Tom Rogers, a prominent figure in the media industry, has altered his previously bullish stance on Netflix, expressing concerns about the streaming giant’s future amidst increasing competition. Known for his optimistic view on Netflix, Rogers, who serves as executive chairman of the AI company Claigrid, shared his insights during an appearance on CNBC’s “Fast Money” this week.
Rogers noted that while Netflix continues to dominate the landscape with a larger number of hit shows than its competitors, the overall engagement metrics are troubling. He highlighted that the growth in Netflix’s subscriber base has slowed, and the total engagement time per viewer has decreased. This shift poses a challenge for the company amid significant competition from platforms offering free content, particularly YouTube.
Shifting Dynamics in Streaming
According to Nielsen, Netflix experienced the largest monthly viewership increase among streaming services in June, yet YouTube accounted for 13% of total monthly TV viewership, compared to Netflix’s 8%. Despite Netflix’s positive quarterly report released on July 17, which exceeded both top- and bottom-line estimates and led to an increase in full-year guidance, Rogers remains cautious.
“Engagement is what drives everything here,” Rogers stated. “The amount of viewing it gets drives price increases, which drive programming budget, which drives more great programming.”
Following the earnings report, Netflix’s stock has seen a decline of approximately 6% and is down nearly 11% since reaching a record high on June 30. While Rogers acknowledged that there were no issues with the company’s earnings, he emphasized the critical importance of viewer engagement in determining Netflix’s long-term success.
The Role of Artificial Intelligence
Looking ahead, Rogers predicts that artificial intelligence will serve as a “double-edged sword” for Netflix. He pointed out that AI can enhance targeted advertising and reduce programming costs, which could benefit Netflix significantly. However, it also empowers independent content creators, particularly on YouTube, potentially intensifying competition.
“The line between professional and amateur content is going to get more and more blurry as AI tools in the hands of amateurs allow them to produce things that look incredibly professional,” Rogers explained. “AI in the hands of the creative community of YouTube could create a level of professional programming for YouTube which drives its viewership even further.”
Despite these concerns, Rogers maintains that Netflix will likely retain its position as the most valuable media company globally. Nevertheless, he cautions that the current trends are “something to watch for sure.” For now, Netflix’s spokesperson, Emily Goldstein, has declined to comment, referring inquiries to the company’s latest earnings call.