streaming giant.
Stephen McBride, a chief analyst at RiskHedge, certainly seems to think Netflix is hemorrhaging too much money too quickly to be able to carry on. In a self-written article on Forbes, McBride explained that when Netflix made it big, it really hurt the “The Big Three” television networks (ABC, CBS, and NBC).
Netflix was an entity that became the provider to 35 million Americans after they ditched cable. As successful as Netflix has become, they always lacked one common denominator — original programs.
The juggernaut HBO, for instance, creates their own programs such as the recently ended Game of Thrones series, which garnered 19 million views, according to USA Today. In 2013, Netflix finally dipped their foot in that same pond, creating their first self-created program with the critically acclaimed “House of Cards”.
Slowly, but surely, Netflix continued to make original programs. According to McBride, Netflix created 88 percent more original shows than they did last year, a move that has put the company in enormous debt.
In 2018 alone, Netflix spent 12 billion to create these original programs with many of them being praised and earning awards. Currently, Netflix owes $10.4 billion to creditors, and this number will continue to grow as they plan to produce more shows than the year prior.
While all this is happening, Disney, who owns sports network ESPN and ABC News, announced their streaming services at half the price of Netflix’s subscription fee. Disney+ will only cost $6.99 a month and will be released Nov. 12th, 2019.
Netflix could be concerned about this competitor’s price point, but they should also focus on the fact that they are about to lose a ton of successful content to Disney’s streaming service in the next 175 days.
Disney announced they will be pulling all its owned content such as Marvel, Pixar Animations, Star Wars, ESPN and The Simpsons from other streaming services and consolidating them all on Disney+.
To make matters more pressing for Netflix, Disney also owns 60 percent of Hulu, which has been Netflix’s biggest competitor. At such a low installment fee, parents will likely sign up in droves so their children can watch the latest Pixar movie, and dads will come over for the sporting events.
Netflix may have an expiration date — and it may be sooner than anyone originally thought.