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Netflix: rise, fall and recovery

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During the first two quarters of 2022, Netflix lost millions of subscribers, revenue and profit declined and its share price and market capitalization deteriorated. Deanna Kathleen de Zilwa discusses how and why a company with such a strong track record as Netflix can experience this crisis and, most importantly, how it overcame the crisis and returned to growth.

Image courtesy of interviewee. April 12, 2024

Generating Workspace

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This video video discusses Netflix's evolution as a leader in the Subscription Video on Demand (SVOD) industry. Founded in 1997 as a DVD rental service, Netflix transitioned to streaming in 2007 and now operates in 190 countries, offering a wide range of genres in multiple languages. The discussion highlights Netflix's growth during the 2020-2023 period, especially the surge in subscriptions during the pandemic lockdowns, followed by a significant decline in subscribers and stock value in 2022 as audiences returned to normal life.

This video video explores Netflix’s recovery strategies, including the introduction of an advertising tier—a shift from CEO Reed Hastings's previous opposition to advertising. Netflix implemented this by partnering with Microsoft and also capitalized on account sharing by monetizing it, which could generate substantial additional revenue. Furthermore, Netflix has ventured into mobile gaming, recognizing the industry's potential.

Challenges facing Netflix include intensified competition from other streaming services and shifts in viewership habits among younger generations who prefer user-generated and mobile content over traditional TV and films. There's also a prediction that mergers and acquisitions may occur in the industry, particularly as Netflix approaches saturation in established markets and seeks to expand into emerging ones. This video video concludes by emphasizing the importance of continuing to study and understand the dynamics of the streaming industry.

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X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

00:00.075 --> 00:03.125
Netflix is known as the first mover in

00:03.155 --> 00:06.805
what is called the SVOD industry, which stands for

00:07.485 --> 00:10.005
subscription video on demand industry.

00:10.465 --> 00:14.085
And as the first mover, it has become the market leader.

00:14.505 --> 00:19.045
Um, it was founded in 1997 as a DVD rental company,

00:19.425 --> 00:21.085
in the United States,

00:21.505 --> 00:23.845
but it has now spread its footprint globally.

00:24.625 --> 00:28.925
And, since 2007, it has been streaming entertainment,

00:29.265 --> 00:32.325
TV shows and movies available,

00:32.665 --> 00:34.405
on internet enabled devices.

00:34.745 --> 00:39.565
So smart TVs, desktops, iPads,

00:39.785 --> 00:42.965
smartphones, gaming consoles as well.

00:44.145 --> 00:45.395
They rose very quickly

00:45.655 --> 00:48.555
and I would identify, a couple of factors

00:48.695 --> 00:51.115
as being responsible for their rise.

00:51.335 --> 00:54.955
One of them is that, technological, capacities,

00:54.955 --> 00:59.155
their innovative capacities right from the early foundation,

00:59.785 --> 01:03.235
they have had an amazing algorithm, which has allowed them

01:03.535 --> 01:07.795
to gather data from users about users' preferences.

01:08.495 --> 01:11.875
And they've used this data to create customized,

01:11.895 --> 01:14.355
recommendations for individual users.

01:14.935 --> 01:18.035
So each individual user, when they log on to the Netflix

01:18.875 --> 01:21.955
platform, is actually getting a completely different,

01:22.985 --> 01:25.275
home screen to another user.

01:25.855 --> 01:29.035
So the other element of their, operations,

01:29.035 --> 01:32.115
which is being particularly innovative, is the breadth

01:32.115 --> 01:33.235
of their operations.

01:33.235 --> 01:35.995
They're in 190 countries around the globe,

01:36.495 --> 01:40.755
and the range of genres of their, TV programs

01:40.855 --> 01:44.715
and movies is extraordinary in many languages,

01:44.925 --> 01:48.515
reflecting many cultural, traditions and norms.

01:49.135 --> 01:53.315
And the genres that they cover are very, very wide.

01:53.535 --> 01:57.875
So animation, children's documentaries, crime action,

01:58.535 --> 02:00.035
romance.

02:01.055 --> 02:03.155
So there's something to appeal to everybody.

02:03.535 --> 02:07.275
So the study focuses, it's published, by Emerald,

02:07.455 --> 02:10.315
and the paper is called, Netflix Rise,

02:10.385 --> 02:11.395
fall and Recovery.

02:11.425 --> 02:14.075
It's available from the Journal of Business Strategy.

02:14.615 --> 02:18.595
So the study covers the three year period from 2020

02:18.775 --> 02:19.835
to 2023.

02:20.135 --> 02:23.515
So the first part of the study tracks their exponential

02:23.515 --> 02:25.235
growth trajectory during the first

02:25.255 --> 02:26.395
two years of the pandemic.

02:26.495 --> 02:29.875
And as everybody knows during that period of time,

02:30.305 --> 02:32.435
most cities in the world, governments

02:32.495 --> 02:34.875
before the vaccines were implemented,

02:35.455 --> 02:38.355
had stay in place orders, lockdowns,

02:38.355 --> 02:40.115
where people couldn't go to work

02:40.495 --> 02:41.995
unless they were essential workers.

02:42.175 --> 02:43.475
And so they were stuck at home.

02:43.575 --> 02:46.835
And so what they many people did then is they took out

02:46.835 --> 02:48.115
Netflix subscriptions.

02:48.775 --> 02:51.795
But then once the vaccine rollout, emerged

02:51.795 --> 02:53.715
around the first world in particular

02:54.015 --> 02:58.635
and businesses started to reopen, the decline came about in,

02:58.815 --> 03:01.405
Um, the first quarter of 2022

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when they lost first 200,000 subscribers.

03:06.025 --> 03:10.165
And then, the share price declined by 35%

03:10.505 --> 03:13.885
and $50 billion was wiped off the valuation of the company.

03:14.185 --> 03:18.325
The situation got worse in second quarter of 2022

03:18.955 --> 03:22.405
when, they lost almost a million subscribers

03:23.105 --> 03:27.845
and the share price declined, by,

03:29.095 --> 03:30.595
an almost 60%.

03:31.215 --> 03:34.515
And, the valuation was declined

03:34.515 --> 03:36.675
by a further $70 billion.

03:37.335 --> 03:41.075
Um, so it was an extraordinary severe decline.

03:41.335 --> 03:44.515
So what I found fascinating in the study was really focusing

03:44.515 --> 03:46.435
on how were they able to recover

03:47.105 --> 03:50.875
because, you know, it's, a lot of companies would've,

03:51.185 --> 03:53.995
been decimated by such a, you know, drastic

03:54.515 --> 03:56.275
reduction in their profitability,

03:56.375 --> 03:58.635
but Netflix was actually able to recover.

03:58.815 --> 04:00.995
So that's one of the other key things that I looked at.

04:01.415 --> 04:03.595
The methods, I'm a qualitative researcher,

04:03.595 --> 04:05.235
so it's a qualitative case study.

04:05.895 --> 04:08.635
And what I did, the primary source data is

04:08.635 --> 04:09.915
all publicly accessible.

04:10.295 --> 04:12.595
So from Netflix's own webpage,

04:12.595 --> 04:16.075
from its investor relations webpage, I accessed

04:16.185 --> 04:18.355
what are known as the earnings call transcripts.

04:18.855 --> 04:20.475
So there are 13 of those.

04:20.975 --> 04:23.315
So the transcripts actually come with a video.

04:23.575 --> 04:27.195
So, the methodology that I used was watching the video

04:27.495 --> 04:31.715
and analyzing what I saw in with the written transcript

04:32.175 --> 04:33.835
as well as the letters to shareholders.

04:33.935 --> 04:36.875
So there were 13, of those sets.

04:37.055 --> 04:40.235
And then the supplementary secondary data included,

04:40.915 --> 04:44.035
articles written by investment analysts by journalists,

04:44.375 --> 04:47.795
as well as, traditional academic journal articles

04:47.975 --> 04:49.395
and monographs as well.

04:49.775 --> 04:52.595
Um, there's some fascinating material which has been

04:52.595 --> 04:53.715
published,

04:53.715 --> 04:56.515
from the IT perspective talking about the actual,

04:56.575 --> 04:59.875
how the detailing, how the algorithm actually works.

05:00.455 --> 05:03.275
So it was a very large data set that I used.

05:03.675 --> 05:04.955
A lot of other executives in a lot

05:04.955 --> 05:07.835
of other companies would've said, you know,

05:08.305 --> 05:10.195
this will just fix itself naturally,

05:10.255 --> 05:11.475
we don't need to do anything.

05:12.175 --> 05:15.475
But the executives of Netflix took ownership

05:15.475 --> 05:16.475
of the situation

05:17.055 --> 05:19.235
and actually were prepared to reverse,

05:19.535 --> 05:21.435
decisions that they'd made.

05:21.575 --> 05:24.275
So there's a couple of factors that I identify as,

05:24.275 --> 05:26.595
being responsible for the turnaround.

05:27.255 --> 05:31.395
One of them was the implementation of an advertising,

05:31.615 --> 05:32.715
subscription.

05:33.375 --> 05:36.595
Now previously, Reed Hastings, who was the one

05:36.595 --> 05:37.995
of the founders of the company

05:38.095 --> 05:41.035
and the CEO of the company, had a longstanding position

05:41.495 --> 05:44.195
of being, against advertising.

05:44.335 --> 05:46.075
But when they lost so much revenue

05:46.455 --> 05:50.155
and the company was in severe, you know, dire straits,

05:50.155 --> 05:53.195
he decided that it would be worthwhile

05:53.555 --> 05:55.075
implementing advertising.

05:55.135 --> 05:58.405
And so they launched the advertising, tier

05:58.545 --> 06:01.965
of subscriptions, but they did it in a very, careful,

06:02.265 --> 06:04.645
the tactics they used were very careful and prudent.

06:05.115 --> 06:08.205
They partnered with Microsoft who had the

06:08.725 --> 06:10.805
existing technology and relationships

06:10.875 --> 06:12.645
with brands to do that.

06:12.985 --> 06:17.205
And so they were able to take this initiative from

06:17.915 --> 06:21.205
idea to implementation within a six month period.

06:21.505 --> 06:23.645
And it was such a sensible thing to do

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because it actually gave them an additional revenue stream.

06:26.865 --> 06:29.325
And then they followed that up by,

06:29.465 --> 06:33.085
in first world markets such as the USA Canada, uk,

06:33.145 --> 06:35.685
and Australia and a couple of other countries

06:36.405 --> 06:37.645
removing the basic tier.

06:37.945 --> 06:40.565
And so that tactically, that was a very clever move

06:40.675 --> 06:43.325
because it pushed those who were looking

06:43.385 --> 06:47.205
for a cheap subscription towards the advertising tier.

06:47.745 --> 06:50.285
So they were then getting revenue from two sources.

06:51.345 --> 06:53.925
The other factor that I'd identify is

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that they became aware, the executives became aware

06:56.645 --> 06:58.245
of the fact that there were up

06:58.245 --> 07:01.925
to a hundred million people accessing Netflix for free.

07:02.625 --> 07:05.805
And so they decided to monetize account sharing.

07:06.505 --> 07:08.125
And they, there again,

07:08.125 --> 07:12.765
their technological sophistication enabled them to use,

07:14.535 --> 07:18.885
techniques to actually, track the ID IP

07:19.105 --> 07:22.925
and, geolocate the devices location.

07:23.105 --> 07:27.205
And so, that, that then prompted users to enter a code.

07:27.465 --> 07:30.885
And through that they were actually able to identify

07:31.305 --> 07:32.565
who was sharing their account,

07:32.665 --> 07:34.845
and they then began to charge those people

07:35.145 --> 07:36.285
for sharing that account.

07:36.385 --> 07:38.765
And there's some research that's been done recently,

07:38.975 --> 07:41.405
which has indicated that this is potentially going

07:41.405 --> 07:45.405
to yield an additional 700 million over the next year.

07:45.905 --> 07:48.605
So that's another very, very significant factor.

07:49.105 --> 07:51.485
And the third factor is they introduced

07:51.835 --> 07:55.245
what is potentially going to be a very lucrative,

07:55.665 --> 07:56.845
revenue stream.

07:57.145 --> 07:59.565
So they went into mobile gaming.

08:00.065 --> 08:03.645
Now the mobile gaming industry is an enormously

08:04.245 --> 08:06.325
lucrative business, generating

08:06.505 --> 08:10.045
around 600 billion globally a year.

08:10.945 --> 08:14.405
And what they have done there, they purchased, they,

08:14.405 --> 08:18.245
they've made some very careful acquisitions of existing,

08:18.825 --> 08:19.965
gaming studios,

08:20.145 --> 08:23.485
and they also developed some in-house capacities themselves

08:23.785 --> 08:24.805
in that space.

08:25.865 --> 08:30.495
And to date, they haven't yet charged users

08:31.195 --> 08:32.575
for their mobile gaming.

08:33.235 --> 08:36.215
But when you review the earnings call transcripts,

08:36.365 --> 08:38.895
it's very clear that that is on the agenda

08:39.115 --> 08:41.375
and that will strengthen their strategic position

08:41.805 --> 08:44.135
because it will give them an additional

08:44.135 --> 08:45.575
supplementary revenue stream.

08:46.075 --> 08:50.375
The conclusions are that I think, as I identified,

08:50.605 --> 08:52.295
it's the flexibility, honesty,

08:52.295 --> 08:55.405
and integrity of the executives to,

08:55.705 --> 09:00.445
really address the crisis head on, and not try

09:00.585 --> 09:02.645
and deny responsibility for that.

09:03.185 --> 09:07.565
And also, acknowledging, that some

09:08.165 --> 09:10.125
tactics they wanted to use, such as the rollout

09:10.125 --> 09:14.085
of the advertising, they didn't have, the capacities

09:14.105 --> 09:17.005
to do that internally, so they formed partnerships.

09:17.545 --> 09:19.445
So this honesty

09:19.585 --> 09:22.925
and sensible decision making of, you know, knowing when

09:22.945 --> 09:24.325
to partner with somebody else.

09:25.105 --> 09:27.205
So, moving forward,

09:27.675 --> 09:32.205
because it is such a massive, industry,

09:32.505 --> 09:37.165
predictions are that, by 2029,

09:37.875 --> 09:42.645
it's expected to generate $429 billion

09:42.945 --> 09:46.085
of revenue by globally by 2029.

09:46.465 --> 09:49.805
And as I'm saying, it's a very, very hotly contested market.

09:50.345 --> 09:52.565
And I was thinking about two things

09:52.565 --> 09:53.685
that have happened recently.

09:54.105 --> 09:56.885
One of them, the competitors moving.

09:57.345 --> 10:01.045
So for instance, in the uk, over the first three months

10:01.065 --> 10:05.805
of the year, Disney, discounted its subscription to,

10:06.065 --> 10:07.405
one pound 99.

10:08.065 --> 10:11.565
And so Disney during that first quarter was actually able

10:11.625 --> 10:13.045
to outperform Netflix.

10:14.145 --> 10:17.685
And then, on a, on the other side of the world,

10:17.905 --> 10:21.285
in the United States, ESPN, which is actually owned

10:21.745 --> 10:25.365
by Disney, which is a massive global streaming service,

10:25.545 --> 10:30.125
has announced a partnership in February, 2024 with Fox

10:30.545 --> 10:34.285
and with, discovery, they're gonna create a new app

10:34.865 --> 10:38.685
and the, they have, the, the rights

10:38.945 --> 10:42.085
to stream the four major sports in the United States,

10:42.505 --> 10:45.005
so NFL, the football, NBA,

10:45.005 --> 10:47.765
the basketball, baseball and hockey.

10:47.945 --> 10:52.525
And they're also going to stream NASCAR Racing Plus,

10:53.025 --> 10:56.445
they're going to stream the FIFA World Cup

10:56.465 --> 10:59.165
and the next FIFA World Cup is coming up in 2026.

10:59.825 --> 11:02.965
So I identify the moves of competitors

11:03.665 --> 11:06.365
as being a major challenge for Netflix.

11:06.905 --> 11:09.925
And in addition to that, there's a demographic trend,

11:10.335 --> 11:12.405
which is actually a challenge for the company.

11:12.585 --> 11:14.245
And, and it's actually a challenge

11:14.305 --> 11:17.885
for all streaming services, and that is that Gen Z

11:17.945 --> 11:22.045
and millennials actually don't watch linear tv

11:22.945 --> 11:26.565
and their attendance at traditional films is actually

11:26.565 --> 11:27.765
quite small as well.

11:28.235 --> 11:32.765
They prefer, user generated content such as,

11:33.095 --> 11:36.285
short clips that are available on YouTube or TikTok.

11:36.785 --> 11:38.325
Um, they are

11:38.915 --> 11:42.605
very interested in streaming music on and,

11:42.665 --> 11:44.485
and podcasts on, on Spotify.

11:45.505 --> 11:49.205
And, they're also very keen on, gaming.

11:49.865 --> 11:52.845
So one of the big challenges for Netflix and

11:53.065 --> 11:56.205
For the other streaming companies is going to

11:56.795 --> 12:00.765
attract in the fir in the first place that, that, cohort

12:00.875 --> 12:03.925
that generation of people and then retain those people

12:04.115 --> 12:07.485
because to date they've sort of relied on older generations

12:07.485 --> 12:11.125
of people, baby boomers and Gen X.

12:11.705 --> 12:13.885
And once those people die, they're going to have

12:13.885 --> 12:16.445
to actually modify their business model,

12:17.025 --> 12:19.645
to capture that younger cohort.

12:20.225 --> 12:22.605
So that's one of their big challenges going forward.

12:23.065 --> 12:27.485
And I actually predict that there will be, some mergers

12:27.485 --> 12:29.805
and acquisitions within the industry space,

12:29.925 --> 12:32.845
because particularly in first world markets, I mean,

12:32.845 --> 12:35.845
they've almost, Netflix is in the United States has almost

12:35.845 --> 12:37.765
reached saturation point,

12:38.345 --> 12:42.525
and so they're gonna need to move into emerging markets,

12:42.905 --> 12:44.685
and they've faced challenges around that.

12:44.845 --> 12:47.685
I just looked at an article that was published yesterday

12:48.055 --> 12:52.045
where Thena Vietnamese government is challenging,

12:52.455 --> 12:55.245
their rollout of gaming within that country.

12:55.545 --> 12:59.885
So there are, it's a very evolving, very dynamic industry

13:00.265 --> 13:02.085
and there are lots of challenges in,

13:02.225 --> 13:03.285
in the future for Netflix.

13:03.665 --> 13:06.565
So yes, I would recommend anyone interested in it

13:06.565 --> 13:07.685
to keep studying it.

00:00 - Netflix is known as the first mover in what is called the SVOD industry, which stands for subscription video on demand industry. And as the first mover, it has become the market leader. it was founded in 1997 as a DVD rental company, in the United States,

00:21 - but it has now spread its footprint globally. And, since 2007, it has been streaming entertainment, TV shows and movies available, on internet enabled devices. So smart TVs, desktops, iPads, smartphones, gaming consoles as well. They rose very quickly and I would identify, a couple of factors as being responsible for their rise. One of them is that, technological, capacities,

00:54 - their innovative capacities right from the early foundation, they have had an amazing algorithm, which has allowed them to gather data from users about users' preferences. And they've used this data to create customized, recommendations for individual users. So each individual user, when they log on to the Netflix platform, is actually getting a completely different, home screen to another user. So the other element of their, operations, which is being particularly innovative, is the breadth

01:32 - of their operations. They're in 190 countries around the globe, and the range of genres of their, TV programs and movies is extraordinary in many languages, reflecting many cultural, traditions and norms. And the genres that they cover are very, very wide. So animation, children's documentaries, crime action, romance. So there's something to appeal to everybody. So the study focuses, it's published, by Emerald,

02:07 - and the paper is called, Netflix Rise, fall and Recovery. It's available from the Journal of Business Strategy. So the study covers the three year period from 2020 to 2023. So the first part of the study tracks their exponential growth trajectory during the first two years of the pandemic. And as everybody knows during that period of time, most cities in the world, governments

02:32 - before the vaccines were implemented, had stay in place orders, lockdowns, where people couldn't go to work unless they were essential workers. And so they were stuck at home. And so what they many people did then is they took out Netflix subscriptions. But then once the vaccine rollout, emerged around the first world in particular and businesses started to reopen, the decline came about in,

02:58 - the first quarter of 2022 when they lost first 200,000 subscribers. And then, the share price declined by 35% and $50 billion was wiped off the valuation of the company. The situation got worse in second quarter of 2022 when, they lost almost a million subscribers and the share price declined, by, an almost 60%. And, the valuation was declined by a further $70 billion.

03:37 - so it was an extraordinary severe decline. So what I found fascinating in the study was really focusing on how were they able to recover because, you know, it's, a lot of companies would've, been decimated by such a, you know, drastic reduction in their profitability, but Netflix was actually able to recover. So that's one of the other key things that I looked at. The methods, I'm a qualitative researcher, so it's a qualitative case study.

04:05 - And what I did, the primary source data is all publicly accessible. So from Netflix's own webpage, from its investor relations webpage, I accessed what are known as the earnings call transcripts. So there are 13 of those. So the transcripts actually come with a video. So, the methodology that I used was watching the video and analyzing what I saw in with the written transcript as well as the letters to shareholders.

04:33 - So there were 13, of those sets. And then the supplementary secondary data included, articles written by investment analysts by journalists, as well as, traditional academic journal articles and monographs as well. there's some fascinating material which has been published, from the IT perspective talking about the actual, how the detailing, how the algorithm actually works. So it was a very large data set that I used.

05:03 - A lot of other executives in a lot of other companies would've said, you know, this will just fix itself naturally, we don't need to do anything. But the executives of Netflix took ownership of the situation and actually were prepared to reverse, decisions that they'd made. So there's a couple of factors that I identify as, being responsible for the turnaround.

05:27 - One of them was the implementation of an advertising, subscription. Now previously, Reed Hastings, who was the one of the founders of the company and the CEO of the company, had a longstanding position of being, against advertising. But when they lost so much revenue and the company was in severe, you know, dire straits, he decided that it would be worthwhile implementing advertising.

05:55 - And so they launched the advertising, tier of subscriptions, but they did it in a very, careful, the tactics they used were very careful and prudent. They partnered with Microsoft who had the existing technology and relationships with brands to do that. And so they were able to take this initiative from idea to implementation within a six month period. And it was such a sensible thing to do because it actually gave them an additional revenue stream.

06:26 - And then they followed that up by, in first world markets such as the USA Canada, uk, and Australia and a couple of other countries removing the basic tier. And so that tactically, that was a very clever move because it pushed those who were looking for a cheap subscription towards the advertising tier. So they were then getting revenue from two sources. The other factor that I'd identify is that they became aware, the executives became aware

06:56 - of the fact that there were up to a hundred million people accessing Netflix for free. And so they decided to monetize account sharing. And they, there again, their technological sophistication enabled them to use, techniques to actually, track the ID IP and, geolocate the devices location. And so, that, that then prompted users to enter a code. And through that they were actually able to identify who was sharing their account,

07:32 - and they then began to charge those people for sharing that account. And there's some research that's been done recently, which has indicated that this is potentially going to yield an additional 700 million over the next year. So that's another very, very significant factor. And the third factor is they introduced what is potentially going to be a very lucrative, revenue stream. So they went into mobile gaming.

08:00 - Now the mobile gaming industry is an enormously lucrative business, generating around 600 billion globally a year. And what they have done there, they purchased, they, they've made some very careful acquisitions of existing, gaming studios, and they also developed some in-house capacities themselves in that space. And to date, they haven't yet charged users for their mobile gaming.

08:33 - But when you review the earnings call transcripts, it's very clear that that is on the agenda and that will strengthen their strategic position because it will give them an additional supplementary revenue stream. The conclusions are that I think, as I identified, it's the flexibility, honesty, and integrity of the executives to, really address the crisis head on, and not try and deny responsibility for that.

09:03 - And also, acknowledging, that some tactics they wanted to use, such as the rollout of the advertising, they didn't have, the capacities to do that internally, so they formed partnerships. So this honesty and sensible decision making of, you know, knowing when to partner with somebody else. So, moving forward, because it is such a massive, industry, predictions are that, by 2029,

09:37 - it's expected to generate $429 billion of revenue by globally by 2029. And as I'm saying, it's a very, very hotly contested market. And I was thinking about two things that have happened recently. One of them, the competitors moving. So for instance, in the uk, over the first three months of the year, Disney, discounted its subscription to, one pound 99. And so Disney during that first quarter was actually able

10:11 - to outperform Netflix. And then, on a, on the other side of the world, in the United States, ESPN, which is actually owned by Disney, which is a massive global streaming service, has announced a partnership in February, 2024 with Fox and with, discovery, they're gonna create a new app and the, they have, the, the rights to stream the four major sports in the United States, so NFL, the football, NBA, the basketball, baseball and hockey.

10:47 - And they're also going to stream NASCAR Racing Plus, they're going to stream the FIFA World Cup and the next FIFA World Cup is coming up in 2026. So I identify the moves of competitors as being a major challenge for Netflix. And in addition to that, there's a demographic trend, which is actually a challenge for the company. And, and it's actually a challenge for all streaming services, and that is that Gen Z and millennials actually don't watch linear tv

11:22 - and their attendance at traditional films is actually quite small as well. They prefer, user generated content such as, short clips that are available on YouTube or TikTok. they are very interested in streaming music on and, and podcasts on, on Spotify. And, they're also very keen on, gaming. So one of the big challenges for Netflix and For the other streaming companies is going to

11:56 - attract in the fir in the first place that, that, cohort that generation of people and then retain those people because to date they've sort of relied on older generations of people, baby boomers and Gen X. And once those people die, they're going to have to actually modify their business model, to capture that younger cohort. So that's one of their big challenges going forward. And I actually predict that there will be, some mergers and acquisitions within the industry space,

12:29 - because particularly in first world markets, I mean, they've almost, Netflix is in the United States has almost reached saturation point, and so they're gonna need to move into emerging markets, and they've faced challenges around that. I just looked at an article that was published yesterday where Thena Vietnamese government is challenging, their rollout of gaming within that country. So there are, it's a very evolving, very dynamic industry and there are lots of challenges in,

13:02 - in the future for Netflix. So yes, I would recommend anyone interested in it to keep studying it.

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