Disney Tried to Buy Netflix the other day. Deal fell through. Now I texted my Broker SELL ALL NETFLIX STOCK ASAP tommrow. The Stock Is gonna drop.
Count the steps in 2 years Max 4 Years time.
#1. Try to buy Netflix (failed)
#2. Pull your content from Netflix
#3. Get all your Media Buddies to pull their content also.
#4. Buy a weak devalued Netflix for Peanuts in 2 years.
#5. Put all your Content back On Netflix and charge Your Media palls a fee to put their content on Netflix.
Now Disney Owns the Cable of the Internet by 2020
Or, just roll your own and keep your peanuts too. Would anyone argue that Disney as a brand is NOT at least as well known as Netflix? If things would go as you suggest, the Netflix brand would be damaged, ultimately associated with the cheapest remaining content that it still can afford to show after #2 & #3.
Netflix also has the long term associations with "cheap" or "cheapest." When they tried to raise their price even $1 per month, there was significant backlash. If I'm Disney (or many others), why do I want to own that brand? If I buy it and want what I perceive to be "fair" price for my content now added back to it (#5), I'm probably jacking the price to $15-$20/month minimum (especially if other Studios are drawn back in and looking for a slice too). Could any remaining Netflix loyalty tolerate the price doubling or more? Especially after #2 & #3 for some period of time?
Or again, I just use my own, very-well-known brand and roll it out at whatever price I want and nobody is surprised that I want an HBO-like premium for my very popular catalog of content.
An aside: I perceive this is the very same issue that conflicts with the fantasy of Apple "just buying Netflix." Why does Apple want Netflix? If Apple gets in the game, they'll want their Apple margin. Netflix pricing won't support that. So an Apple Netflix is probably a much higher priced Netflix. Or Apple can try to get the content owners to give them a fat discount to fit the Apple margin into current Netflix prices. But what would that do? More of what is happening with Netflix now. Content owners already wanting "more money" defect to other services that will pay up or roll their own (where they can get 100% of the revenues for their content).
The main issue with Netflix is that they are somewhat married to dirt cheap monthly pricing. Netflix did a great job over a long time of associating "$8" with their brand. Now the playing field is evolving where as little as a single traditional channel thinks they can get $6/month for just their portion of all programming. Many others are following (some are leading). What Netflix needs is an ability to RAISE monthly pricing so that it can be top bidder for desirable content. But big chunks of it's base freaks at even a $1/month increase. That collision can't end well. Either Netflix has got to be able to get more money out of us consumers OR those with desirable content are going to take it elsewhere where they can get paid what they believe it is worth.
It seems the only way Netflix "wins" this battle is if the masses refuse to pay more for content. However, the masses have already shown they'll pay a lot more to stream select content via other offerings on the market. If I'm Netflix, I'm probably thinking about more tiers of service, where I can keep an <$10 tier for the price sensitive but have an over and probably well-over $10 tiers in which more expensive content is made available... just like classic bronze, silver, gold tiers of cable, which existed in part for the very same issue.
Else, expect other desirable content to leave Netflix for greener pastures. More simply: Netflix must pay up or watch desirable content go elsewhere. Where does Netflix get the money to pay up? For long-term viability, it has to come from us consumers via higher pricing.