Netflix’s streaming video service has been thriving for so long that other companies try to duplicate its success in other forms of digital entertainment and content.
In Spotify music service became the most famous of the remnants of the clones, despite significant challenges that will be difficult to continue to grow at the same rate as Netflix was streaming video.
The biggest difference between Netflix and Spotify, comes down to their ability to separate themselves from the rest of the pack.
Netflix has firmly established its service as a major in the tens of millions of households around the world are investing billions of dollars in the original list of programs that can not be observed anywhere else.
Popular shows such as “stranger things”, “house of cards” and “black mirror” has allowed the company Netflix continues to attract millions of subscribers every year while growing enough loyalty to be able to gradually increase their prices. That leverage allows Netflix to spend more to acquire the rights to TV shows and movies, while remaining profitable.
Unlike Spotify is selling consumers access to a vast catalogue of digital music, which are largely the same as the library, on the same $10 monthly fee on rival music streaming services from Apple, Google and Amazon, the three big companies more resources.
Netflix showed how well the formula works again on Monday with the release of their first quarter. Los Gatos, California, company added another 7.4 million video subscribers in the first three months of the year ending in March, with 125 million worldwide, including 57 million in the United States.
Performance exceeded management and analyst projections, to the delight of investors. Shares of Netflix rose more than 5 percent to $324.10 in extended trading.
Service Spotify was finally able to build too a unique collection of content, but there is no clear way for Swedish companies to do that, because major record labels, while licensing your music in any service is willing to pay. Even if a record Label offered exclusive rights to some of his popular songs, Spotify would be no problem to around their far wealthier levels.
The similarity between the major streaming music libraries already seem to be undermining Spotify. Average revenue per pay subscriber fell to $5.32 per month in the past year, compared with an average of $6.84 per month in 2015, according to analysis of consumer research firm ValuePenguin .
The decrease is primarily due to discounts that Spotify has given for the family packages and students, helping to increase its paying subscribers from 28 million in 2015, at the end of last year to 71 million — almost twice more than Apple music, its biggest competitor.
The decline in average prices in Spotify per user will make it more difficult to get a profit, then that company has never done since its inception in 2007.
Meanwhile, Netflix has doubled, rising prices, starting in 2014. In the first quarter of this year, the average revenue per paying Netflix subscribers worldwide amounted to $10.10 per month, up 14% from $8.89 per month, at the same time last year.
“We need to earn it first, having impressive content that everyone wants to see,” said Netflix CEO reed Hastings said on Monday during a discussion in the first quarter results of the company. “But if you do this, you can force people to pay a little more.”
Price rise is one of the reasons Netflix’s first quarter earnings climbed 63% compared to last year to $290 million, or 64 cents a share.
Many investors still think Spotify has a chance to be on Netflix streaming video. These expectations are a big reason why Spotify has a market value of $26 billion in two weeks after its debut as a public company. But Spotify shares have fallen 15 percent from its trading high of $169 per share, reflecting doubts that it will ever come close to copying Netflix, which has a market value of more than $ 130 billion.
Sourse: abcnews.go.com
