Netflix Is Starting to Behave a Lot More Like a Traditional Big Studio ⇥ hollywoodreporter.com

Natalie Jarvey, Hollywood Reporter:

With a market-leading 152 million global subscribers, 10 percent of TV screen time in the U.S. and a several-year head start, Netflix may be too big to fail. But that hasn’t stopped a growing chorus of questions over how long the “Netflix bubble” can last. Its ballooning costs — analysts estimate that it will spend between $10 billion and $15 billion on content this year — means it burns through cash ($3 billion in 2018). Its current debt load is $12 billion.

Worries ratcheted up July 17 when the company reported its first subscriber loss in the U.S. in eight years. Its high-flying stock came crashing down 15 percent, erasing $24 billion in value in less than a week. “It’s notable that they lost subscribers before they lost a meaningful amount of content and before there was direct competition from their suppliers,” says Wedbush’s Michael Pachter, a noted Netflix bear. “This suggests they will face additional pressure when they lose content later this year and as their current [licensing] contracts with Warner Bros., Fox, Disney and NBCU expire.”

Once the studios figured out that they, too, could sign a contract with AWS and build a streaming media player, they replaced Netflix’s big advantage with an even worse version of the old cable television model. If you’re a film or television buff and want to maintain a moral and legal high ground, there’s no question in my mind that you’ll pay more for a combination of streaming services than you used to for cable.

But if I were an executive at one of these conglomerates, I’m not sure I’d wager too much on the inability for users to remember how their torrent client works.