Blog 10 - Icarus

Everyone knows the famous greek legend of Icarus, a boy wouldn’t listen to his warnings and it killed him. This parable seems incredibly relevant with recent news in the streaming world. As we’ve seen from my interview and also survey it would appear that the younger generations are moving towards streaming and specifically Netflix as the future of the viewing experience. To keep up with this huge demand for Growth Netflix is growing itself, this year putting $8 Billion into new original shows and has 700 Originals in development. An astonishing amount and all perfectly justified when in Q4 of 2017 their paid streaming memberships rose by 8.3 Million, frankly an astonishing amount considering already how big they already are.

The reason I see Icarus as an allegory is because of Netflix's ambition, their growth. 700 shows and films in development just this year is insane and it comes at a price. It was reported towards the end of last year that this growth of Netflix’s has left them in around $4.8 Billion in debt alongside $15.7 Billion in contracts with studios. No small fee. The borrowed money along with contracts has likely all gone towards the creation of content, and it’s working as seen from the companies growth, but Netflix themselves have warned their negative cash flow this year may be as big as 2.5 Billion. The recent price increases for Netflix could be a direct result of this. In the short term it offers some relief but in no way offers a long term solution and may begin turning away customers if the price rises become too high.

This isn’t the real issue, the too close to the sun aspect is the “Bubble” effect, an economic term for when there is a quickly increasing price/cost for a commodity that is out of line with the actual value of the product. So if Netflix keep expanding beyond their means and need to raise their prices as their costs get higher, it’s going to reach point where Netflix’s subscriber growth is going to saturate and the ‘Bubble’ will burst. It’s unlikely for this happen in the next few years as there’s still plenty of areas for Netflix to grow to geographically, they’ve barely broken the huge Asian market. However when this growth bubble bursts it’s likely to scream catastrophe for the company as the subscriber growth won’t be able to catch up with the content growth. The only thing that’s likely to prevent this is a long sited vision so that when Netflix are approaching saturation they cool down content growth to a manageable level for their current subscriber base. Although this would still leave them with their debt and likely they would stop growing, which would leave them dead in the water company. It may be likely we see in the next 10 years Netflix expand into areas that we can’t fathom yet in order to have areas to grow in when their streaming service saturates. 

As with any of the services talked about in my blogs it’s difficult to predict the future and where the viewing experience may go. As I’ve said here, Netflix may eventually bankrupt themselves but that won’t be for many years to come. From the research through survey’s and article’s it would seem that cinema’s efforts to create a nicer experience’s is failing and with some pricing adjustments we’re likely o see Screening Room-like service running parallel to cheaper multiplex cinemas. What’s has the potential to take the biggest hit is television with little to change in the experience of it bar live moments which with the help of Amazon might even stay the same. What’s likely to be the greatest outcome from all this is community. It’s the sense of community when in a cinema or watching sport at the pub that may fade in the years to come and be the real fallout of the future of film and tv.