Ever since the COVID-19 pandemic began, streaming services have sort of found a second life among their customers. It is easy to understand why, as people now need even more home-available entertainment than ever before. However, we were not the only ones that took notice of this.

As the pandemic also limited physical movie releases, many studios saw a newfound opportunity in the world of streaming, and they eventually went on to debut their newest films on online platforms. Furthermore, many studios opted for exclusivity rights regarding these types of releases, meaning you can only find a specific movie within a given streaming service. 

Fast forward to today, and it is for those same reasons that several streaming services have taken their respective time in the spotlight when it comes to home entertainment. Disney+ (NYSE: DIS) has scored big time with several hits such as Mulan and Raya and the Last Dragon, and it is looking to do so again with the forthcoming release of Black Widow. Likewise, HBO Max (NYSE: T) most recently performed similarly with its exclusive release of Godzilla vs. Kong.

But what about Netflix? Well, while Netflix had easily been dominating the streaming business ever since its inception, it easily allowed for its customer base to go directly with its competitors instead. This was due to them lacking any external intellectual property that would open the door for high-tier movie releases during the pandemic. 

In short, Netflix was quickly losing an essential aspect for any successful business: its competitive advantage, and we all know that is always a significant risk in any industry.

Luckily, Netflix has already noticed this and has also taken action to get back on track. 

How? It allied with Sony.

Setting up their own exclusive blockbuster premieres

Last Thursday, Netflix (NASDAQ: NFLX) publicly announced a newly made deal with Sony Pictures Entertainment (NYSE: SNE). This particular deal establishes that Netflix will receive exclusive digital distribution rights for Sony’s following theatrical releases for the next five years. This deal also applies to any release tied to Sony’s animation studio: Sony Pictures Animation.

Regarding what can you expect from this deal, you can soon find any of the following films (and more) as part of Netflix’s library:

  • Morbius
  • Uncharted
  • Where the Crawdad Sings
  • Bullet Train
  • The Mitchells vs. The Machines

And if that was not enough, Netflix is now allowed to stream any other content from Sony’s already existing filmography as well.

What does this mean for Netflix’s future?

Even if a while ago it was on a path towards losing its competitive advantage, Netflix remains the streaming service with the biggest subscriber count and the one with the most significant amount of revenue. 

While Disney+ has recently been showing the most growth in the business, Netflix still maintains itself on top of it, performance-wise. For comparison, Disney+’s current revenue stands about a monthly $4.03 per user, while Netflix’s stands around a monthly $10.87 per user. And it is worth mentioning that we took those numbers before the Sony deal.

With the addition of Sony’s newest filmography to the equation, Netflix has been able to turn the tables around. It was able to fortify the competitive advantage it already had. 

By mixing up its already remarkable subscriber count with newer exclusive content, it is making sure that its customers still remember Netflix’s name when being compared to their competitors’ respective exclusive content.

In essence, Netflix was able to identify a significant vulnerability in their current business model, and then quickly acted upon it to come out even stronger in the end. And as all investors know, that is a reason to celebrate, especially if you own this company’s stocks.