Barbarians at the Gate: Can Netflix Defend its Content Empire?

BY Ayal Shmilovich

Mark your calendars: 2019 will be a turning point in the epic war for eyeballs. With 139 million subscribers worldwide*, an enormous content library and the first mover advantage, Netflix has a serious head start in the coming content crush-all. With competitors pouring in and content costs skyrocketing, Netflix is fast becoming the Roman Empire defending its sprawling media dominion. While Netflix has a seemingly unpickable lock on televisions worldwide, in 2019 it will increasingly have to contend with enemies at the gate. While their streaming empire is not in immediate danger of falling, this may be the year barbarians drain Netflix's competitive moat.

Last week, Apple announced plans for their new streaming service, fortified by partnerships with legit Hollywood royalty like Steven Spielberg, Ron Howard, Jennifer Anniston, Reese Witherspoon, Steve Carrell, Oprah, and others. While Apple is a bit late to the content battle and while many consumers may be suffering “streaming fatigue” by the time Apple TV launches, CEO Tim Cook still has the deepest pockets of any company in the world AND daily access to 1.3 billion iPhone users. The Sultan of Silicon Valley also rolled out a streaming video game service to complement their emerging slate of original video content. And then there’s iTunes for content not available through their streaming service.

As a standalone, Apple’s streaming service doesn’t appear to be the alleged “Netflix Killer” investors were pining for; but with a content/platform aggregator for networks and streaming devices including Roku, Samsung TVs, and many others, the reimagined Apple TV app may finally provide desperately needed curation cure-all for the blitzkrieg of new content hitting devices daily. So, this delayed foray into the streaming space appears to be more than the sum of its parts and could make Apple a formidable foe for Netflix over the long run.

Amazon’s streaming service has been mildly successful but is not even close to threatening the ubiquity of Netflix. Prime Video almost feels like the afterthought of content services, but because it seamlessly integrates with a service many people already pay for, Amazon will always have a user base to draw from. Also, like Netflix, Amazon is not afraid to back up their dump truck of cash and spend on content like an A-list actor’s Aspen holiday. And given their enormous footprint, Amazon is always a threat to any sector in which it chooses to do business.

Because and only because HBO has some of the highest quality shows on television, it has been able to survive as a stand-alone channel/service. HBO’s 134 million worldwide subscribers* make it a force of nature in the content game even when the vast majority of those numbers are through cable bundles. But at this moment, HBO has some major hurdles to clear, including the end of their most popular show, Game of Thrones; the departure of their CEO earlier this month; and their acquisition by AT&T. Taken together these factors throw HBO’s future into serious flux. Additionally, at $14.99, they are the most expensive of the streamers. So, the question remains: are consumers willing to pay a premium for a service with an uncertain future and a crowd of competitors.

Disney seems to be the true enemy knocking on the gate of Netflix and no matter how tall and wide it is, no gate will keep the House of Mouse at bay. Later this year, Disney releases its Disney+ app that will aggregate all of the Disney franchises on a single platform. With the acquisition of Fox now complete, Disney controls a plethora of content and a diverse viewing audience that will make them a force to be reckoned with. Here are just a few major franchises held under Disney’s content umbrella:

• Disney Animation
• Marvel (the complete catalog as they have acquired the X-Men franchise from Fox)
• Pixar
• Lucasfilm
• The Simpsons
• Hulu (they own 60% now)
• 21st Century Fox movie studios
• ESPN and ESPN+ for sports

It seems Disney has a nearly endless amount of content to tap into. Their portfolio also holds the holy trinity of distribution: movie theaters, live TV with sports, and direct to consumer streaming. Non-sports content is also wholly owned by Disney, a feat unmatched by many of the other services, including Netflix.

Final Thoughts
2019 will likely NOT be the year competitors “sack the city” and take down the vast content empire that is Netflix. Maybe 2019 for Netflix is more like the year 180 for Rome, which marked the death of Marcus Aurelius and the end of what many historians think of as the height of the Roman Empire. With incessant incursions into their territories, Rome struggled to maintain their domain. Even still, Rome stood strong for almost 300 more years, lending credence to the fact that Netflix may still have a long road to run. Yet in the modern digital landscape, empires rise and fall within decades; not centuries. So, the question remains: has Netflix erected the necessary innovation fortifications that will beat back its competitors and continue its reign within the digital domain?


Securities offered through LPL Financial, Member FINRA( (

Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor. Gerber Kawasaki and Gerber Kawasaki Wealth and Investment Management are separate entities from LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.

Gerber Kawasaki, 2716 Ocean Park Blvd. #2022 Santa Monica, CA 90405. Contact us at (310) 441-9393