Diller: Netflix Has Won The Race For Subscribers, Advertising Poses 'Existential' Problem

When it comes to numbers of subscribers, has Netflix already won the streaming services war?

Barry Diller, chairman and senior executive of IAC/InterActiveCorp and Expedia Group, thinks so.

"I believe -- and I’ve said this to my peril -- that no one’s going to compete with Netflix in terms of gross subscribers. I believe they have won the game," Diller said in an interview with CNBC yesterday (below) during the Allen & Co. Sun Valley Conference. "There's nothing I can see that's going to dislodge them."

Diller said he disagrees with analysts who think that Netflix will begin to lose its large head-start advantage (150 million subscribers worldwide) because it will lose subscribers as soon-to-be-competitors NBCUniversal and AT&T's WarnerMedia take away Netflix's streaming rights  to top-viewed shows, such as "The Office" and "Friends."



As for other potential competitive threats to Netflix, Diller said Amazon -- which along with Netflix has "totally upended" the six movie companies that once had "hegemony" over the entire production/distribution business -- is "in a completely different business" than Netflix. Amazon is "selling Prime, which gives you all sorts of services, television among them," he elaborated.

Disney "has the best chance" to compete with Netflix for subscribers "because of its very, very popular content and the money and the distribution and the Disney name behind it," Diller continued. But while Disney may attract millions of subscribers, he said, he doesn't believe they'll ever catch up with Netflix. 

However, he added: "I don’t think it matters much" -- seeming to imply that subscriber numbers alone may not be the only determining factor in which players "win" the streaming wars. 

“I don’t know if you can say who is going to quote unquote ‘win’ this… this is a weird transformation," Diller noted. "You have an arms race that never existed before, and a complete blurring of television and movies in the last couple of years. And you have these two new entrants [Netflix and Amazon] that have not only forced consolidation, but forced [the traditional players] to make investments they’ve never...had to make before. You have Disney, which has mobilized itself like a superforce, wanting to compete in streaming; and AT&T reorganizing itself, buying Time Warner, [so as to also] compete. So how many people are going to be at this table five, 10 years from now? I think it’s impossible to say."

Asked about what will happen to "smaller" players like CBS, Viacom and Lionsgate, Diller said that, with so many companies eager to buy content, smaller players can likely succeed if they have the "talent and energy" to produce strong content -- although they're unlikely to be able to "build a big empire." 

More important, he said, "all of broadcasting is endangered, because what’s happening with streaming and other services is that the only people who are watching commercials are people who can’t afford to buy the products that are being sold. That’s an existential, long-term issue." 

(Recent Comscore data cited in MediaPost's "Video Insider," showing that those who pay for 0TT services tend to have much higher incomes than cordless and cord-never households, speak to Diller's point.) 

Asked if Google and Facebook should be regulated, Diller -- who owns several properties that compete with those platforms -- said he believes in "sensible" regulation when companies reach sizes that give them such market influence they could obstruct the existence of a "fair playing field" for all competitors. He said he thinks regulation will happen, but doesn't think that the big tech platforms should be broken up "unless it is proven that regulation doesn’t work."

6 comments about "Diller: Netflix Has Won The Race For Subscribers, Advertising Poses 'Existential' Problem".
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  1. Tom Goosmann from True North Inc., July 11, 2019 at 10:04 a.m.

    Lucasfilm, Pixar, ABC, Fox, Marvel. Disney's wears Thanos' gauntlet loaded with the stones and all were waiting for is the snap. How can Diller not see that as a major threat to Netflix? 

  2. Tom Goosmann from True North Inc. replied, July 11, 2019 at 10:05 a.m.


  3. Ed Papazian from Media Dynamics Inc, July 11, 2019 at 10:53 a.m.

    While I agree with Barry about the need to regulate the digital media business I'm puzzled by his remarks about advertising and the people who watch---or don't watch--- ads. Most of those who subscribe to streaming services also get either broadcast TV or cable, or both--and they watch all sorts of ad-supported fare that you  can't see via Netflix and the other streaming services. Not just sports but news, tons of reality shows, talk shows, game shows, etc. etc. I think that Barry---like others who are fixated on primetime "scripted" programming--- fails to realize that for most people---and, especially the heavy viewers---20% who account for 50+% of all TV viewing---TV is a lot more than just "original" primetime dramas and sitcoms.

  4. Matt Collins from Simulmedia replied, July 11, 2019 at 4:33 p.m.

    I agree, Ed. Diller's conclusions regarding the future of ad supported television - whether delivered live or over-the-top - are missing the inputs you mentioned. It's also not clear that "winning" in the streaming wars will good for the victors if the measuring stick is subscriber count, which ignores the cost of operating the business. According to numbers published in The Information, Netflix lost $3 billion in 2018, or $342K per hour, 24 hours a day. Live, ad supported TV remains valuable to viewers and advertisers, and its model has proven to generate profits for shareholders. It's hard to see that simply vanishing, at least based on what the market is willing to pay today for ad-free streaming.

  5. John Grono from GAP Research, July 11, 2019 at 5:54 p.m.

    Some other predictions:

    "I think there is a world market for maybe five computers." - Thomas Watson, president of IBM, 1943.

    "Television won't be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night." - Darryl Zanuck, executive at 20th Century Fox, 1946.

    "There is no reason anyone would want a computer in their home." - Ken Olsen, founder of Digital Equipment Corporation, 1977.

  6. Ed Papazian from Media Dynamics Inc, July 12, 2019 at 9:23 a.m.

    John, one of the classic predictions made in the early 1980s by quite a few media gurus and mavens was that by 1990 there wouldn'y be any broadcast TV networks.

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