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Royal Bank of Scotland to investors: 'Sell everything'

Discussion in 'Sports and News' started by Dick Whitman, Jan 12, 2016.

  1. Buck

    Buck Well-Known Member

    Subscriber growth indicates they are selling a product/service people want.
    But they’re selling it for much less than it costs to make and deliver.
  2. DanOregon

    DanOregon Well-Known Member

    I would have thought a potential trade war would have impacted the stock market, but the tariffs on China and the TPP minus the US doesn't seem to have caused a ripple.
  3. Pete

    Pete Well-Known Member

    Netflix has clearly established itself as the dominant subscription streaming company. That's the business that all their rivals are now trying to crack, and Netflix can fight them from their current position of strength. Their competitors are going to have to burn a lot of cash to get in their neighborhood. So no, their strategy definitely isn't ridiculous. However, spending so much money on content creation as opposed to licensing content brings an added layer of risk that they didn't have before.

    One other note is that pretty much all of those companies you cite aren't standalone companies, but part of large media conglomerates. ABC and Marvel are part of Disney; NBC is part of NBCUniversal which is part of Comcast; DC is part of Warner Brothers which is part of Time Warner which will likely be part of AT&T. CBS is (I think) kinda standalone at the moment, but there's talk it might again become part of its former parent, Viacom. Essentially every major movie studio is part of a larger company.

    One reason for all that consolidation is that being a standalone studio is a tough go, and their stocks didn't trade at great multiples because their profits tended to rise and fall with hits/busts and their revenues can't just go up-up-up because that's not the nature of that business. Lately there's been an especially big push to combine content with distribution (AT&T/Time Warner, Comcast/NBCUniversal, Disney buying 20th Century Fox and the rest of the content world in part to start their own streaming services, etc.). Netflix likely feels that they need to be that too – they have the distribution, but likely feel they need to control their own content, and making it themselves is the best way to do that. However I'm arguing that they started that war, not vice versa.

    But hey, the war is here, so I think Netflix is (and perhaps has to be) all-in on content creation. I'm just very curious to see where they'll be in 3-5 years.
  4. doctorquant

    doctorquant Well-Known Member

    I’m not sure it’s accurate to label Netflix a “content creator” ...
  5. Pete

    Pete Well-Known Member

    It's pretty clearly becoming one, and spending a ton of money to do so.

    Though obviously that content is being created to (hopefully) make its subscription service more attractive, which is how it makes its money. Original content is exclusive content – at least the way they're approaching it – so they clearly feel that can be a powerful differentiator to their offering, since there are now lots of streaming options and will soon be even more (Disney in 2019, etc.).
  6. The Big Ragu

    The Big Ragu Moderator Staff Member

    I dunno, the company has close to $16 billion (all borrowed money) committed to producing original content, with an estimated budget of $7 to $8 billion this year alone for original series and films. That is a boatload of money, especially when you aren't covering the expense from cash generated by your actual operations. Whatever label you want to give the company, content creation is clearly integral to whatever strategy they are pursuing; it is certainly a main reason the company is burning through cash like it is nothing.
    Last edited: Jan 24, 2018
  7. doctorquant

    doctorquant Well-Known Member

    Perhaps my mild objection to the labeling is overly picayune. My take is that they're simply licensing content directly, rather than having the studios (?) being an additional intermediary between them and the content creators (as before). It's not like they've set up a production company (with all that investment, etc.).
  8. LongTimeListener

    LongTimeListener Well-Known Member

    Yeah. If they one day decided "shit, we have way too much already, let's let people catch up!" they wouldn't have a major operation to shutter.
  9. Pete

    Pete Well-Known Member

    With all due respect, this isn't correct. The studios ARE the content creators in this context. And Netflix has explicitly moved their content acquisition budget away from licensing others' content and toward creating their own original content. They have effectively set up a large production company, just like any other major studio. So has Amazon (Amazon Studios) for that matter, though not at the same scale. The only difference is that Netflix hasn't made its studio arm a standalone company (I don't believe).

    Netlix's Sarandos Aims to Build the Next Great Hollywood Studio
  10. The Big Ragu

    The Big Ragu Moderator Staff Member

    They started at this only about 6 years ago. With some of the early deals, the producers owned the rights to the shows and they were exclusive licensing deals. For example, House of Cards and Orange is the New Black. Very early on, though, seeing the success of those
    shows, they knew they had made a mistake. Now, they are producing their own movies and shows that THEY commission, produce and own the rights to. It's more expensive to own rather than have an exclusive license (which again is why Netflix is burning through cash at an escalating rate), but I'd guess the calculus is that it will allow them to turn around and license their stuff to others later on. BTW, their goal is to be about 50/50 licensed content to originally produced content.
  11. doctorquant

    doctorquant Well-Known Member

    Fair enough. I am apparently not familiar enough with the content-production business, particularly Netflix's. I was just seeing things like The Crown being produced by Left Bank/Sony.
  12. Pete

    Pete Well-Known Member

    That is what they generally did at first for their original shows, like a typical TV network – license the shows from a studio, such as Sony. (Quick departure: The major TV networks don't own the shows they air, they just license them from a studio, though they also all have studios as part of their corporate family. So a show made/owned by Universal Television (part of NBCUniversal) might air on Fox, for instance, like Brooklyn Nine-Nine.) And as you note with The Crown, Netflix still licenses shows made by "traditional" studios and production companies.

    But now they're doing things like throwing a lot of money at Shonda Rhimes for an overall deal to make original shows for them. That's what a studio does. In fact, they're saying they want to be the world's largest creator of entertainment – or, in other words, the biggest studio.

    It's an interesting bet. To me, anyway.
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