With 130 million subscribers, reaching an estimated 300 million people worldwide, Netflix has become an international phenomenon that has millions of people now binge-watching a variety of TV shows and movies. Netflix has completely disrupted and changed the distribution and content creating landscape in the entertainment industry. What started as a DVD rental delivery service has transformed into a streaming service spending over $11 billion a year on creating original, exclusive content. Netflix has effectively put Blockbuster out of business, is shrinking cable companies by the quarter and has studios scrambling to innovate to avoid being the company’s next casualty. The enormous effect the streaming giant has had on entertainment has led people in the industry to coin the term, “the Netflix effect.”

After Reed Hastings walked into a Blockbuster in 1997 and paid $40 in late fees after returning his VHS copy of Apollo 13, he came up with the idea of Netflix. Blockbuster operated 10,000 stores at its peak and had a market value of $5 billion in 2002 (Harvard Business Review). A company that once seemed unbeatable was being disrupted by a company that offered a more convenient business model and was significantly less expensive – especially without the dreaded late fees. At its beginnings, Netflix was a competitor of Blockbuster but not yet close to putting it out of business. Ironically, in the early 2000s, CEO Reed Hastings wanted Netflix to be bought by Blockbuster. When a deal wasn’t met, Netflix continued to grow on its own. Hastings clearly saw the opportunities the internet offered, and he invested in streaming. In 2007, Netflix launched its streaming service – they were no longer offering the same service as Blockbuster, they were offering more, and at a cheaper price. By 2010, Blockbuster filed bankruptcy and four years later all Blockbuster stores were closed.

Netflix has continued to expand its business, launching its first piece of original content in 2013 with House of Cards. At this point, their stock (NFLX) began to sky-rocket and their number of subscribers domestically and internationally were growing rapidly.

The vast amount of content Netflix was offering – from people’s favorite old TV shows to movie classics to fresh, original content – was extremely valuable to customers, at a still very low monthly fee. Studios and networks were benefiting off of Netflix as well; they were now able to sell Netflix TV shows and movies that had been collecting dust in their archives for years, and begin to make money off of that property again. It is cable companies who began to see “the Netflix effect” after the launch of original content in 2013, and have suffered tremendously ever since.

Netflix subscribers doubled from 2012 to 2017 while cable subscriptions were simultaneously declining quarter after quarter. In 2017, total Netflix subscribers surpassed total cable subscribers in the United States (Forbes).

More and more people started to see the value in cutting their expensive cable subscriptions for cheaper, commercial-free content. This had led cable providers, like Xfinity, to launch their own streaming services. But these have not been successful – live sports are the only thing keeping cable companies afloat at the moment.

As of December 2016, Netflix had a 75 percent market share in the streaming services market. YouTube was closest behind, at 53 percent, while Hulu, Amazon and HBOGo were all competing closely for market share (TechCrunch). While Netflix still maintains its dominance in the market, the landscape of competitors is about to drastically change, with traditional studios entering the market.

Netflix is now heavily spending on original content and this has studios, who were once working harmoniously with the company, trying to compete directly with them through launches of their own streaming services. Disney pulled all of their content off of Netflix earlier this year in preparation for the launch of their direct-to-consumer service, Disney+. Similarly, WarnerMedia has announced they are launching a streaming service, using their library of 7,000 films and 5,000 TV shows in order to attract customers.  Additionally, there have been massive moves towards consolidation in the industry – most recently with Disney purchasing 21^st Century Fox, effectively eliminating an entire studio. Disney now has more content at their disposal, and one less competitor trying to edge out Netflix.

Netflix has been challenging the studio system for a few years now, forcing them to modify their traditional practices. They have lured some of the most coveted industry talent away from their long-time studio homes with enormous contracts. Ryan Murphy, creator of Glee and American Horror Story, signed a $300 million deal with Netflix, leaving 21^st Century Fox. Creator of Grey’s Anatomy, Scandal and How to Get Away with Murder, Shonda Rhimes, left ABC (Walt Disney Co.) after over a decade for a $150 million deal. These deals have not only increased hostility between Netflix and studios, but they have changed the entire economic system of the industry. Producers used to own a piece of their shows outright, potentially earning hundreds of millions of dollars by selling the rights to reruns. Tom Werner, for instance, made enough money from The Cosby Show and Roseanne to buy a sports team. Friends creators and talent are still earning residuals every time an episode is aired on Nick At Night or TBS – or sold to Netflix. There’s no back end on Netflix. “You get more upfront with less risk, but potentially less upside in success,” explains Chris Silbermann, Rhimes’s agent at ICM Partners. Rhimes now is working on developing and producing several shows at once through Netflix, something she would not have been able to do at ABC.

In order for studios and networks to maintain their top talent, they must now offer extremely competitive contracts to their employees. Warner Bros. recently offered one of their star producers, Greg Berlanti, a contract worth $400 million to stay at Warner Bros. until 2024. Berlanti currently has fifteen shows on the air, the most of any TV producer in history. Warner Bros. cannot afford to lose him and his success, so they must pay the extremely high price that Netflix has set for them. Lionsgate and Disney have made similar deals with their top executives. Traditional studios are tired of Netflix, and they are beginning to fight back relentlessly. A talent agent at Creative Arts Agency, Joe Cohen, has noted how harsh of an environment this has become in the industry, “There is a lot of crazy stuff happening in the market today, and there is an aggressive dividing line between what is now considered old media companies and new media companies.” This is a line that old media companies are trying to blur as much as they can, and have put an enormous amount of their efforts and money into doing so.

All of these major changes in the entertainment industry prompted by Netflix’s disruption are so significant, and have gained so much media attention, because the industry has not shifted this much and this dramatically since 1948. Then, the supreme court hearing, United States v. Paramount, ended studios being able to own theaters and exclusively show their own movies at those theaters. The studio system completely collapsed and studios were forced to adjust. Now, the old media companies, which now encompass the studios, must adjust to the disruptions caused by Netflix and begin to innovate themselves. The result is an aggressive environment, with no signs of the growing disruptor slowing down. For reference, AT&T shares have sunk 15 percent in five years compared to a 480 percent rise for Netflix.  (The Hollywood Reporter)

With all of Netflix’s massive successes – unbelievable subscription numbers, huge international reach and 112 Emmy nominations in 2018 – it is easy to overlook their massive debt problem. They spent $11.7 billion on new content in the last year, but only brought in $14 billion in revenue. The reality is, Netflix is a barely profitable company that has approximately $10 billion in outstanding debt, with no signs of slowing down on their spending. Steven Birenberg, founder of Northlake Capital Management, notes, “Netflix seems to have proved that a model of all types of content, all genres for all people, can be successful — at least if success is measured by subscribers.”

With more players entering the direct-to-consumer market, many industry professionals are wondering how sustainable Netflix’s business model is. Many financial analysists already believe that Netflix stock is overvalued, but when their market share soon begins to be eaten into by streamers with a library of premium content, they will no longer have such a unique business. Big tech companies like Amazon and Apple, who have a lot of money to spend, are also working for their share of the pie in the streaming space. With the potential of Netflix being disrupted itself in future years, investors will likely take notice to the change in landscape and urge Netflix to cut back its spending in order to maintain long-term success. Already in the last six months, NFLX stock has declined dramatically – a perceived correction of an over-evaluation by analysts and investors.

Not only are all of these changes affecting companies internally, and within the Company Town of Los Angeles, but navigating this new landscape poses a potential challenge for consumers. It will be a battle among marketing and public relations professionals to communicate to them in the future. Will a single household be subscribing to Netflix, Hulu, HBOGo, a Disney service and a Warner Bros. service? Or will there be even more consolidation?

 

Sources:

https://www.hollywoodreporter.com/news/netflix-effect-can-rivals-compete-by-bulking-up-content-1162416

https://www.hollywoodreporter.com/features/welcome-hollywoods-new-age-anxiety-1127792

https://www.forbes.com/sites/ianmorris/2017/06/13/netflix-is-now-bigger-than-cable-tv/#217b95cf158b

https://hbr.org/2013/11/blockbuster-becomes-a-casualty-of-big-bang-disruption

https://www.latimes.com/business/hollywood/la-fi-ct-att-streaming-service-20181010-story.html

https://www.bloomberg.com/news/articles/2018-10-04/netflix-is-forcing-hollywood-into-a-talent-war

Netflix reaches 75% of US streaming service viewers, but YouTube is catching up

For over a year, cities all over the United States, as well as in Canada and Mexico, have been in a battle to get Amazon’s attention. Two-hundred and thirty-eight entries from states, cities and towns were submitted since the announcement of the search for Amazon’s HQ2, all offering the online retail giant millions of dollars in tax incentives. Local officials all over North America had immense excitement about the possibility of bringing many new, high paying jobs to their city. In the end, Amazon chose to split its second headquarters between two areas that already have the greatest number of Amazon employees other than Seattle and the Bay Area – Long Island City, NY (just outside of Manhattan) and Arlington, VA (just outside of Washington D.C.) The decision is controversial, and has local taxpayers wondering whether or not the benefits outweigh the downsides of the company’s presence.

Amazon has committed to generating 25,000 new jobs in each city, with an average salary of more than $150,000 for those jobs. They have also committed to building community infrastructure and to donate space for a new public school and ““for a tech startup incubator and for use by artists and industrial businesses.” There are many potential benefits on the local economy and individuals as a result of so many new jobs and an investment in the community. Additionally, college students in the surrounding areas are enthusiastic about the number of diverse, high-paying future job opportunities.

But many concerns are also being raised, particularly surrounding the headquarters in Long Island City, in the Queens neighborhood outside of Manhattan. Alexandria Ocasio-Cortez, the representative-elect of New York’s Fourteenth Congressional District said on Twitter, “The idea that [Amazon] will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.” Others have also openly criticized the use of government money for a private corporate government, when that money could be used for so many other things.

There are additional concerns over housing prices rising outside of Long Island City and Arlington. According to senior economist at First American, Odeta Kush, home prices in Seattle have jumped 35 percent since Amazon opened its doors. In the last five years, that jump was 73 percent for homes and 31 percent for rent prices, according to Zillow data.

In places like New York City and Washington D.C., where home and rent prices are already some of the highest in the U.S. these statistics are extremely concerning to many residents. However, some analysts believe price trends will not mirror Seattle’s because of the already established housing markets in the two cities.

As plans for the split HQ2 are being finalized, everyone seems to have an opinion on the decision – including SNL writers.

The recent announcement is another example of how a company that started out as an online bookstore, has become such a powerful force in our society. Amazon has an economic impact that cannot be ignored, and has even manage to seep into popular culture,

Technology has begun to dominate our lives. Older generations have been forced to adapt to the changes it brings, while younger generations are growing up with iPhones, iPads and more. Elementary schools all over America now require students to bring tablets or laptops to class. Many children are being handed iPads before they say their first words. The impact on being raised on technology cannot be properly studied yet because it is still so new to our society. However, it is telling that the engineers who are making these products that have invaded our lives are not letting their children anywhere near the technology. New studies have revealed that lower income, minority group children are spending the most time on screens daily.

In Silicon Valley, parents are implementing no-phone use contracts with their nannies, which requires a nanny to agree to not use any screens – including phones, computers or TV – in front of the child. Many parents who work in the technology industry have decided to get rid of screen time completely for their children instead of just limiting time. Kristin Stecher, a former social computing researcher who is married to an engineer at Facebook said, “Doing no screen time is almost easier than doing a little. If my kids get it at all, they just want it more.” Parents like Kristin understand the addictive nature of technology more than most adults in the United States. Athena Chavarria, who has worked for Mark Zuckerberg for years, has said she is, “…convinced the devil lives in our phones and is wreaking havoc on our children.”

It is obviously ironic that those concerned about their own child’s screen time are the ones creating the technology that will invade millions of other children’s lives. Parents without the awareness of this issue, or the means to hire a nanny to enforce no screen time rules, have kids spending a significant portion of their day on screens. These parents are actually being sent the message that screen time will help their children, and there are valuable educational tools available. The below graphs by Common Sense demonstrate the shocking amount of time tweens and teens are spending on screens in any given day.

When this data is broken down by demographics, inequalities are revealed. According to the Common Sense survey lower-income teenagers spend an average of eight hours and seven minutes a day on screens. Higher-income teenagers spend about five hours and 42 minutes. A Northwestern University study revealed minority children watch 50 percent more TV than white children. These statistics are even more alarming when it is taken into account the inequality of ownership of technology by income. While children from lower-income families are spending more time on screens, they own less screens than higher-income families. The dramatic digital inequality is demonstrated below.

Again, there is no effective way to study the impact growing up with screens has on a child yet. Technology is a continual experiment. However, leading technology executives understand the likely impact and are raising their children to play board games and learn how to socialize – not spend all of their time of screens, if any at all. Instead, they are using children from lower-income families and/or minority groups without the shame knowledge to test this experiment. In as soon as ten years, our society may begin to noticeably see the effects of this inequality play out in higher education enrollment and the work force.

Last year, Sonia was diagnosed with stage three uterine cancer which had spread to her lymph nodes. She has gone through six months of aggressive chemotherapy and twenty-five rounds of radiation. Still, her cancer is progressing rapidly. But she is still fighting, and hoping to be eligible to try a new trial drug from Henry Ford Health System in Michigan. The cost of each treatment is $10,000 – Sonia would need about five or six to have a chance at beating her cancer. This $50,000 – $60,000 figure has her worried about paying her bills and keeping open her small business, Klueless Cupcakes. However, her main priority is to do everything she can to fight her cancer. Sonia’s mother started a GoFundMe campaign with a modest goal of $10,000 – the cost of just one trial drug treatment.

There are many stories like Sonia’s: individuals who have been fighting cancer for years and are no longer able to work, but are left paying hefty bills for each doctor’s appointment, surgery and mainly, treatment. Friends and families of these cancer patients have created GoFundMe campaigns to ask for the money their loved ones need, but are likely too ashamed to ask for themselves.

The healthcare crisis in the United States is multi-faceted. It involves the question of who has access to healthcare, health insurance costs, political interests, lobbying power, mergers and more. But the overwhelming issue is that healthcare costs are so much higher in the U.S. than other countries. According to The Wall Street Journal, the United States spends more per capita on health care than any other developed nation.  Soon, the U.S. will spend almost 20 percent of its GDP on health.

While the U.S. is a rich nation, and it is logical to be spending more on healthcare than other counties, it should not be that much more.

There are obvious inefficiencies in the United States healthcare system, particularly related to insurance. The price of insurance is extremely high when it is not an employee benefit, leaving it unaffordable to many and the cause of millions of uninsured Americans. Ironically, the uninsured options for care are the most expensive – for example, emergency rooms. Often, uninsured individuals reach a point where they need extensive and expensive care because they never received preventive care.

Insurance policy prices and the high costs of care for the uninsured are two aspects of the increased medical spending in the United States, but there are many components that contribute to the overall high spending. Another contributor to increased spending is something called defense medicine – doctors are worried about malpractice lawsuits, so they run a lot of unnecessary, expensive, tests to cover themselves. Doctors and nurses in the U.S. are also paid more than in other countries. Administrative costs, like paperwork and marketing, are higher as well. But none of these reasons are as significant to spending increases as many think. What contributes most to high spending in the healthcare industry is a result of the way healthcare in America functions.

There is a mixture of private and public components of the healthcare system in the United States – from insurance carriers to healthcare providers to research and development companies. However, the majority of the U.S. healthcare system operates within the private sector. This differs significantly from single-player systems in Australia, Canada and the UK where healthcare services are mostly provided by the government.

The structure of the American healthcare system means there are many different players behind a single patient – but they are not on the same page. The insurer wants the patient to receive the least number of tests possible, in order to pay the least amount of money possible. The provider wants to run as many tests as possible to protect themselves from malpractice lawsuits and to rake in more money for their hospital or private practice and, of course, themselves. The patient hopes for the best care possible, ideally without spending too much out of pocket. However, if a patient feels they need care, they will do whatever necessary and pay whatever price is set.

One would think the increased competition in the marketplace due to lack of government involvement would keep prices low. However, little negotiation of prices for medical products and treatments takes place. Providers and manufacturers are not motivated to keep prices low because people will pay for the care they need regardless, and if they are told their insurance will not pay for something, they will go to another company.  Insurers have no leverage to negotiate because there are so many players in the marketplace that will pay for the same care. Additionally, insurance companies are able to cover the costs with increased premiums. There is inelastic demand for healthcare – if a patient is told they need to pay $100 for a treatment and then that price changes to $1,000, they will still pay. They need the treatment no matter what the cost.

This system has led people to pay high prices for insurance policies and, subsequently, the care they need.  Elisabeth Rosenthal said in a New York Times article, “Whether directly from their wallets or through insurance policies, Americans pay more for almost every interaction with the medical system.” A Commonwealth study reported by the San Diego Union Tribune found that among industrialized nations, there were significant pricing differences for many medical procedures. An MRI scan in the United States cost $1,145 on average in 2013, compared with $138 in Switzerland, $350 in Australia and $461 in the Netherlands. An appendectomy cost $6,645 in New Zealand and $13,910 in the U.S. And these prices are rising fast. According to Mayo Clinic, before 2000 a year of cancer drug therapy cost between $5,000 and $10,000 in the United States. In 2012, that average price increased to more than $100,000. Additionally, these costs in the U.S. are 50% to 100% higher than the same patented drug cost in other countries.

The pharmaceutical industry has significant power to set their prices and make high profit margins because of the inelastic demand of most of their products. Therefore, they have set life-saving treatments and drugs at high, unaffordable prices. Pharmaceutical companies justify these high prices with a few main arguments: there is a high cost of research and development, there are comparative benefits to patients, and that controlling prices limits innovation. It is true that most research spending is done in the U.S., and the innovations made are propelling science forward significantly with many individuals reaping the benefits. But these arguments do not justify the six figure numbers that Americans must pay for treatments when people using the same drugs in other countries are paying far less.

People like Sonia are being directly affected by the healthcare system in the United States. Healthy individuals pay their annual insurance fees and go to their yearly physicals without much extra cost. The sickest people in America are suffering, but because of a desire to fight for their health, they will continue to pay astronomical prices for their care if there are not systematic changes.

In a medical emergency, dial 9-1-1 – it is ingrained into every American’s head from childhood. What is only realized after you call 9-1-1 and the ambulance takes you to the hospital is the hefty bill that comes with it. But what are we supposed to do in a state of emergency, not call an ambulance?

As medicine advances, more patients are being treated effectively and more lives are being saved. However, the costs associated with these advances are astronomical, and many Americans don’t even know how much they are paying for healthcare. Similar to the habit of calling an ambulance, most people don’t immediately start thinking about cost and start questioning their course of treatment – they just want to get better. This is one of the root causes of the healthcare crisis in the United States. Patients trust their doctors, and they should. However, they are increasingly being steered in more expensive directions because of new technologies and increased healthcare costs across the nation.

Of course, the healthcare crisis in the United States is multi-faceted. It involves the question of who has access to healthcare, health insurance costs, political interest, lobbying power, mergers and more. Often the topic of healthcare gets so complicated that people don’t even know what their opinions are or how to address the issue. But one thing is extremely clear, healthcare costs are rising and it is directly affecting Americans. According to The Wall Street Journal, the United States spends more per capita on health care than any other developed nation. Soon, the U.S. will spend almost 20 percent of its GDP on health. This is not because Americans are buying more healthcare overall, but because what they are buying is becoming increasingly more expensive. Health insurance costs and out-of-pocket prices are increasing. For a healthy individual, this is likely just increased costs associate with annual visits to a general physician. Although significant, this doesn’t have dramatic impacts on individuals and families. However, for individuals with life-threatening diseases, disabilities or cancer, these costs become a huge burden. As seen in the chart below, the price of prescription drugs due to pre-existing conditions and hospital care expenses have grown exponentially since 2000. Physician and clinical service prices have increased as well, but more moderately.

When looking at specific individuals plagued by horrible circumstances of health, it is easy to see how these increased prices have become a problem. For example, according to the American Diabetes Association, the total costs of diagnosed diabetes in 2017 was $327 billion, increasing by $82 billion since 2012. For a Type One Diabetic who is insulin dependent, many of these costs are associated with the insulin they must purchase in order to survive. When grouping together Type One and Type Two Diabetics, the largest components of expense are hospital impatient care (30 percent) and prescription medications to treat complications of diabetes (30 percent). These dramatic numbers are a trend seen among life-long diseases that require many doctor appointments, occasional hospital visits and a lot of medication.

A Duke study published last year, where 300 cancer patients were surveyed, revealed the financial distress a cancer diagnosis causes a household. On average, cancer patients in this study were spending 11 percent of their household income on their cancer treatments. Those who reported the most financial trouble were spending more than 30 percent of their household income on their care, even though more than 60 percent of the people surveyed were covered by private insurance. These expenses are not the first thing someone things about when they receive their diagnosis, but for many, they are very difficult to ignore and that has an impact on their health. An associate professor, oncologist and member at the Duke Cancer Institute, S. Yousuf Zafar, says, “The financial toxicity of cancer treatments is impacting patients’ ability to pay for care, and is likely impacting how well they do.” Zafar says during the recession ten years ago she started noticing patients asking for less expensive treatments and wanting to cut back on the frequency of their treatments. This is a trend that has continued even as the economy has recovered – even in privately insured patients.

Although the United States is constantly making medical advances with treatments that can dramatically increase an individual’s quality of life and life expectancy, the economic burdens are holding a lot of patients back from embracing these new technologies.

A new, advanced diabetes technology, the Dexcom G6, continuously monitors glucose levels in a revolutionary way. With insurance, most patients have to pay an out-of-pocket cost of $349 for a box of three sensors that last ten days each. That is about twelve boxes a year, for a total of over $4,000 a year spent on Dexcom supplies.

Revolutionary drugs are now also being created to treat cancer. Recently, James P. Allison and Tasuku Honjo were just awarded a Nobel Prize for their research on cancer immunotherapies. Immunotherapy treatments are seen as a beacon of hope for many people with cancers such as melanoma, lymphoma, lung, kidney and bladder cancers. It is amazing. However, when these treatments are unaffordable to most, they are not being utilized to their full potential. Ezekiel Emanuel, a professor at University of Pennsylvania’s Perelman School of Medicine, says, “What we’ve seen over the last two decades is the cost of cancer drugs go through the roof. Every year, the introductory price seems higher and higher and higher.”

According to Forbes, the cost of cancer drugs has increased from $50,000 per patient in the mid-1990s to $250,000 today – four times the median U.S. household annual income. A treatment of $850,000 for a single patient is not unheard of with immunotherapy. Not only does this mean people can’t access these medications, it means they are unsustainable in the U.S. health system as a whole. However, still, the U.S. government plans to increase its budget towards medical research for the third consecutive year.

The thought of not calling 9-1-1 because of the cost of an ambulance ride seems absurd. But people with life threatening conditions are now forced to consider limiting or withdrawing treatments and care that could have extraordinary impacts on their health conditions.

With a health system that has become unsustainable, how can the United States maintain a healthy, long-living country? The answer may be to look at preventative care, which will cost less in the long-term. Former head of the Centers for Medicare and Medicaid Services under President Obama, Dr. Donald Berwick, notes,” We put far more into hospital care than we do keeping people from having to be in the hospital.”  However, with this idea lies another problem.  Going back to the almost 20 percent of the nation’s GDP being within the healthcare sector, it is evident how the significantly the industry contributes to the country’s economy. While much of this has to do with spending, another – fairly large – part of this has to do with the employment the health care industry has brought Americans. In December 2017, the health care industry surpassed the retail industry as the country’s largest employer. It surpassed the manufacturing sector in 2008.

This points to the vast amount of power there is in the industry, which makes it such a tough issue to tackle. Healthcare is a complicated issue, and there is no easy answer. However, it is unfair to ignore the many Americans who are burdened with these costs, when they are already being burdened by a life-altering medical condition.

A turbulent few years of American politics has created new groups of activists across the nation standing up for themselves, what they believe in and what they feel is right. The #MeToo movement disrupted Hollywood and has spread to Silicon Valley and to Washington. Black Lives Matter rallies have filled the streets of the United States. Celebrities and professional athletes have made statements of support on national TV. As we are living in a time of activism, people are encouraged to participate.

It is no longer acceptable to just stand by – for individuals, or for companies. This age of activism is translating to the way consumers behave. Support – or disapproval – of a company’s values is shown in purchase behavior. It may seem like a risky PR move for a company to stake a political or social stance, but recent events have demonstrated the possible pay-off.

On September 4^th of this year, Nike released the following ad starring Colin Kaepernick:

Kaepernick was the part of a highly controversial protest starting in 2016. He and other NFL players began kneeling during the national anthem to protest racism, police brutality and social injustice. President Trump politicized the protests and many viewed it as disrespectful to those who have served our country. Nike took a huge risk with this ad, that would potentially alienate many of their previous customers.

Backlash seemed immediate after the ad was released. Social media sites flooded with videos of people burning their Nike products and criticizing the language of “sacrificing everything.” President Trump even partook in the conversation:

Although many – including fellow athletes LeBron James and Serena Williams – supported Nike’s decision to run this ad, the media primarily emphasized the negative reactions. This made Wall Street and Nike investors nervous. On the day the ad was released, there was a larger than normal sell-off of Nike stock.

However, as seen in the graph above, it was very insignificant in the scheme of things. In fact, since the ad was released Nike’s stock has seen reached an all-time high.

Instead of the #NikeBoycott approach, many people actually showed their support for the brand by going out and buying their products. According to the research firm Edison Trends, online sales jumped – sales rose 31% from Sunday (September 2^nd)  through Tuesday (September 4^th). While that spike didn’t last long, it demonstrated the way consumers felt towards Nike and the divisive stance they took.

The support shown on social media, in sales and in pieces of journalism like, This Life: If Nike can stand with Kaepernick, I can shell out extra for sneakers, speak to the way retail activism works in this political climate. While the long-term stock and sale performances will likely not be heavily effected, the immediate reactions of consumers are telling. People will remember what Nike stands for when they go to buy their next pair of running shoes, and an individual’s own beliefs will impact whether they buy Nike or a competing brand.