REPORT: Spotify Wants To Get In The Video Market To Compete With Netflix

Posted Mar 25, 2013

Spotify is best known for allowing users to stream music for free through their desktop software.  Spotify’s paid service lets users listen to music without ads, offline for your playlists, and a seamless mobile experience.  BusinessInsider is reporting that Spotify wants to launch a video service that would compete directly against Netflix.  Spotify’s streaming video would also include original content, which would compete against content provider companies like YouTube, HBO, and other cable channels.

BusinessInsider’s sources said that Spotify is looking for partners to help them create exclusive content.  When Spotify raised $100 million in funding back in November, the company hit a $3 billion valuation.

Netflix, the largest premium video streaming service, recently launched an original series called House of Cards.  It costed around $5 million to create each episode of the show excluding marketing expenses.  Netflix is hoping that the show will attract new subscribers to the service and that they will be able to retain those users.

I would be surprised to see if this report has any substance because Spotify still has a long way to stabilize their music business.  Spotify does not own the music that customers listen to.  As Spotify grows, the music labels charge them more.  Spotify is not profitable yet, but this is because they are strictly investing in growth.  Video content is an entirely different type of ball game.  Switching from a business that focuses on just music to getting into the video market is like taking a football defensive lineman and sticking him in a basketball game.

Spotify has mastered a difficult task, which is that they have built a solid streaming platform.  It seems like the hardest part for them to face is not building their technology platform for streaming the content, but to get their hands on the quality content. If Hulu can do it, then so can Spotify.