Business Technology

Monday 24 July 2017

Netflix arrives in style, but it faces a battle to get ahead

Netflix founder
and CEO Reed
Hastings; Sarah
Bolger, star of
'In America'
and 'The
Tudors', and
Ted Sarandos,
Netflix chief
content officer,
at the launch of
the film
streaming
company in
Ireland at
Trinity College,
Dublin, this
week
Netflix founder and CEO Reed Hastings; Sarah Bolger, star of 'In America' and 'The Tudors', and Ted Sarandos, Netflix chief content officer, at the launch of the film streaming company in Ireland at Trinity College, Dublin, this week
Peter Flanagan

Peter Flanagan

THE launch was lavish but was seen by some as a damp squib. Netflix spared no expense at its PR event in Dublin's Westin Hotel, demonstrating the prowess of its system on several different platforms.

Company chief executive Reed Hastings and senior officers Tom Sarandos and Neil Hunt were all wheeled out to the media for interviews and everyone seemed to go home happy.

There was just one problem, however. The content available to Irish customers was deemed not up to scratch, prompting a host of complaints from people who had signed up for the service on spec only to find the selection lacked top-drawer new releases and other titles.

The issues around the start of the service here -- the perception of a top quality service that has been poorly managed -- reflected the problems the film and TV streaming company faced in their US home over the past year.

Last summer, the company, which began as a mail-order DVD rental service before moving into streaming content over the internet, split their DVD and streaming subscription model.

That move, combined with more competition in the sector, has seen the firm lose hundreds of thousands of subscribers while the share price has fallen from $299 (€236) in July to only $99 now.

There is no doubt the Netflix set-up is beautiful to look at while the picture quality is excellent as long as you have a strong internet connection, but without the content, will the customers come?

Unsurprisingly, Mr Hastings sees Sky as his key competition. Through Sky Movies and Sky Atlantic, it has secured first dibs on the vast majority of 'A-list' content from Hollywood studios and until those agreements are renegotiated Netflix will have to make do without the bestsellers.

Mr Sarandos, who manages content acquisition for Netflix, says the company has the resources to bid against Sky for the rights on film premieres and the like.

"The library we have for Netflix Ireland at the moment is the smallest it will ever be. In Canada, the catalogue doubled within a year of launching and we hope to do something similar here," he claims.

The launch of Netflix into the Irish market is undoubtedly a big deal, and its presence here will present a direct challenge to the likes of the RTE Player and Channel 4's 4OD. Much of what's available on these services for free can be accessed on the Netflix paid-for service, while Apple already provides a paid-for movie and TV rental service.

Both Mr Hastings and Mr Sarandos, however, dismiss the claim that these services are in competition with Netflix, and vice versa.

"I'm sure there will be competitors in the sector eventually but right now there is no direct competition in Ireland for us," says Mr Hastings.

"The other thing to remember is this is not a zero sum game," adds Mr Sarandos. "For us to succeed, we don't need Apple TV or 4OD to fail."

That may not be the case but if Netflix doesn't have the shows and films people really want to see, the number of platforms the service is available on and its ease of use won't matter a jot.

Like in any media business, content will remain king, and without the content the service will struggle.

The coming showdown with Sky promises to be one to watch. It could be worth cracking out the popcorn for on its own.

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