As giants like Amazon (AMZN), Apple and Comcast (CMCSA) all line up to chip away at Netflix’s (NFLX) dominance, the market leader’s co-founder and first CEO told Yahoo Finance the content arms race has crossed an inflection point.
“I really think it’s Disney who’s the one that’s making the big bet here,” Marc Randolph told Yahoo Finance’s YFi PM recently.
“You look at the acquisitions they’ve made for their catalogue, the investment they’ve promised to make, the hardware deals they’re making. They’ve signaled pretty strongly this is a real thing for them,” he added.
When it was announced, analysts said Disney’s relatively cheap price point made a statement about how they intended to aggressively battle Netflix. Initial surveys suggest consumers don’t intend to completely drop the latter, even as they flirt with the former.
According to Randolph, Disney has made clear that they “are not going to dabble.”
He added that the company has been “trying to find the right moment to say, ‘okay, are we in or are we not?’ I think that has now been established.”
With streaming the way of the future for entertainment “If you’re not in, now you’re risking being left behind,” Randolph said.
Disney going “all in” is coming at a heavy cost in the short term. The company unit that houses its streaming service had an operating loss of $740 million alone in its latest quarter, as it spends on content and infrastructure.
‘You have to be about content’
But despite Disney’s spending, Randolph remains optimistic about Netflix’s future prospects. He pointed to the founding principles of the company as a bedrock for its ongoing success.
“It was not about the delivery mechanism, it was not about shipping DVDs, it was not about streaming — it was about helping people find content that they love,” Randolph said.
“I see this as an almost linear progression of something that’s been in [Netflix’s] DNA since the very beginning,” he argued. “I think it’s kind of informative, actually. If you’re trying to figure out where a company is going, look back to the beginning.”
To be certain, the foundation of streaming is technology. Yet Randolph warned that wasn’t the end of the story.
“You have to anticipate these things changing [but] you can’t be about hardware. You have to be about the content. You go where the market goes.”
Nick Robertson is a senior producer at Yahoo Finance.