Netflix revolutionized the television industry and has become one of the most innovative companies over the past decade. Reed Hastings and Marc Randolph first founded Netflix in 1997. The company initially began as a DVD rental service where you were able to pay a monthly subscription fee and rent as many DVDS as you wanted. It took Blockbuster out of business and forever changed the way we watch and consume entertainment. Netflix soon realized that the tendency was to transfer onto digital and released the Netflix online platform in 2007 while still maintaining the DVD rental service. In 2010 the company made its streaming international and by 2016 Netflix online platform reached over 190 countries.
Netflix’s platform originally revolved around its quantity and had a larger variety of content than any of its competitors. However its content lacked in quality and newness, it usually only featured older movies and TV shows. Nonetheless, it only charged $9.99 a month so viewers deemed it worthwhile and Netflix quickly gained popularity. “Netflix and Chill”, a phrase that we are all so familiar with was first coined in 2009 by a twitter user referring to the act of watching the online service. The euphoria of the phrase gained power mid 2014 and the company kept gaining more and more popularity and market value.
Other leaders of the industry such as Fox, Turner, Warner Bros, and The Walt Disney Company realized they had to keep up with this new digital tendency of online streaming and created their own non-linear streaming platforms as well. Nonetheless, Netflix had already gained most control of the market given its rapid rise in popularity and user subscription. However, when companies such as HBO, CBS, FOX, Amazon Prime, and HULU began releasing their services and featuring their own original content, Netflix saw a potential threat. Netflix quickly realized that in order to survive it had to focus on creating original series. This generated a whole new experience for the consumer. Netflix would release episodes of a season all at once instead of having the viewer wait each week for the episode premier, creating the “Bing Watching” phenomenon. Some of their first and most popular Netflix original series were; House of Cards, Orange is the New Black, Narcos, and Black Mirror. Their shift towards content production rattled its competitors and led the whole industry to move towards the same direction.
Recently, YouTube launched “YouTube TV”, following the industry trend of relying on original content. Amazon also has its own original series and TV service platform. At this point the race for market value is predominantly dependent on original content creation. I predict that soon enough Facebook will also produce its own content and television service.
In What is Web 2.0 Tim O’ Reilly talks about some of the big companies that formed part of the Web 2.0, such as, Google, Amazon, and eBay, and how they served as platforms enabling an online participatory culture which facilitated the massive flow of information. What drove their success was their ability to process huge amounts of data and keep their users constantly and actively engaged with their platform and with each other. This participatory culture has led to a saturation of content and user activity on the web, and these companies no longer need to focus on this aspect of their business as much as before. The era of Internet virility has reached its peak, and even though there still exists a massive flow of information and users constantly creating, sharing, liking, posting, following, etc. it has become much harder to organically reach fandom. Therefore it makes natural sense that the next move for companies such as Facebook, YouTube, Google, Amazon, and Snapchat is to focus on creating their own original content.
I worked for HBO last summer and one of the main concerns of the corporation was the rapid rise of Netflix. Even though HBO had already developed their non-linear platform HBO GO and HBO Now they feared the ever growing innovative company. One of the reasons why companies such as HBO had such difficulty keeping up with Netflix was because their whole business model and corporate structure was centered around cable and linear television depending on revenue coming in from Ads placed on programing. Therefore they were always a year or two behind Netflix’s innovations, given their lack of capacities and business structure. In 2014 Turner Broadcasting cut its total workforce by about 10%, leading to 14,000 people being laid off. They over went a complete corporate restructuring, replacing many directives. They claimed it was for budgeting purposes, but in my opinion they saw the need to keep up with the new tendencies in the media industry that Netflix had originated and the only way to do so was to completely restructure their business. I have first hand seen these changes, working at HBO and currently in Cartoon Network.
Even though media corporations know that the industry is leading towards digital their business model still is dependent on on-air programing, there is still a huge demand for cable television and it is a primary source of income for the industry. At HBO I worked in the On Air Networks department where I had to create promotional videos for TV shows and movies that would air on linear television. I also gained experience in their creative, out of home, and digital marketing departments, and most of our efforts and projects where in line with the programing schedule. For example, in out of home marketing we would work with PR agencies to create launch events for different TV show campaigns. Digital marketing, consisted mostly on Internet add placement, as well as maintaining the social media platforms. In Creative Marketing I had the chance to be part of the ideation and conceptualization process of the marketing campaigns of different TV shows. In Cartoon Network, I currently work with games marketing, social media, and YouTube. So I have been able to get more experience with digital marketing and content creation. While being here I have realized that original content, innovation, newness, and excitement is what drives our subscriptions and viewer engagement. The ability to keep up with technology use it appropriately for social media marketing is key. Even though Cartoon Network does an amazing job with promoting its brand through social and is updated with all the trends of the industry, it is not a trend creator.
Netflix has been a trend creator and a company that perfectly represents innovation, technology, and brilliance. The way it was able to over take the market and completely change the game for all other competitors is something I consider we should be analyzing more and learning from. Not only did Netflix create a new technology and digital habit but it resulted in all other media corporations following their path.
Gershon, Livia. "Will The Fall of Cable Mean Darker TV?" J Store Daily . JStore, 21 Oct. 2014. Web.
Musser, John, and Tim O'Reilly. Web 2.0: principles and best practices. Sebastopol, CA: O'Reilly Radar, 2007. Print.