“Just because Netflix had essentially created this new world of internet TV was no guarantee that it could continue to dominate it. Hulu, a streaming service jointly owned by 21st Century Fox, Disney and NBC Universal, had become more assertive in licensing and developing shows, vying with Netflix for deals. And there was other competition as well: small companies like Vimeo and giants like Amazon, an aggressive buyer of original series. Even the networks, which long considered Netflix an ally, had begun to fight back by developing their own streaming apps. Last fall, Time Warner hinted that it was considering withholding its shows from Netflix and other streaming services for a longer period. John Landgraf, the chief executive of the FX networks—and one of the company’s fiercest critics—told a reporter a few months ago, “I look at Netflix as a company that’s trying to take over the world.”

At the moment, Netflix has a negative cash flow of almost $1 billion; it regularly needs to go to the debt market to replenish its coffers. Its $6.8 billion in revenue last year pales in comparison to the $28 billion or so at media giants like Time Warner and 21st Century Fox. And for all the original shows Netflix has underwritten, it remains dependent on the very networks that fear its potential to destroy their longtime business model in the way that internet competitors undermined the newspaper and music industries. Now that so many entertainment companies see it as an existential threat, the question is whether Netflix can continue to thrive in the new TV universe that it has brought into being.”

SOURCE: R/GA Future Vision