Netflix burns $3 billion of cash in 2018

The Netflix story itself should be made into a movie and released on......Netflix. The evolution from physical video distributor to video streamer (blockbuster in the home - remember them ?) and now content creator is amazing and the Netflix team have achieved what many thought was impossible.

It was always likely to be the case that vertical integration was unavoidable as online distribution of itself becomes of marginal value. Amazon, Disney etc have the capability to stream worldwide and in the case of Amazon a very powerful online marketing and monetisation platform.

Netflix however have decided to go for it big time and are gambling that as their competitors withdraw content from the Netflix platform they can compete and win with alternative original content such as BirdBox.

This represents quite a profound change to the Netflix consumer model which offered a very broad range of strong content at a super competitive price. They did not go for the Blockbusters - quite wisely in my view - as piracy has dented the ability of the blockbusters to drive online value.

This set of links on Reddit makes the point 

Now - with original production of their own - Netflix will need to protect their exclusivity to achieve a return on investment from original production - or the cash burn may prove impossible to put out.

On the other hand if they can crack the production and worldwide distribution of streamed video content at an attractive and viable price point the hall of fame awaits.

https://www.cnbc.com/2019/01/17/netflix-says-its-cash-burn-will-peak-this-year-then-go-down.html

Sports rights owners spoilt for choice as streaming platforms multiply

Rights owners can choose multiple routes to market for live content but the old geographically based distinctions are an illusion in the streaming space. VPN's and pirate activity make distribution global in reality whatever the rights contracts might say. For most sports once the 4 or 5 core markets are covered ROW is just bunce.

Opening up a new market from a technical perspective for a streaming provider is just a matter of adjusting the IP address range in the data base and ensuring that the CDN provider has a point of presence in country. The marketing is a different matter but Google and Facebook have the global footprint. 

Distribution options for live video include YouTube, FaceBook, HotStar, DAZN, 11 Sports, ESPN Plus, B/R Live, ROKU, Hulu and many others.

The impact of this on the economic models is yet to be fully understood. YouTube will be tough to beat in my view but at this point before the online subscription model for live sport is proven, it is anybody's guess.