Netflix’s Biggest Competition? Basically Everything Besides TV, Says Netflix

In a letter to investors, the streaming giant said it’s not sweating all of the soon-to-come streaming competition from companies like Disney and WarnerMedia—because Fortnitepoaches more of its viewers than HBO.

Is Netflix worried about the growing collection of streaming services it will have to compete against when companies like Disney and WarnerMedia launch their own platforms? Of course not, says Netflix. In fact, in a letter to investors, the company cited a very different source of competition: Fortnite.

As Netflix wrote in its Q4 quarterly letter, “Our focus is not on Disney+, Amazon or others, but on how we can improve our experience for our members.” So, where does its strongest challenge actually comes from? “We compete with (and lose to) ‘Fortnite’ more than HBO,” Netflix said. “There are thousands of competitors in this highly fragmented market vying to entertain consumers and low barriers to entry for those great experiences.”

Another big rival? YouTube. Netflix claims that when the video platform saw a global outage last October, its own viewership and customer sign-ups rose. Netflix also took an opportunity in the letter to ding one of its current streaming adversaries by noting that compared to YouTube, Hulu represents only a small fraction of viewing time. While Netflix admits that Hulu is “successful in the U.S.,” its absence from the global market makes it a relatively small fish, the company says.

This is a familiar tactic for Netflix, which loves to cite unorthodox sources of competition and call them more powerful than its actual contemporaries. In 2017, for instance, Netflix C.E.O. Reed Hastings said at an industry summit that his company’s real competitor is . . . sleep. “You get a show or a movie you’re really dying to watch, and you end up staying up late at night, so we actually compete with sleep,” Hastings said. “And we’re winning!”

Netflix has been particularly strategic in its recent messaging—perhaps due, at least in part, to its newly announced price increase, which will see customers paying $1 to $2 more per month, depending on their subscription plan. The company has been touting the success of shows like You, which it acquired from Lifetime, leading to skepticism about its numbers that is similar to the raised eyebrows it drew when it announced the massive viewership for its original film Bird Box.

As Variety notes, however, Netflix can insist all it wants that traditional networks and streamers do not pose a significant threat to it—but consumers do have limits when it comes to how much they are willing to spend across all of their subscriptions. Variety also cites research from the consulting firm Magid, which indicates that American customers are willing to spend roughly $38 each month across all of their streaming subscriptions—so as the number of options grows, it will be up to streaming platforms to prove that they’re more worthy than others if they want to receive a portion of that total.

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