In 2013, a top executive at Netflix famously announced that the company’s ambition was to “become HBO faster than HBO can become us.” The declaration made headlines at the time for its audacity: Netflix was gunning for the king of premium television.
Not only is Netflix increasingly dealing with rivals emerging from almost every corner these days, with a handful of new streaming video operations launching over the next year or so backed by deep-pocketed corporate parents, but establishment players also keep dogging the streaming giant with negative comments about the way it does business. And about the way Netflix is regarded by the general public and entertainment industry alike.
Word emerged in recent days, for example, that director Steven Spielberg is trying to convince his fellow members of the Academy of Motion Picture Arts & Sciences to get on board with a recommended rules change that would box Netflix out of the Oscars. By way of explaining his position, Spielberg told ITV that streamers like Netflix should be eligible for Emmys, not Oscars. “Once you commit to a television format, you’re a TV movie. If it’s a good show, you deserve an Emmy. But not an Oscar.”
Meanwhile, there are major changes under way over at one of Netflix’s buzziest rivals. HBO, which is a little more than a month away from airing the much-anticipated final season of Game of Thrones, recently saw the departure of Richard Plepler — the network’s longtime CEO who led the network through an insanely successful three-decade ascension to the pinnacle of television entertainment.
Former NBC executive Bob Greenblatt was recently installed as the new chief of AT&T’s direct-to-consumer business as well as WarnerMedia Entertainment (which HBO falls under), and he just gave an interview to NBC that hints at his ambitions for his organization’s streaming efforts. He also shared some thoughts about Netflix, still the king of the streaming video hill for now.
“Netflix doesn’t have a brand,” Greenblatt said of his rival. “It’s just a place you go to get anything — it’s like Encyclopedia Britannica. That’s a great business model when you’re trying to reach as many people on the planet as you can.”
He’s essentially trying to separate HBO from a streamer like Netflix that, apparently, he thinks tries to be all things to all people. A mass offering, like McDonald’s or Walmart. The other telling comment Greenblatt shared came by way of singling out some Netflix titles by name, offering them praise while in the same breath hinting that HBO — the home of dark, but incredibly popular, fare, ranging from The Sopranos to GoT — may try to go more mass market.
“I liked Jack Ryan as a show,” he said about the Amazon version of Tom Clancy’s popular series of books. And then he continues with a few other Netflix titles: “…The Bodyguard … Russian Doll … the Aziz Ansari Show … The Good Place … This Is Us … There are all kinds of things that are exciting. It’s just got to be really quality. It doesn’t have to be the usual kind of dark show that we think of as premium television.”
How well he and the rest of the WarnerMedia team can walk that fine line, while letting HBO continue to pursue the kinds of great projects that got the network to this point in the first place, will be interesting to watch. It’s certainly fraught with peril, one of the dangers being a potentially watering down of HBO content or of tipping the scales too far in the direction of quantity over quality.
About that last point, though, Greenblatt says the company is committed to quality and very much wants to be associated with the premium branding that he argues eludes a service like Netflix.
“This is a company that really wants this media company to grow and prosper,” he told NBC about HBO’s new corporate parent. “Maybe they want to do it a little more efficiently… but they’re not saying let’s undo HBO.”
But now it seems Netflix has identified an even bigger rival: the massively popular video game Fortnite.
The online shooter accounts for an enormous amount of consumers’ screen time, Netflix said in a shareholder letter Thursday, making it a formidable foe in the global war for Internet users’ attention.
“We earn consumer screen time, both mobile and television, away from a very broad set of competitors,” Netflix said in the letter. “We compete with (and lose to) Fortnite more than HBO . . . There are thousands of competitors in this highly-fragmented market vying to entertain consumers.”
Netflix’s decision to name-check Fortnite reflects the game’s ever-growing popularity. It boasts over 200 million registered users, and some 80 million log in to play each month, according to publisher Epic Games. Thanks to an engaging combination of reward mechanics, social communication and ease of entry — the game’s competitive mode is free to play — Fortnite soared to fresh heights last year, helping Epic earn a reported $3 billion in profit.
Epic wants to translate that success into an even bigger opportunity to hook Internet users — by building its own app and game store that undercuts the likes of Apple and Google.
For now, Netflix’s chief near-term threat remains other major TV content companies. As firms such as Disney pull their content off Netflix ahead of launching their own exclusive streaming video apps, Netflix will face pressure to defend its subscriber base — the only way the company makes money. In its earnings report Thursday, Netflix said it added modestly to its audience, drawing in 1.5 million users in the United States and 7.3 million internationally.
But Netflix’s nod of respect to Fortnite is also a recognition of how significantly Netflix’s horizons have expanded.
Ever since its humble days slinging DVDs to customers through the mail, Netflix has been a video company. Even now, as it pours billions into streaming content, Netflix restricts itself to displaying films and TV shows. But as it’s evolved, Netflix has also come to appreciate that there are only so many hours in the day — meaning only so much screen time consumers have to devote to entertainment.
That puts it on a collision course with other digital media: not just YouTube or Hulu, but podcasts, blogs and, yes, video games.
Netflix shares dropped about 4 percent in regular trading Friday after a mixed earnings report Thursday night. The company said it added 8.8 million subscribers, slightly higher than many analyst estimates of about 8 million. But its revenues were slightly below analyst expectations, coming in at $4.19 billion compared to consensus projections of $4.21 billion.