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NETFLIX: WILL CONTENT BE ENOUGH?1

Mary Kelly and Christopher Swann wrote this case solely to provide material for class discussion. The authors do not intend to illustrate
either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying
information to protect confidentiality.

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Copyright © 2020, Ivey Business School Foundation Version: 2020-11-02

We named our company Netflix in 1998 because we believed internet-based movie rental represented the
future, first as a means of improving service and selection, and then as a means of movie delivery. While
mainstream consumer adoption of online movie watching will take a number of years due to content and
technology hurdles, the time is right for Netflix to take the first step.

– Reed Hastings, Netflix chief executive officer2

To say that Netflix, Inc. (Netflix) had succeeded in disrupting the home entertainment market over the past
two decades would be an understatement. It first changed the market by offering digital versatile discs
(DVDs) delivered by mail and then by streaming videos to subscribers, wherever and whenever they wanted
to watch. The company’s early success in streaming stemmed from the decision to aggregate thousands of
hit films and television shows licensed from content partners who sought additional distribution outlets.
Even after it started creating its own content in 2012, non-original programming, including re-runs of shows
such as Friends (WarnerMedia LLC [WarnerMedia]), The Office (NBCUniversal Media LLC
[NBCUniversal]), and Grey’s Anatomy (The Walt Disney Company [Disney]), accounted for the majority
of viewership minutes among Netflix subscribers.3 However, in 2019, the owners of such content began to
launch their own services. Inspired by Netflix’s success, they developed their own plans to enter the United
States (US) video streaming market, thereby positioning themselves in direct competition to their former
distribution partner. Consequently, Netflix’s greatest challenges lie ahead. How should Netflix, a single-
play entertainment company, respond to the entry into the market of rivals with both scale and scope that
would make most firms quiver?

THE EBB AND FLOW OF AN INDUSTRY

Historical Context

During the so-called “golden age of movies” (i.e., the 1930s–1950s), there were five major movie studios
and a handful of smaller ones in the US. Financial viability depended on controlling the creative talent
necessary to make movies as well as selling tickets at the box office. Following the evolution of television
(TV) during the 1950s and the popularization of both pay TV and brick-and-mortar video stores (during the

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1980s–2010s), studios had access to additional distribution channels, which helped to extend the life of a
movie.4 After theatrical exhibition, copies of movies on Video Home System (VHS) tapes, DVDs, or Blu-
ray Discs were distributed exclusively to stores for rental and sale to the public. Once the retail exclusivity
period ended, movies were released to cable and satellite providers for distribution on pay-per-view and
premium channels (see Exhibit 1).5

Paul Kagan Associates, Inc. estimated that, in 2001, sales at video stores (rental and purchase) accounted for
a 41 per cent share of the $35.8 billion6 in revenue earned by movie studios, compared to the 21.6 per cent
share derived from box office receipts and the 37.4 per cent share from other outlets, including TV rights,
merchandising, and airlines and hotels.7 Blockbuster, LLC (Blockbuster), the only national video retailer,
estimated that 64 per cent of the US population lived within a 10-minute drive of one of its company-owned
or franchised stores.8 However, by the end of the decade, Blockbuster would file for bankruptcy.9

Netflix’s Entry

In April 1998, between the rise and fall of video stores, Netflix’s founders, Reed Hastings and Marc
Randolph, launched the world’s first online DVD rental company. Netflix subscribers ordered movies
online and then received the physical DVDs a few days later in a red envelope delivered via the US postal
system. Combining a corporate focus on making the customer experience easy and convenient with an
expanding catalogue of movies available to rent (from 900 in 1998 to more than 5,000 in 2000), Netflix’s
subscriber count approached 300,000 by the turn of the millennium.10 By the end of 2006, its DVD-by-mail
service had 6.3 million domestic subscribers.11

In 2007, after bandwidth technology had advanced sufficiently to allow for the high-quality transmission
of videos from servers to end users via internet service provider (ISP) networks, Netflix began offering a
movie streaming service, Watch Now.12 The limited streaming service (six hours per month) was initially
included as a free add-on to the $5.99-per-month DVD-by-mail subscription.13

Thinking Strategically

The Netflix platform was a classic two-sided market built on innovative approaches to program delivery.
Netflix’s content partners delivered videos to cloud services (mainly Amazon Web Services), which were
then distributed to subscribers on demand through Netflix’s Open Connect network.14 Initially, Netflix
outsourced its delivery system to large content-delivery networks. However, as its subscriber base grew
globally, the company’s scaling and efficiency needs increased, and Netflix decided to build its own
delivery system. Overall, the integration led to greater control and lower transaction costs.15

Moreover, video streaming was based on an adaptive bit rate, and the need to minimize end-user buffering
required the content to be cached.16 Consequently, Netflix used customized servers and components, which
were designed according to its own specifications, and negotiated with local ISPs (e.g., Comcast
Corporation [Comcast] and Charter Communications, Inc. [Charter]) to locate its network assets closer to
subscribers (even in ISP data centres) in order to reduce both network costs and latency.17

For the end-user interface, Hastings made a critical decision in late 2007. The company had been working on its
own Netflix player and was weeks away from launching it when it pulled the plug on the project and spun off
the company to Roku, Inc. (Roku).18 Commenting on this strategic play, Anthony Wood, chief executive officer
(CEO) of Roku, stated, “[The Netflix player] would’ve created tension with partners, and increasingly decisions

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would come up where Netflix would have to decide, ‘Should we make decisions based on what’s best for
licensing, or what’s best for our own hardware?’”19 As a result, Netflix remained an agnostic platform
ubiquitously available on gaming consoles, disc players, Smart TVs, mobile phones, and tablets.

The diversity of the movies and TV shows leveraged by Netflix’s platform and accessible via multiple end-
user devices led to a growing base of empowered subscribers who were happy to share their opinions and
recommendations with others.20 Using such data, Netflix was able to implement its “Holy Grail,” that is,
narrowcasting. According to the narrowcasting model, small segments of a wide viewing base—the “long
tail”—were served with curated or personalized programming. By enlisting algorithmic approaches to
analyzing viewer demographics, preferences, show choices, and behaviour (e.g., when the viewer paused
or stopped watching), Netflix was able to provide nudges or suggestions to each subscriber regarding what
to watch next.21 The end result was a better viewing experience.

THE VERTICAL STRUCTURE OF THE STREAMING INDUSTRY – PARTNERS AND RIVALS

Start with Licensing

From the launch of its streaming service in 2007, Netflix leveraged what it had, namely a library of movies
and TV reruns licensed from third parties. Nostalgia was always appealing, and licensing arrangements with
TBS and Comedy Central ensured that Netflix had a stream of popular hits.22 As early as 2008, Netflix secured
access to roughly 2,500 movies through a deal with the Starz cable network and Hollywood studios such as
Warner Bros. Entertainment Inc. (Warner Bros.), Nickelodeon, and Twentieth Century Fox Film Corporation
(Fox).23 Disney content became available on the Netflix streaming platform in 2012. By 2013, Netflix had
amassed a large library of content through digital rights licensing. However, the threat of bidding wars over
shows that were available for license as well as the threat of the competitive pullback of titles hastened the
move toward the company’s ultimate goal—Netflix originals—a strategy pursued by competitors, too.24

Own to Control

Netflix’s first original series, Lillehammer, debuted in North America in early 2012. The company took a
chance when, during the final quarter of 2012, it released the newly commissioned series House of Cards,
which was produced by the studio Media Rights Capital.25 The popularity of House of Cards clarified the
path toward the production of original movies and series—including Orange is the New Black, Narcos, and
The Crown—as well as documentaries and specials, such as David Letterman’s My Next Guest Needs No
Introduction. All these were created and produced by independent writers, producers, and studios, and they
were all storybook narratives. Each series had a connecting theme, with episodes acting like chapters in a
book that moved toward a climactic ending rather than as stand-alone episodes. Contrary to industry
standards, when Netflix completed a series, it made all of the episodes available simultaneously, instead of
releasing them on a weekly basis. Thus, the concept of binge-watching” was born.26

Trade-Offs

The licensing of movies and TV shows from media companies, whether branded as originals or not, was
not without risk, especially when those media companies were potential competitors. Indeed, in its 2013
Form-10-K filing, Netflix explicitly recognized the risks posed by competitive streaming companies having
exclusive rights to content that might not be extended to Netflix in the future. For its part, Netflix was
moving in the direction of self-production in order to gain greater cost control and reduce the risk of

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foreclosure on video content. In late 2018, Netflix announced its acquisition of Albuquerque Studios (ABQ
Studios), located in Albuquerque, New Mexico, for approximately $30 million.27 The facility included eight
sound stages, a backlot, and support offices.28

Mitigate Risk

Due to competitive media and streaming companies bidding on talent and studio production assets, there
was a risk that the industry would face increases in labour and other production costs. Netflix sought to
mitigate some of this potential escalation in costs through negotiating exclusive contracts for highly valued
resources. For example, Netflix locked-in Ryan Murphy (creator of Glee, among other shows) to an
exclusive five-year, $300-million contract, while it locked-in Shonda Rhimes (Grey’s Anatomy) to build
her own “mini Marvel” TV universe. The company also bought Millarworld, a comic-book publisher.29

Content Spending Wars

Variety Intelligence Platform estimated that US media and entertainment companies spent $121 billion on
original content for their studios, networks, and subscription video-on-demand (SVOD) services in 2019.30
Disney topped the list, spending $27.8 billion, followed by Comcast ($15.4 billion), ViacomCBS, Inc.
(ViacomCBS; $15 billion), and AT&T, Inc. (AT&T; $14.2 billion).31 Without an extensive catalogue of its own
content to rely on like its competitors, Netflix spent $14.6 billion in cash to secure original and licensed content.32
Moreover, the bidding wars over prized content were intense. In 2019, Netflix outbid Hulu LLC (Hulu), Amazon,
Inc. (Amazon), WarnerMedia, NBCUniversal, and ViacomCBS for the five-year global streaming rights for the
comedy series Seinfeld.33 The deal was estimated to be worth more than $500 million.34

THE HORIZONTAL STRUCTURE – RIVALS AND PARTNERS (SEE EXHIBITS 2, 3, AND 4)

The Market and Its Leader

In 2019, there were more than 140 online services offering movies and TV shows on demand.35 SVOD
accounted for 63 per cent of the $25 billion value of the US home entertainment market.36 According to a
survey conducted by Leichtman Research Group (LRG), nearly 75 per cent of US households had an SVOD
service, with 69 per cent subscribing to more than one.37

Further, eMarketer estimated that 182.5 million people, some 55 per cent of the US population, viewed
content via SVOD services in 2019.38 Netflix’s share of users was 87 per cent, followed by Amazon Prime
Video with 52.9 per cent, Hulu with 41.5 per cent, and HBO Now with 12.6 per cent.39 Commenting on the
numbers, Eric Haggstrom of eMarketer stated,

While there is no true “Netflix killer” on the market, Disney’s upcoming bundle with Disney+,
Hulu, and ESPN+ probably comes closest. Netflix’s answer has been to stick to what has made it
the market leader—outspending the competition on both licensed and original content, offering
customers a competitive price.40

While Netflix’s original productions were among those most frequently cited as viewers’ favourite shows
on the platform, the most commonly viewed shows, according to Nielsen Holdings PLC (Nielsen), were
actually licensed programs.41 While a significant amount of its licensed content was expected to wind down
over the years (e.g., the loss of the Disney catalogue as well as shows such as The Office and Friends), the

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company expected that its subscribers would shift to other content on its platform, much more of which
would be original.42

Netflix offered its content library, consisting of 3,730 movies and 2,108 TV shows, for a monthly fee of $8.99
(basic), $12.99 (standard), or $15.99 (premium).43 The variation in price was based on the number of screens
that could access content simultaneously as well as on the signal quality (i.e., standard vs. high definition).
According to MoffettNathanson LLC (MoffettNathanson), the top reasons cited by Netflix users for their use
of the site included not being interrupted by advertisements (ads), having the ability to choose what they
wanted to watch, and having the ability to binge-watch programs.44 In its Second Quarter 2019 Letter to
Shareholders, Netflix reiterated its intention to remain free of advertising, similar to its competitor Home Box
Office (HBO). The statement read, “We believe we will have a more valuable business in the long term by
staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction.”45

Amazon

Amazon, the largest internet retailer, with a revenue of $280 billion in 2019, launched its SVOD service,
Prime Video, in 2011 as a free add-on to (i.e., bundled with) its Prime membership service.46 CEO Jeff
Bezos reported that, by the end of 2019, the firm had more than 150 million paid Prime members
worldwide.47 The firm did not break its subscriber counts down by location, although both Consumer
Intelligence Research Partners and Ampere Analysis Ltd. (Ampere Analysis) estimated that there were 112
million US Prime members (and 42.2 million Prime Video users).48 Amazon licensed thousands of titles
from third parties; distributed content from premium networks such as HBO, Showtime, Cinemax, and
Starz; made videos available for rent and purchase; and created its own content, on which it spent $6.5
billion in 2019.49 Amazon’s most valuable original content included the award-winning TV series The
Marvelous Mrs. Maisel and Fleabag.

Apple, Inc. (Apple)

Apple introduced its $4.99-per-month, ad-free streaming service, Apple TV+, in November 2019. Spending
an estimated $6 billion on content in 2019, Apple offered eight series and one documentary at launch, all
original and exclusive content involving high-profile actors and filmmakers, including Jennifer Anniston,
Reese Witherspoon, and Steve Carell in The Morning Show.50 Ampere Analysis estimated that Apple TV+
had garnered 33.6 million subscribers by the end of 2019, in large part due to a promotion that offered
buyers of Apple hardware products a one-year membership for free.51

Disney

Disney controlled the next two largest SVOD services, Hulu (without live TV) and Disney+, which had
27.2 million and 26.5 million subscribers, respectively.52 Disney’s entry into the streaming business and
away from relying exclusively on third parties to distribute its content was facilitated by its acquisitions. In
2017, it gained a majority stake in the streaming technology company BAMTech Media.53 In 2019, it bought
international media assets, film and TV production studios, two cable networks (FX and National
Geographic), and a 30 per cent share in Hulu from Twenty-First Century Fox, Inc. (Twenty-First Century
Fox). In total, these acquisitions cost $71.3 billion.54 In April 2019, it launched the sports streaming service
ESPN+, and then 19 months later, it launched the entertainment service Disney+. At the end of 2019,
ESPN+ had 6.6 million subscribers. The three SVOD services were offered to users as a bundle for $12.99
per month or on an à-la-carte basis. Premium services—Showtime, Starz, HBO Now, and Cinemax—were

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available as add-ons. At the launch of Disney+, Disney partnered with Verizon Communications, Inc. to
give away a one-year Disney+ subscription to both new and existing customers on the unlimited wireless
phone plan as well as to new 5G home internet customers.

ViacomCBS

The 2019 merger of Viacom and CBS brought CBS All Access and Showtime under one roof, and together
they had 11.2 million subscribers.55 Launched in 2014 as the first broadcast network over-the-top (OTT)
service, CBS All Access provided original programming (e.g., Star Trek: Picard and The Good Fight), full
seasons of popular CBS TV programs (e.g., NCIS), live news (from local CBS affiliates), live sports (from
CBS Sports HQ), and live entertainment news (ET Live).56 Showtime was available to viewers as a premium
channel on the pay-TV bundle, as a stand-alone streaming service (beginning in 2015), and as an add-on to
third-party SVOD platforms (e.g., Amazon Prime and Hulu).

AT&T

In sixth place was AT&T’s HBO Now, which had approximately 8 million subscribers.57 AT&T planned
to leverage the more than 370 million direct consumer relationships it had across its mobile, pay-TV,
broadband, and digital platforms with the May 2020 launch of HBO Max, a stand-alone, direct-to-consumer
application (app) offering HBO’s original movies and series as well as exclusive WarnerMedia content.58
The price tag for consumers was $14.99 per month. With the launch of the new service and a forecasted
subscriber count of 36 million by the end of 2020, AT&T planned to terminate its licensing contracts with
rival streaming services, including the $100 million it received annually from Netflix for the sitcom Friends.

Others

Comcast’s NBCUniversal planned to launch a new streaming service in 2020 that would include original
programming, live sports, and NBCUniversal’s library of movies and TV shows. Comcast announced that
it would pull content from Netflix, Hulu, and Prime Video when the licensing contracts expired. This
included lucrative contracts for popular series such as The Office, Law and Order, and Park and Recreation.
However, in December 2019, the firm announced that it had reached an agreement with Starz, whereby the
two firms would license streaming content to one another. Starz, a premium TV network owned by the film
studio Lions Gate Entertainment Corporation, had launched its streaming app in 2016 at a monthly price of
$8.99. By the end of 2019, it had 6.3 million subscribers, with the largest share being in the US.59 Other
market participants included Quibi (a mobile-only app consisting of short video clips), DC Universe,
Sundance Now, Acorn TV, Filmatique, Shudder, and Urban Movie Channel.

SCALE AND SCOPE

The Big Screen

Since 1995, six vertically integrated major studios had controlled at least 75 per cent of the US theatrical
market (see Exhibit 5).60 With the exception of one studio, Sony Corporation/Columbia Pictures, they all
competed with Netflix in terms of streaming. Traditionally, Hollywood studios, such as Disney, released a
movie for theatrical exhibition for an exclusive period of about 75–90 days. At the conclusion of the
exclusivity period, the movie would be distributed to other platforms, including video-on-demand platforms

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and TV networks. Success at the brick-and-mortar box office was often important for a film’s overall
revenue and marketing.

Netflix created its content to launch straight on its streaming platform in order to entice more subscribers to
sign up as well as to encourage current subscribers to stay. In 2018 and 2019, however, it arranged for its
highly acclaimed films Roma and The Irishman to debut in theatres. The films were in theatres for less than a
month, enough time to earn Academy Award nominations but not enough to make theatre owners, such as
Cineplex, Inc. and AMC Entertainment Holdings, Inc., happy with the arrangement.61

The Small Screen

In terms of the small screen, the market research firm Nielsen estimated that there were 646,152 unique
program titles (including TV series, movies, and live programming) available to US consumers in 2019,
with only nine per cent exclusively offered through an SVOD service.62 According to Nielsen, the five
attributes most commonly cited by SVOD users as important with regard to retaining and perhaps adding
services were cost, ease of use, variety/availability of content, streaming/playback quality, and speed (menu
selection and content loading).63

Depending on the household, pay TV was either a substitute for or a complement to SVOD. In light of
rising prices and frustration with viewing linear programming many US households dropped their
subscription service to SVOD providers in favor of video entertainment directly over the Internet, or Over-
The-Top (OTT) service. Between 2009 and 2019, the percentage of households that subscribed to a pay-
TV service (using either a set-top cable box or satellite dish) dropped from 87 per cent to 75 per cent.64 Yet,
according to LRG, 54 per cent of households with a TV had both an SVOD and a pay-TV service.65 Despite
the shift in how and where video programming was viewed, such households watched an average of 24.5
hours of traditional TV per week in 2019, with the range being from 11 hours for the 18–34 age group to
46.5 hours for those aged 65 years and older.66

The top four pay-TV providers (Comcast, Charter, AT&T, and Dish Network Corporation), which served
approximately 75 per cent of the market, responded to the cord-cutting by offering skinny bundles that did
not require a pay-TV subscription but did require broadband (or virtual) access over ISP or wireless
networks. For many households, the local ISP was one of a few pay-TV providers that served the
community, albeit the only one that could package internet access with pay-TV and telephone services at
discounted rates. In 2019, Comcast and Charter were the largest fixed-broadband providers, with 28.6
million and 26.7 million US subscribers, respectively.67 MoffettNathanson estimated that there were nearly
10 million virtual pay-TV subscribers, with Hulu + Live TV having the largest number (3.2 million),
followed by Sling TV (2.6 million), YouTube TV (2 million), and AT&T TV Now (918,000).68

According to Parks Associates, Inc., the churn rates for OTT services were nine and 1.5 times higher than
those for pay TV and virtual multichannel video programming distributors (vMVPD), respectively.69 Some
customers maintained pay-TV subscriptions, at least in the short term, for several reasons including
penalties incurred by cancelling multi-year sign up extension contracts, the appeal of low-price service
bundles including internet and telephone service, or the difficulty of cancelling service online.

NETFLIX – HOW TO COMBAT THREATS FROM FORMER PARTNERS/NEW RIVALS

In every respect, Netflix’s past performance had been stellar. Between 2010 and 2019, its stock price had
increased by 4,135 per cent, significantly outpacing both the Standard and Poor’s (S&P) 500 (up 185 per

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cent) as well as its next closest competitor, Amazon (up 1,280 per cent).70 Between 2015 and 2019, it had
garnered 408 Emmy and 52 Academy Award nominations, only slightly less than the perennial
powerhouses Disney and Warner Bros. (see Exhibit 4).71

The path ahead for Netflix could prove more difficult, however, as it faced three major threats. The
streaming market was expected to become bloated with new competitors, each encroaching upon the others’
subscriber bases. Consumers would also face a more difficult choice regarding how much to spend on video
entertainment from multiple SVOD services. Moreover, Netflix was going to face an inevitable decline in
the breadth of its content due to the expiration of licensed content agreements with former partners, who
had turned rivals. The company’s first-mover advantage had allowed it to secure the largest share of the US
streaming market. Retaining that share could become more difficult with the entry into the market of
diversified media giants. How should Netflix respond?

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EXHIBIT 1: EVOLUTION OF ENTERTAINMENT – 1930 TO 2009

Decade Milestones
1930s Between 1935 and 1939, an average of 762 movies were released and 19 movie tickets were sold per capita annually. Some of the most
iconic movies were made during this decade, including Snow White and the Seven Dwarves, Gone with the Wind, and The Wizard of Oz.
The “Big Five” movie studios were forward integrated into movie theatres. Combined, Warner Bros. Inc., RKO Pictures, Twentieth Century
Fox Film Corporation, Metro-Goldwyn-Mayer Studios, Inc., and Paramount Pictures Corporation operated 70 per cent of first-run movie
theatres in 92 cities with populations of 100,000 or more.
1940s Annual movie ticket sales per capita peaked at 34.3 in 1946.
In the landmark 1948 antitrust decision in United States v. Paramount Pictures et al., the Supreme Court ordered the studios to divest their
theatres and stop anticompetitive practices such as blind-buying and block-booking when distributing movies to independent theatres.
Television (TV) ushered in live programs broadcast to viewers with TV sets equipped with antennae/receivers. Cable TV came onto the market
in 1948 as a subscription-based service. For households in mountainous or remote areas, local cable operators used community antennas to
receive and transmit signals via coaxial cables connected to people’s homes.
1950s By the end of the 1950s, or the “golden age” of television, nearly 90 per cent of households owned a TV set. Most of the advertising-supported
programming on TV was produced by three major networks, namely National Broadcasting Company (NBC), American Broadcasting
Company (ABC), and Columbia Broadcasting System (CBS), and transmitted over the air by terrestrial radio waves at no charge. The invention
of the magnetic tape, which could be used to record and store video and audio, allowed broadcasters to “air” programming to viewers
simultaneously at scheduled times.
1960s Leveraging their technology to import and distribute distant signals, cable operators began expanding into larger metropolitan markets and
distributing more channels.* By the end of the decade, 3.6 million United States (US) households subscribed to a cable service.
1970s The videocassette recorder (VCR), which allowed households to watch movies copied to Video Home System (VHS) tapes, was introduced
in 1975 at an average price of between $1,000 and $1,400.
The first professionally managed video rental store opened in 1977 in Los Angeles.
In 1972, Time, Inc.’s Home Box Office (HBO) became the first satellite-delivered national cable channel. Viacom, Inc.’s Showtime and The
Movie Channel followed in 1978 and 1979, respectively.
1980s Founded in 1980 by Ted Turner, Cable News Network (CNN) became the first all-news cable channel. Advertising began to appear on cable
networks.
The average price of a VCR dropped to below $400.
By the end of the 1980s, there were more than 70,000 outlets renting movies in the US, with over a third being specialty rental stores such as
those owned by Blockbuster, Inc. (Blockbuster). The US Census Bureau estimated that 15 per cent of US households owned a computer.
1990s In the pay-TV market, direct-broadcast satellite (DBS) providers became formidable competitors of cable operators because satellite dishes,
which were used to receive signals, became smaller in size and less obtrusive, and the Federal Communications Commission (FCC) lifted its
ban on firms’ ability to transmit local broadcast channels.
Movie distributors began releasing videos on digital versatile discs (DVDs) due to the format’s higher video and sound quality. Moreover, a
disc’s smaller size relative to a VHS tape made it less costly to ship.ᵝ In 1997, 37 per cent of US homes owned a computer, while 18 per cent
had access to the internet.
In 1998, Reed Hastings and Marc Randolph launched Netflix, Inc., the first online DVD rental store.
By 1999, 86 per cent of households owned a VCR. The VictoryShares Dividend Accelerator (VSDA) estimated that, each week, approximately
50 million consumers visited a video store.
2000s Rentals of movies and whole seasons of TV shows exceeded retail sales. DVD rentals exceeded VHS rentals for the first time in 2003. In
2002, Redbox Automated Retail LLC (Redbox), an operator of automatic kiosks that dispensed DVDs, began locating its machines inside
retail locations.§ By the end of the decade, Redbox had 22,400 kiosks. In 2007, Netflix introduced its streaming service. By 2008, nearly 90
per cent of the US population owned a DVD player, up from 20 per cent in 2001. Hulu, a joint-venture subscription-video-on-demand (SVOD)
service, was launched in 2008. In 2009, Blockbuster had 6,520 stores, 4,018 of which were located in the US. Approximately 74 per cent of
US households owned at least one computer (and used the internet), while more than 100 million subscribed to a pay-TV service, with the
price varying based on location, the number of linear channels per tier, and optional internet and telephone service bundles.

Note: * ESPN and CNN were launched in 1979 and 1980, respectively.; ᵝ The release of movie titles on high-definition DVD and Blu-ray Disc
began in 2006.; § McDonalds started Redbox as a means of increasing foot traffic into its restaurants. The DVD rental rate was just $1 per day,
and consumers could return the disc to any kiosk location.
Sources: James W. Brock, The Structure of American Industry, 13th ed. (Long Grove, IL: Waveland Press, 2016); “History of Cable,” California
Cable and Telecommunications Association, accessed February 2, 2020, www.calcable.org/learn/history-of-cable/; “1950s: TV and Radio,”
Encyclopedia.com, June 13, 2020, accessed July 5, 2020, www.encyclopedia.com/history/culture-magazines/1950s-tv-and-radio; “The Cable
History Timeline,” The Cable Center, accessed April 1, 2020, www.cablecenter.org/images/files/pdf/CableHistory/CableTimelineFall2015.pdf;
Johnnie L. Roberts, “The VCR Boom: Prices Drop as Their Popularity Continues to Grow,” Chicago Tribune, September 22, 1985, accessed
January 24, 2020, www.chicagotribune.com/news/ct-xpm-1985-09-22-8503040687-story.html; Derek Khanna, “A Look Back At How The Content
Industry Almost Killed Blockbuster And Netflix (And The VCR),” TechCrunch, December 28, 2013, accessed June 20, 2020,
https://techcrunch.com/2013/12/27/how-the-content-industry-almost-killed-blockbuster-and-netflix/; Thom File, “Computer and Internet Use in the
United States,” US Census Bureau, May 2013, accessed March 25, 2020, www.census.gov/prod/2013pubs/p20-569.pdf; Eric Bangeman, “DVD
Players Finally Outnumber VCRs,” Ars Technica, December 22, 2006, accessed January 21, 2020,
https://arstechnica.com/gadgets/2006/12/8484/; Video Software Dealers Association, “More DVDs Rented Last Week Than VHS Cassettes; First
Time That Number of DVDs Rented Exceeded Video Cassettes,” Business Wire, June 19, 2003, accessed January 22, 2020,
www.businesswire.com/news/home/20030619005625/en/DVDs-Rented-Week-VHS-Cassettes-Time-Number; Erik Gruenwedel, “DVD/Blu-ray
Disc Player Ownership Continues to Decline,” Media Play News, August 23, 2018, accessed January 21, 2020, www.mediaplaynews.com/dvd-
blu-ray-disc-player-ownership-continues-to-decline/; Christopher Harress, “The Sad End of Blockbuster Video: The Onetime $5 Billion Company
is Being Liquidated as Competition From Online Giants Netflix and Hulu Prove All Too Much for the Iconic Brand,” International Business Times,
December 5, 2013, accessed February 10, 2020, www.ibtimes.com/sad-end-blockbuster-video-onetime-5-billion-company-being-liquidated-
competition-1496962; Federal Communications Commission, In the Matter of the Annual Assessment of the Status of Competition in the Market
for the Delivery of Video Programming, 14th Report, July 20, 2012, accessed June 20, 2020, www.fcc.gov/document/fcc-releases-14th-video-
competition-report; Randall Stross, “When the Price is Right, the Future Can Wait,” New York Times, July 11, 2009, accessed February 10, 2020,
www.nytimes.com/2009/07/12/business/12digi.html.

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EXHIBIT 2: ENTERTAINMENT SPENDING IN THE US (IN MILLION $)

AT HOME

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
PHYSICAL SALES 3,293 4,030 4,716 5,491 6,070 6,935 7,779 8,462 8,952 10,321

RENTAL
Brick and Mortar 250 317 389 488 616 693 956 1,216 1,599 2,309
Subscription 301 369 455 548 659 793 1,015 1,258 1,741 2,272
Kiosk* 885 1,098 1,272 1,515 1,732 1,837 1,895 1,938 1,676 1,269
Total Rental 1,436 1,784 2,116 2,550 3,007 3,323 3,866 4,412 5,017 5,851

DIGITAL
Electronic Sell-Thru 2,583 2,458 2,154 2,037 1,907 1,601 1,189 808 603 508
Video on Demand 1,958 2,087 1,965 2,105 1,968 1,981 2,109 2,012 1,784 1,752
Subscription 15,898 12,849 9,927 7,287 5,082 4,066 3,191 2,395 1,603 NA
Total Digital 20,439 17,394 14,046 11,429 8,957 7,649 6,489 5,215 3,990 2,260

GRAND TOTAL 25,167 23,208 20,878 19,470 18,035 17,906 18,134 18,090 17,959 18,431

AT THE BOX OFFICE

Tickets Sold (M) 1,247 1,311 1,226 1,302 1,323 1,257 1,339 1,381 1,283 1,329
Receipts (M$) 11,362 11,946 10,994 11,259 11,155 10,273 10,887 10,993 10,173 10,482
Average Ticket Price ($) 9.11 9.11 8.97 8.65 8.43 8.17 8.13 7.96 7.93 7.89

Sources: “Industry Data,” Digital Entertainment Group, accessed June 21, 2020, www.degonline.org/industry-data/; “Domestic Movie Theatrical Market Summary 1995 to
2010,” The Numbers, accessed June 21, 2020, www.the-numbers.com/market/.

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EXHIBIT 3: NETFLIX – SELECTED FINANCIAL AND OPERATIONAL DATA (IN MILLION $)

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
REVENUES $20,156 $15,794 $11,693 $8,831 $6,780 $5,505 $4,375 $3,609 $3,205 $2,163
Cost of Revenues 12,440 9,968 8,033 6,257 4,591 3,753 3,117 2,652 2,040 1,357
Marketing 2,652 2,369 1,436 1,098 824 607 470 439 403 294
Tech & Dev 1,545 1,222 954 780 651 472 379 329 259 163
G&A 914 630 431 316 407 270 180 139 127 64
Operating Income $2,604 $1,605 $839 $380 $306 $403 $228 $50 $376 $284

NET INCOME $1,867 $1,211 $559 $187 $123 $267 $112 $17 $226 $161

CONTENT ASSETS
Licensed Content, Net $14,703 $14,081 $11,772 $9,595 $6,827 NA NA NA NA NA
Produced Content, Net 9,801 6,021 2,897 1,381 365 NA NA NA NA NA
DVD, Net 10 13 25 27 NA NA NA NA NA
Total $24,505 $20,112 $14,682 $11,001 $7,219 $4,939 $3,797 $2,874 $1,967 $362

SUBSCRIBERS (000)
DVD 2,153 2,706 3,330 4,029 4,787 5,668 6,765 8,049 11,039 18,268
Streaming 167,090 139,259 110,644 89,090 70,839 54,476 41,434 30,363 21,600 *
Domestic 61,043 58,486 52,810 47,905 43,401 37,698 31,712 25,471 20,153 *
International 106,047 80,773 57,834 41,185 27,438 16,778 9,722 4,892 1,447

AWARD NOMINATIONS
Emmys 117 112 91 54 34 31 14 0 0 0
Oscars 24 15 8 3 2 1 1 0 0 0

Note: * For 2010 and 2011, domestic DVD and streaming revenues were combined, as one subscription plan included both services; DVD = digital versatile disc; G&A =
general and administrative expenses; NA = not applicable; Tech & Dev = technology and development.
Sources: Netflix, Inc., 10-K Report for the Fiscal Year Ended December 31, 2019, accessed June 20, 2020, https://d18rn0p25nwr6d.cloudfront.net/CIK-
0001065280/4b247013-f3f1-4881-92d2-13088d2bd8d7.pdf; “71st Emmy Awards and Winners,” Television Academy, accessed June 21, 2020,
www.emmys.com/awards/nominees-winners; “Experience Over Eight Decades of the Oscars From 1927 to 2020,” Oscar, accessed June 21, 2020,
www.oscars.org/oscars/ceremonies/2020.

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EXHIBIT 4: FINANCIAL AND OTHER DATA CONCERNING COMPETITORS

Parent Company Disney AT&T ViacomCBS Comcast Amazon Apple
Revenue $69,570 M $181,193 M $27,812 M $108,942 M $280,522 M $260,174 M
Net Income $11,584 M $14,975 M $3,308 M $13,057 M $11,588 M $55,256 M
2010–2019 Stock
351% 37% −19% 430% 1280% 861%
Performance
2019 Original $27.8 B $14.2 B $15.0 B $15.4 B $6.5 B $6.0 B
Content Spend
Emmy
465 (ABC, Hulu, Fox, FX) 576 (HBO) 239 (CBS, Showtime) 278 113 --
Nominations*
Oscar 155 (Disney, Twentieth Century 30 (Paramount and CBS 62 (Universal and Focus
62 (Warner Brothers) 12 --
Nominations* Fox, and Fox Searchlight) Films) Partners)
Other Major Wireline and wireless Theme parks, pay TV, Internet retailer, Consumer
Theme parks and resorts,
Business telecommunications, -- broadband, and cloud storage, hardware and
consumer products
Segments pay TV telecommunications grocery stores software products
SVOD Service Hulu (2008), Hulu TV (2017), HBO Now (2015), HBO Max CBS All Access (2014), Apple TV Plus
Peacock (2020) Prime Video (2011)
(Launch Year) ESPN+ (2018), Disney+ (2019) (2020) Showtime (2015) (2019)
Movies and TV series from Walt
Movies and TV series from Live CBS TV channels Movies and TV series, Licensed and
Disney Pictures, Pixar, Marvel, Original movies
Content HBO, Warner Bros., New Line and library of 10K+ CBS including original and library original TV and
LucasFilm, and National and TV series
Cinema, DC Comics originals content movies
Geographic
$8.99 or free with
HULU: 5.99 with ads or 11.99 HBO Now: $14.99; HOB Max: $4.99 or free for
CBS All Access: $5.99 No charge for limited Prime membership;
without ads; ESPN+: $4.99; $14.99 or free for AT&T 12 months with
Price/Month with ads or $9.99 without programs, $4.99 with ads, Showtime and Starz
Disney+: $6.99; Bundle of Hulu, wireless, broadband, and video purchase of Apple
ads; Showtime: $10.99 and $9.99 without ads are video channel
ESPN+ and Disney+: $12.99 customers device
add-ons
Xfinity: Largest pay-TV and
broadband provider. Multi-
Hulu + Live TV: $54.99 with ads Cinemax: $9.99 add-on; AT&T
tier pricing based on
Other TV-Related or $60.99 without ads (HBO, Now: $55 for 45+ channels or
PlutoTV: $0 with ads number of channels and -- --
Services Cinemax, Showtime, and Starz as $80 for 60+ channels (with
bundle options (TV and
add-ons) HBO and Cinemax)
internet). Netflix and
Showtime in highest tier.

Note: * For the years 2015–2019; ads = advertisements; SVOD = subscription video on demand; TV = television. Other firms that spent money on original content in 2019 included Fox
($5.7B), Discovery ($4.6B), Sony ($2.7B), Facebook ($2.5B), Lions Gate ($2.3B), AMC ($1.1B), Google ($0.9B), and MGM ($0.8B).
Sources: Amazon.com, Inc., Form 10-K for the Fiscal Year Ended December 31, 2019, accessed October 11, 2020, https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/4d39f579-
19d8-4119-b087-ee618abf82d6.pdf; Apple Inc., Form 10-K for the Fiscal Year Ended September 28, 2019, accessed October 11, 2020, https://d18rn0p25nwr6d.cloudfront.net/CIK-
0000320193/1a919118-a594-44f3-92f0-4ecca47b1a7d.pdf; AT&T Inc., Form 10-K for the Fiscal Year Ended December 31, 2019, accessed October 11, 2020,
https://otp.tools.investis.com/clients/us/atnt2/sec/sec-show.aspx?FilingId=13936660&Cik=0000732717&Type=PDF&hasPdf=1; Comcast, Form 10-K for the Fiscal Year Ended
December 31, 2019, accessed October 11, 2020, www.cmcsa.com/static-files/b5555e74-b063-4638-9503-07ebd5c1d021; Disney, Inc., Form 10-K for the Fiscal Year Ended September
28, 2019, accessed October 11, 2020, https://otp.tools.investis.com/clients/us/the_walt_disney_company/SEC/sec-

This document is authorized for use only in Prof. Justin Joy's EBusiness at Christ University from Feb 2022 to Aug 2022.
show.aspx?FilingId=13754385&Cik=0001744489&Type=PDF&hasPdf=1; Verizon Communications Inc., Form 10-K for the Fiscal Year Ended December 31, 2019, accessed October
11, 2020, http://verizon.api.edgar-online.com/EFX_dll/EdgarPro.dll?FetchFilingConvPDF1?SessionID=Wrn6U3ExUYurATQ&ID=13940645; Gavin Bridge, “Entertainment Companies
Spend $121 Billion on Original Content in 2019,” Variety, January 6, 2020, accessed March 25, 2020, https://variety.com/2020/biz/news/2019-original-content-spend-121-billion-
1203457940/; “71st Emmy Awards and Winners,” Television Academy, accessed June 21, 2020, www.emmys.com/awards/nominees-winners; “Experience Over Eight Decades of the
Oscars From 1927 to 2020,” Oscar, accessed June 21, 2020, www.oscars.org/oscars/ceremonies/2020.
 Page 13 9B20M187

EXHIBIT 5: DOMESTIC BOX OFFICE MARKET SHARE (%)

Largest Movie Studios

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
Disney (Buena Vista) 33.2 26.2 21.7 26.1 21.0 15.6 16.0 14.3 12.0 14.0
Twentieth Century Fox 4.4 9.1 12.1 13.1 11.7 17.2 9.8 9.4 9.7 13.3
AT&T/Time Warner (WB/New Line) 13.9 16.2 18.5 17.0 14.1 15.2 17.1 15.3 18.0 18.0
Comcast – NBCUniversal 11.6 14.8 13.8 12.6 22.0 10.7 12.8 12.5 10.1 8.5
Sony Pictures/Columbia 12.2 11.2 9.6 8.1 8.7 12.3 10.6 16.3 12.5 12.3
ViacomCBS – Paramount Pictures 5.0 6.4 4.8 7.5 6.3 9.8 9.1 8.4 19.3 16.5
Lions Gate 7.1 3.0 8.0 5.9 5.6 7.1 9.7 11.5 1.8 4.9
% of Box Office 87.2 86.9 88.5 90.2 89.3 87.9 85.1 87.6 83.4 87.3

Source: “Market Share for Each Distributor,” The Numbers, accessed May 27, 2020, www.the-numbers.com/market/2019/distributors.

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ENDNOTES
1
This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives
presented in this case are not necessarily those of Netflix, Inc., or any of its employees.
2
Thomas Clayburn, “Netflix Debuts PC Video Streaming Service,” InformationWeek, January 16, 2007, accessed February
10, 2020, www.informationweek.com/netflix-debuts-pc-video-streaming-service/d/d-id/1050768.
3
Joe Flint and Amol Sharma, “Netflix Fights to Keep Its Most Watched Shows: ‘Friends’ and ‘The Office,’” Wall Street Journal,
April 24, 2019, accessed March 24, 2020, www.wsj.com/articles/netflix-battles-rivals-for-its-most-watched-shows-friends-and-
the-office-11556120136.
4
Households were more willing to rent “okay” movies, as this option was less costly than seeing the film in a theatre. In addition
to the timing advantage, video rental offered households the opportunity to control their viewing experience—for example,
they could pause, stop, fast forward, and rewind the movie—unlike the later distribution channels of premium or pay-per-view
cable channels, or broadcast television. Frontline, “Now Playing…and Playing…and Playing,” PBS, accessed February 9,
2020, www.pbs.org/wgbh/pages/frontline/shows/hollywood/business/windows.html.
5
Blockbuster, Inc., Form 10-K Report for Fiscal Year Ended December 31, 2000, March 29, 2001, accessed March 25, 2020,
https://sec.report/Document/0000930661-01-000794/.
6
$ = USD = United States dollars; All currency amounts are in USD unless otherwise specified.
7
Blockbuster, Inc., op. cit.
8
Ibid.
9
Blockbuster was acquired by Dish for $320 million in 2011. By the end of 2019, there was only one Blockbuster store left in
the world, a franchised location in Bend, Oregon. Tiffany Hsu, “The World’s Last Blockbuster Has No Plans to Close,” New
York Times, March 6, 2019, accessed March 25, 2020, www.nytimes.com/2019/03/06/business/last-blockbuster-store.html.
10
Initially, Netflix charged rental fees for its movies, but within two years, it moved to a subscription model and dropped both
return-by dates and late fees. “How Netflix Became a $100 Billion Company in 20 Years,” Product Habits, accessed February
10, 2020, https://producthabits.com/how-netflix-became-a-100-billion-company-in-20-years/.
11
Ibid.
12
By 2019, 82 per cent of US households had access to broadband, which is defined as a minimum speed of 25 Mbps for
downloads. Ibid.; “85% of U.S. Households Get an Internet Service at Home,” Leichtman Research Group, December 23,
2019, accessed March 3, 2020, www.leichtmanresearch.com/85-of-u-s-households-get-an-internet-service-at-home/.
13
What Netflix did for movies was akin to what Amazon did for books and Apple did for music. In 2011, Netflix unbundled the
services. Instead of paying $9.99/month for both, including unlimited streaming, subscribers were charged $7.99 for each.
Jeffrey C. Ulin, The Business of Media Distribution (New York, NY: Focal Press, 2014), 235.
14
“Designing Netflix’s Content Delivery System: Symposium 2014,” YouTube video, 28:36, posted by “uptimeinstitute,” July
3, 2014, accessed June 28, 2020, www.youtube.com/watch?v=LkLLpYdDINA.
15
Ibid.
16
“A Brief History of Netflix Streaming Technology,” YouTube video, 55:54, posted by “Streaming Media,” August 5, 2013,
accessed June 28, 2020, www.youtube.com/watch?v=pZ8tJzIaJ3s.
17
Ibid.
18
Austin Carr, “Inside Netflix’s Project Griffin: The Forgotten History of Roku Under Reed Hastings,” Fast Company, January
23, 2013, accessed July 5, 2020, www.fastcompany.com/3004709/inside-netflixs-project-griffin-forgotten-history-roku-under-
reed-hastings.
19
Ibid.
20
Alan Wolk, Over the Top, How the Internet is (Slowly but Surely) Changing the Television Industry (North Charleston, SC:
CreateSpace Independent Publishing Platform, 2015), 92–96.
21
Alison N. Novak, “Narrowcasting, Millennials and the Personalization of Genre in Digital Media,” in The Age of Netflix, ed.
Cory Barker and Myc Wiatrowski (Jefferson, NC: McFarland & Company, Inc., 2017), 162–166.
22
Kathryn Pallister, ed., Netflix Nostalgia: Streaming the Past on Demand (Lanham, MD: Lexington Books, 2019).
23
In 2013, HBO entered into an agreement with Amazon to license much of its library for streaming via Prime as the market
moved away from DVD sales. Lucas Shaw, “Hollywood Studios Can’t Quit Netflix – Even if They Want To,” Los Angeles Times,
May 30, 2019, accessed June 19, 2020, www.latimes.com/business/la-fi-netflix-hollywood-studios-programs-20190520-
story.html; Derek Kompare, “Streaming As Shelving: The Media Past in the Media Future,” Flow, May 5, 2019, accessed June
19, 2020, www.flowjournal.org/2014/05/streaming-as-shelving/.
24
Maira Bianchini and Maria Carmem Jacob de Souza, “Netflix and Innovation in Arrested Development’s Narrative Construction,” in
The Age of Netflix, ed. Cory Barker and Myc Wiatrowski (Jefferson, NC: McFarland & Company, Inc., 2017), 102–103.
25
Ashley Rodriguez, “Netflix Didn’t Make Many of the ‘Originals’ That Made It Famous. That’s Changing,” Quartz, February
26, 2019, accessed June 19, 2020, https://qz.com/1545594/netflix-doesnt-make-most-of-its-originals-now-thats-changing/.
26
Wolk, op. cit., 32–36.
27
Todd Spangler, “Netflix Is Paying Less Than $30 Million For Albuquerque Studios, Which Cost $91 Million To Build,” Variety,
October 16, 2018, accessed June 22, 2020, https://variety.com/2018/digital/news/netflix-albuquerque-studios-deal-terms-30-
million-1202981274/.
28
Ibid.
29
Rodriguez, op. cit.
30
Gavin Bridge, “Entertainment Companies Spend $121 Billion on Original Content in 2019,” Variety, January 6, 2020,
accessed May 27, 2020, https://variety.com/2020/biz/news/2019-original-content-spend-121-billion-1203457940/.

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31
Ibid.
32
Netflix, Inc., 10-K Report for the Fiscal Year Ended December 31, 2019, accessed June 20, 2020,
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001065280/4b247013-f3f1-4881-92d2-13088d2bd8d7.pdf.
33
Kevin Tran, “Top 19 Media Trends of 2019: Bidding War for Classic TV Hits,” Variety, December 31, 2019, accessed May
27, 2020, https://variety.com/2019/tv/news/top-19-media-trends-of-2019-bidding-war-for-classic-tv-hits-1203454261/.
34
Ibid.
35
Motion Picture Association, THEME Report 2019, 38, accessed June 15, 2020, www.motionpictures.org/wp-
content/uploads/2020/03/MPA-THEME-2019.pdf.
36
“Industry Data,” The Digital Entertainment Group, accessed March 20, 2020, www.degonline.org/industry-data/.
37
“74% of U.S. Households Have an SVOD Service,” Leichtman Research Group, August 27, 2019, accessed May 27, 2020,
www.leichtmanresearch.com/74-of-u-s-households-have-an-svod-service/.
38
Insider Intelligence, “Netflix Losing US Share as Rivals Gain,” eMarketer, August 21, 2019, accessed May 29, 2020,
www.emarketer.com/newsroom/index.php/netflix-losing-us-share-as-rivals-gain/.
39
Ibid.
40
Ibid.
41
Todd Spangler, “Netflix Subscribers Say ‘Orange Is the New Black,’ ‘Stranger Things’ Are Their Favorite Shows on the
Service,” Variety, July 15, 2019, accessed May 27, 2020, https://variety.com/2019/digital/news/netflix-orange-is-the-new-
black-stranger-things-most-poular-1203267573/.
42
Netflix, Inc., Second Quarter 2019 Letter to Shareholders, July 17, 2019, accessed June 15, 2020,
https://s22.q4cdn.com/959853165/files/doc_financials/quarterly_reports/2019/q2/Q2-19-Shareholder-Letter-FINAL.pdf.
43
“Choose the Plan That’s Right For You,” Netflix, Inc., accessed May 24, 2020, www.netflix.com/signup/planform.
44
Mansoor Iqbal, “Netflix Revenue and Usage Statistics (2020),” Business of Apps, April 24, 2020, accessed June 20, 2020,
www.businessofapps.com/data/netflix-statistics/.
45
Netflix, Inc., Second Quarter 2019 Letter to Shareholders, op. cit.
46
Amazon, Inc., Form 10-K for the Fiscal Year Ended December 31, 2019, accessed March 25, 2020,
www.sec.gov/Archives/edgar/data/1018724/000101872420000004/amzn-20191231x10k.htm.
47
Amazon, Inc., Amazon.com Announces Fourth Quarter Sales Up 21% to $87.4 Billion, January 30, 2020, accessed May
27, 2020, https://s2.q4cdn.com/299287126/files/doc_news/archive/Amazon-Q4-2019-Earnings-Release.pdf.
48
Fareeha Ali, “Amazon Prime Has 112 Million Members in the US,” Digital Commerce 360, January 24, 2020, accessed May 27,
2020, www.digitalcommerce360.com/article/amazon-prime-membership/; Erich Schwartzel, Shane Shifflett, and Alexandra Berzon,
“Amazon Prime Video Gives Amateur How-To’s, Conspiracy Theories a Stage,” Wall Street Journal, January 24, 2020, accessed
May 27, 2020, www.wsj.com/articles/amazons-video-library-has-grown-big-on-amateur-content-11579792605.
49
Bridge, op. cit.
50
Julia Alexander, “Apple TV Plus Can Afford to Gamble $6 Billion in a Way that Disney and Hulu Can’t,” The Verge, August
20, 2019, accessed February 12, 2020, www.theverge.com/2019/8/20/20813761/apple-tv-plus-budget-money-disney-netflix-
hulu-warnermedia-hbo-amazon.
51
Michael Grothaus, “Apple TV Plus Could Have More Subscribers Than Disney Plus,” Fast Company, January 24, 2020,
accessed May 27, 2020, www.fastcompany.com/90455731/apple-tv-plus-reportedly-has-more-subscribers-than-disney-plus.
52
In 2019, following the purchase of Twenty-First Century Fox assets and AT&T (formerly Time Warner) selling back its shares,
Disney gained a 67 per cent share of Hulu. NBCUniversal remained an equity investor but agreed to sell its share of Hulu to Disney
as early as 2024. The Walt Disney Company, The Walt Disney Company Reports First Quarter Earnings For Fiscal 2020, February
4, 2020, accessed May 27, 2020, https://thewaltdisneycompany.com/app/uploads/2020/02/q1-fy20-earnings.pdf.
53
The Walt Disney Company, The Walt Disney Company To Acquire Majority Ownership of BAMTech, April 8, 2017, June 20,
2020, https://thewaltdisneycompany.com/walt-disney-company-acquire-majority-ownership-bamtech/.
54
Hulu began in 2008 as a joint venture involving News Corp (Fox), NBC Universal (Comcast), Providence Equity Partners,
and later, Disney. Amy Lamare, “How Streaming Started: YouTube, Netflix, and Hulu’s Quick Ascent,” Thinknum, Inc., July
31, 2018, accessed June 20, 2020, https://media.thinknum.com/articles/a-brief-history-of-video-streaming-by-the-numbers/.
55
“ViacomCBS Has 11 Million Online Subscribers,” Informitv, February 20, 2020, accessed May 27, 2020,
https://informitv.com/2020/02/20/viacomcbs-has-11-million-online-subscribers/.
56
“Thousands of Episodes. Live TV. Original Series.,” CBS All Access, accessed February 15, 2020, www.cbs.com/all-access/.
57
Aric Jenkins, “Inside HBO Max, WarnerMedia’s Multibillion-Dollar Bet on Its Streaming Service,” Fortune, May 27, 2020,
accessed May 27, 2020, https://fortune.com/2020/05/27/hbo-max-launch-warnermedia-streaming-future-bet/.
58
AT&T, Inc., AT&T Inc. 2019 Annual Report, February 3, 2020, accessed March 25, 2020,
https://investors.att.com/~/media/Files/A/ATT-IR/financial-reports/annual-reports/2019/complete-2019-annual-report.pdf.
59
Starz also had 19.9 million linear subscribers. Etan Vlessing, “Lionsgate Grows Starz Subscribers to 26.5 Million,” Hollywood
Reporter, February 6, 2020, accessed May 27, 2020, www.hollywoodreporter.com/news/lionsgate-grows-starz-subscribers-
262-million-1276988.
60
“Domestic Movie Theatrical Market Summary 1995 to 2020,” The Numbers, accessed February 10, 2020, www.the-
numbers.com/market/.
61
Dave McNary, “Theater Owners Caution Studios Over Shorten Release Windows,” Variety, April 14, 2020, accessed May
24, 2020, https://variety.com/2020/film/news/theater-owners-caution-studios-shorter-release-windows-1234579912/.
62
Todd Spangler, “Streaming Accounts for 19% of Total TV Viewing With Netflix Leading the Pack, Nielsen Says,” Variety,
February 11, 2020, accessed May 25, 2020, https://variety.com/2020/digital/news/streaming-video-netflix-total-tv-viewing-
nielsen-1203500634/.

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63
“Playback Time: Which Consumer Attitudes Will Shape the Streaming Wars?” Nielsen, February 11, 2020, accessed May 29,
2020, www.nielsen.com/us/en/insights/article/2020/playback-time-which-consumer-attitudes-will-shape-the-streaming-wars/.
64
“75% of TV Households Subscribe to a Pay-TV Service,” Leichtman Research Group, November 5, 2019, accessed
February 9, 2020, www.leichtmanresearch.com/75-of-tv-households-subscribe-to-a-pay-tv-service/.
65
Ibid.
66
Adam Epstein, “Streaming Still Has a Long Way to Go Before It Catches Regular Old TV,” Quartz, February 13, 2020,
accessed May 29, 2020, https://qz.com/1801623/streaming-has-a-long-way-to-go-to-catch-regular-tv/.
67
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This document is authorized for use only in Prof. Justin Joy's EBusiness at Christ University from Feb 2022 to Aug 2022.