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A warning for Netflix investors: Media rivals are done playing nice, says analyst

A warning for Netflix investors: Media rivals are done playing nice, says analyst
[Animation: Filmack / Thirteen]

With films like Beast of No Nation, Okja, and Noah Baumbach’s just-released The Meyerowitz Stories, Netflix has been pushing into the original movie pool, and after yesterday’s earnings, it announced plans to release some 80 films in 2018. That’s more than one new film every five days, so get comfy on the couch, potatoes.

It’s all part of a spending blitz that could cost Netflix $8 billion on content next year, but that spending comes with a downside, warns research firm MoffettNathanson. As Netflix works to build its library, its media company rivals will get stingier with their own content. In a new analyst note, Michael Nathanson says Netflix’s success has already made other media companies “arise from their crack cocaine induced slumber to rethink their licensing of exclusive, first run content to Netflix and move that content to their own platforms, Hulu, or VOD.”

Disney recently made headlines for its decision to pull its content from Netflix and launch its own streaming service, but it’s far from the only network to think like that. Per MoffettNathanson, “FOX has been a much bigger source of the off TV hits on Netflix … and their titles are in the midst of shifting.” The more media companies pull shows and movies from Netflix, the more that Netflix will have to rely on its originals, and they cost a lot of money to make.

They also cost a lot of money to market. After all, ABC already paid for those Grey’s Anatomy posters on the sides of buses, but when Netflix makes its own shows and movies, marketing costs rise. MN found that its marketing costs of $358 million are up 29% year to date. Of course, all this could lead to even more price hikes down the line, so don’t be surprised if Netflix soon costs almost as much as a movie ticket and a babysitter.

In its note, MoffettNathanson maintained its “neutral” rating on Netflix’s stock.ML