With the increase in competition, Netflix (NASDAQ: NFLX) has decided to branch off into radio - its first foray into non-video content. The content-streaming giant has made a deal with Sirius XM Holdings (NASDAQ: SIRI) to create a comedy channel. The platform, dubbed Netflix Is a Joke Radio, will create an official outlet for its growing portfolio of comedy content and potentially also help drive SiriusXM subscribers back to its own service, which currently boasts $33 million subscribers. This will also give SiriusXM a chance to differentiate itself from rivals such as Spotify (NYSE: SPOT) with its exclusive non-music content.
The partnership is scheduled to launch by January 2019. The new channel will feature audio-only of Netflix comedy specials and also content developed exclusively for the station. Stand-up comedy has always been Netflix's competitive strength as the company has managed to lure A-list comedians to its platform and away from competitors such as HBO. Netflix went as far as to double the fees that comedians were receiving on AT&T's (NYSE: T) HBO. Chris Rock has received $40 million for two stand-up specials for Netflix, which was double what HBO was offering. Netflix currently boasts 130.1 million subscribers worldwide, with 57.4 million in the US. Earlier this week, Netflix reported that they added 5.2 million members last quarter, which is the same as last year's quarter, though less than the estimated 6.2 million.
Andy Hargreaves, an analyst at KeyBanc Capital Markets, commented that Netflix actually has too much content than any one individual subscriber can sift through and if they can't find what they want amid that, they might just cancel. To combat this, Netflix has been reliant on its algorithm to present personalized recommendations to each subscriber based on their watch and search history to make sure they know about items that might interest them. He also added that, ""If you have other ways to make people aware of stuff that is on Netflix already, that helps reinforce the value of the service.This is another way for you to promote awareness of what's on Netflix, and without cannibalizing anything."