‘Did we build a monster?’: Netflix may be the most feared force in Hollywood
Film studios and TV companies fear they are cutting their own throats by supplying content to video-on-demand giant Netflix, whose viewers are visiting cinemas less and watching less cable TV
Time Warner chief executive Jeff Bewkes once mockingly likened Netflix to the “Albanian army”. That army now has more than 70 million subscribers in nearly 200 countries – and may well be the most feared force in Hollywood.
The company has moved from its foundation as a US video rental business to become an international entertainment juggernaut generating award-winning content for both its digital streaming service and cinematic releases. Many of Hollywood’s most talented writers and producers take their proposals to Netflix first.
It’s also a Wall Street favourite valued at nearly US$45 billion, giving Netflix financial firepower to go with its impressive subscriber base.
“Every single day in my company, and I know in other companies, there’s a question of: ‘Did we do something … to build a monster that will come back to kill us?’” NBCUniversal research president Alan Wurtzel said last week at the Television Critics Association media tour in Pasadena, California.
The tipping point came last summer when Walt Disney Co. revised profit expectations for its cable channels including ESPN, reflecting an industry-wide shift as more consumers cut their cable offerings in favour of Netflix or other services. The news triggered a sell-off of media stocks, erasing nearly US$50 billion in market value in two days.
Media stocks have not recovered, and executives such as Bewkes have signalled a possible change in their dealings with Netflix and other digital outlets. He said Time Warner was considering holding on to episodes of its shows longer before making them available for video-on-demand services.
“Media companies are saying, ‘We are cutting our own throats here, and we’re bleeding,’” said Doug Creutz, media analyst with Cowen & Co.