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Increased competition, especially from Amazon
Prime and Disney+, may be counterintuitive
because it could actually help Netflix in its
expansion strategy: On the one hand, it would
be disadvantageous for Netflix to have a
monopoly in most markets, as it is beneficial to
be part of a segment of different streaming
players. On the other hand, multiple strong
streaming players can further push cable and
pay-TV offerings out of the market, since
consumers are spending more on streaming
services in general.
This is also in line with the goetzpartners
customer survey, which highlighted that most
customers are willing to spend money on two to
three streaming service subscriptions per
month. However, if the rise of Disney continues
at its current pace (adding more than 100
million subscribers in one year), Netflix will
need to take further action besides trying to
catch up in the kids and superhero segment.
Furthermore, Disney benefits from the fact that
it was able to build its brand over the last 50-60
years.
Looking at Amazon Prime, the comparison with
Netflix seems more difficult, even though it is
regarded as the more serious competitor in the
market according to the experts’ opinions.
Netflix is fully focused on one key segment,
i.e., the entertainment segment, while Amazon
Prime sometimes cannot focus on its
entertainment part, because its key purpose is
to sell and deliver consumer products via its
website.
However, the recent acquisition of MGM by
Amazon Prime is shaking up the streaming
market: Paying over $8 million, Amazon Prime
receives exclusive rights to different block-
buster movies like James Bond, Rocky, and
more than 17,000 shows.
Overall, these recent strategic moves by
Amazon Prime reveal that it aims to increase
both its content quality and quantity and to
catch up to Netflix to put pressure on its
market leadership position.