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Netflix says Fortnite is bigger competition than HBO or Hulu

The company’s quarterly report clarifies the ‘streaming wars’

Fortnite Llama TV Happy Power/YouTube
Matt Patches is an executive editor at Polygon. He has over 15 years of experience reporting on movies and TV, and reviewing pop culture.

With Netflix’s revenue hitting $16 billion in 2018, HBO’s parent company WarnerMedia and Disney preparing to launch their own streaming services, and every other media company under the sun splintering access into a million different pieces, 2019 looks to be the most brutal year of “the streaming wars” yet.

But as far as Netflix is concerned, the competition extends beyond duking it out with the titans of Old Hollywood: This is a fight for eyeballs, and one of the fiercest competitors is, of all things in the streaming giant’s orbit, Epic Games.

In its earnings report for the 2018, published Thursday, Netflix estimated that it commands 10 percent of television screen time in the U.S., and slightly less than that for total mobile screen time. In other countries, the percentages are lower due to “lower penetration of our service.” The reason, Netflix said, isn’t because of obvious streaming competition, but of online platforms and video games.

“We compete with (and lose to) Fortnite more than HBO,” the report indicated.

By the end of 2018, Netflix claimed nearly 139 million paying memberships worldwide. Meanwhile, in November 2018, Epic reported that its blockbuster battle royale game commanded upwards of 200 million registered users. In its quarterly report, Netflix made clear that “consumer screen time” is its most valuable metric, and that Fortnite — just one of endless options for plugged-in audiences — offers the stiffest competition.

Fortnite wasn’t the only source of entertainment luring audiences away from Netflix.

“When YouTube went down globally for a few minutes in October, our viewing and signups spiked for that time,” Netflix wrote. “Hulu is small compared to YouTube for viewing time, and they are successful in the US, but non-existent in Canada, which creates a comparison point: our penetration in the two countries is pretty similar.”

In 2019, Netflix will again spend billions on original series and films to grab undecided audiences — the company cites the July 4 return of Stranger Things as a major event, and teases new interactive movies in the wake of Black Mirror: Bandersnatch — but also bump up the prices of subscriptions across the board. The forward-facing message is clear: Double down on what’s worked and brush off the overt competition. (“Our focus is not on Disney Plus, Amazon or others, but on how we can improve our experience for our members,” Netflix said.) But looming are Epic’s own platform ambitions: What began as a single-game phenomenon is now a Steam-competing store — and in many ways, Netflix’s real competition in the streaming battles to come.

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