It's already won.

You don't play the game, YOU CREATE THE GAME!

This is what established players don't recognize, whether it be in content or distribution. If you want to win in the end you can't do what everybody else does, you've got to risk, you've got to create something new that satiates the customer in a way existing products do not.

With Netflix it was all about on demand.

Remember driving to the video shop? What a waste of time/terrible experience that was. You had to get in your car, you got there, and they didn't have what you wanted.

But now you go on Netflix and they organize the titles in a way that plays to your interests, that's comprehensible, BUT YOU NEVER HAVE TO LEAVE YOUR COUCH!

How great is that, INCREDIBLE!

Meanwhile, traditional outlets are dribbling out product with endless promos and commercials and as soon as we got an option, we bolted.

That was the magic of Napster. We just got the tracks we wanted. We didn't want the overpriced CD. And the MP3 was good enough, we don't need the Blu-Ray, but unlike the record labels, Netflix gives people what they want, you desire high quality, you can pay for 4k.

But the point is Netflix is a tech company, not an entertainment company, and that's why they're winning.

One, they know there's a first-mover advantage. And that if you continue to improve the product, you dominate. It's only when you become stagnant that you're screwed.

So Netflix is airing reruns. Then it goes to original programming. But not like HBO, which releases shows in drips and drabs. You get overhyped and then you're disappointed, like with "Divorce" or "Here and Now." Whereas with Netflix, if you don't like this, we've got a new show for you tomorrow, or next week.

But Bob you say, LOOK AT THE LOSSES!

Where were you the past twenty years? You overspend for market share and kill all comers and then you roll in dough. Can you say AMAZON?

And there's this fiction that there can be multiple competitors.

I ask you, when you talk about television, and everybody does, how often does someone suggest an Amazon show... ALMOST NEVER! Showing that outlet's challenges, although I do believe only Amazon can challenge Netflix.

But, the cable outlets are dependent upon cable system payments. We've seen with channels going dark that the cable systems are saying NO MAS! And everyone's sick of overpaying for sports they don't watch.

So if you're dependent upon cable system payments, you're done.

And if you're dependent upon advertising you're done. The public will not sit for it, only the cheapest individuals will endure ads, and then the ads don't work on them, because they're so damn tight. No, the people advertisers want to reach are the spenders, which is why everybody's now advertising on Amazon, check it out, that's where the dollars change hands.

So the networks and other ad-supported channels are on life support. They're dependent upon hits, which come and go, and what do I always say...DISTRIBUTION IS KING!

So, just having good content is not enough, you're reinventing the wheel every season, you're only as good as your last hit.

As for HBO... That's a dying model. If the outlet were smart, they'd band together with Hulu or another player and release all episodes on the same day. People don't like to wait, appointment viewing is passe. We want it all and we want it NOW!

As for Hulu, forget about it, it doesn't have critical mass, and unlike Netflix, it's only in America. Sure, the "Handmaid's Tale" burnished the outlet's image, but Netflix has more than that, "Narcos," Stranger Things," 13 Reasons Why," "Wormwood"... A record company can't survive on one act, you need a steady flow of product, which Netflix has. And it's a virtuous circle, they keep adding subscribers to the point they've got more money and they spend it on the best creators!

So they end up with the lion's share of the viewers.

Which is why Fox wanted out, why it sold to Disney.

But Disney started too late. It's like Apple Music and Spotify. Spotify was first and eclipses Apple in worldwide subscribers and growth, Apple Music can't catch up.

And what is Disney's plan? Three apps? You've got to pay for kids, sports and mainstream fare? Come on, we're sick of paying multiple outlets. We want to pay only one, or two. Disney doesn't have enough product to fill the pipeline, to get our attention.

As for Apple...

It's just too late. One hit show does not make a network. Sure, they've got a great brand name, but explain Siri to me, the first voice assistant that's the worst. As for the HomePod, dead upon arrival. Amazon has been iterating like crazy, they keep lowering the price and Apple comes out at a premium, what world do they live in? It'd be like offering a ten thousand dollar flat screen. That ship has sailed, a TV is under a grand!

So Netflix ends up with the lion's share of the marketplace. On the internet, that's usually 65-70%.

And then Amazon is the next biggest player and then a few marginal ones.

The whole world goes topsy-turvy. We're not bonded to CBS or Showtime or TBS or...

The recent Netflix deals show creators would just as soon go to Netflix for more bucks and less interference.

And so would you!

Netflix already owns comedy. All the greats are on the service. To the point when they launched the latest Chris Rock special this week there was very little hype. You'd see it on the service, which you're already subscribing to. This is not HBO where we bang you over the head with coming attractions. Talk to a movie theatergoer, they hate the endless trailers! They're a captive audience, but not at home, not with streaming, you're in total control!

So unless Disney aligns with every other studio and they load up product immediately it's a Netflix world, with Amazon as a runner-up, since you get their service free with Prime, and anybody who spends dollars has Prime.

This is not a nascent game, it's about to be set in stone!

How many people have both Spotify and Apple Music. NONE!

And sure, they have the same products, whereas streaming video services do not, but soon all the creators will want to be on Netflix because that's where all the eyeballs are.

The game is almost over.

And Netflix won.

--
Visit the archive: lefsetz.com/wordpress/
--
www.twitter.com/lefsetz
--
If you would like to subscribe to the LefsetzLetter,
www.lefsetz.com/lists/?p=subscribe&id=1

If you do not want to receive any more LefsetzLetters, Unsubscribe

To change your email address this link