How Netflix became the streaming king
Four years ago, Netflix was faced with a formidable challenge to its dominance. Competitors including Walt Disney Co. and Warner Bros. Discovery invested billions of dollars to chip away at Netflix’s market share by launching splashy shows on their own streaming services.
For a time, it seemed that Netflix was vulnerable. The company lost subscribers for two straight quarters in 2022 despite gargantuan spending, raising concerns that its growth had plateaued.
But lately, the tide has turned. Netflix has managed to maintain its position as the leader in subscription streaming, with 260 million paying customers worldwide, far more than its direct competitors. Netflix added more than 13 million subscribers during the fourth quarter. The Los Gatos, California-based company’s stock has surged roughly 90% during the last year.
As a result, many analysts have made a bold proclamation in recent months. The so-called streaming wars are over, they say. Netflix has won. As evidence, they point to rival studios that are now licensing more of their programs to Netflix, including HBO’s “Six Feet Under” and “Insecure,” after years of holding onto their big action movies and popular shows for their own platforms.
“Their competitors are so desperate to make money, they’re giving this content to Netflix,” said Jeffrey Wlodarczak, chief executive of Pivotal Research Group. “This is what winning is.”
Netflix executives, for their part, sound as confident as ever, even as the company continues to make changes, including a recent shakeup in its film business. There’s much more runway for Netflix to grow, Spencer Neumann, Netflix’s chief financial officer, said at a Morgan Stanley conference in San Francisco in March.
“We are just getting started,” Neumann said. “Now we’re small in every measure. Every way we look at it, we’re less than 10% of the view share in every country in which we operate, and that’s a pretty small slice of pie.”
How did Netflix defend its bulwark when there are still multiple streaming services fighting for eyeballs?
The streamer has cracked down on password sharing, offering a cheaper ad-supported plan for cost-conscious viewers. Added restrictions on viewers who were borrowing Netflix accounts got people to buy their own subscriptions, helping the company increase net income to $938 million in the fourth quarter, compared to $55 million a year ago, while revenue rose 12.5% to $8.8 billion.
Since then, Disney’s Hulu, Disney+ and ESPN+ and Warner Bros. Discovery’s Max also have signaled they will tighten their limits on password sharing.
Netflix also diversified its content beyond scripted programs, adding more reality TV shows, non-English-language originals, live TV, games and sports documentaries to its mix.
And Netflix expanded its sports-related content. In January, the streamer announced it would become the exclusive host to WWE’s weekly pro wrestling show “Raw” in 2025, which analysts say will help boost Netflix’s advertising business and increase WWE’s global reach outside the U.S. “Raw” is the top show on the USA Network, where it brings in 17.5 million unique viewers over the course of the year, WWE and Netflix said.
“Introducing it to a new set of fans as well as servicing the existing fans that are either already Netflix subscribers, or will come over, to me either way is a win,” Brandon Riegg, vice president of nonfiction series at Netflix, said at a press event in Hollywood in January. “The truth is we don’t know how much bigger it can get. I think we’re all really bullish on it.”
A significant factor in Netflix’s lead is that it had a major head start, entering the streaming arena in 2007, much earlier than many of its Hollywood competitors. It set up production hubs in different countries around the world, including South Korea, where Netflix has had success with a pipeline of K-dramas that can be dubbed into many different languages. The company