Written By Keshav Mohta (Grade 9)
The COVID-19 pandemic has been harmful to many industries while having a positive impact on some businesses. Video streaming companies in particular, have had a great year as more and more people watch movies and shows, with nothing better to do at home. The biggest and most noticeable of these companies is of course, Netflix. With over 200 million subscribers Netflix is leading the pack by a huge margin. The platform has an extremely wide range of movies and TV shows from varied genres and everyone has something to watch.
The company began in 1997, with co-founders Marc Randolf and Reed Hastings. With an initial investment of $2.5 million, “Netflix” (“net” as in the internet and “flix” as in movies) started off as a DVD-rental company. On their website, people could order movies which would be posted to their address. The DVD would then have to be sent back to a Netflix office. At the meagre cost of $4 per DVD-rental plus postal charges, the service became a hit.
In 2 years, the company’s user base had grown exponentially. However, users complained as late fees piled on. To solve this challenge, Netflix switched to a subscription model where one would pay a monthly charge allowing them to order any movie they’d like. They could keep that movie for as long as they wanted too. However, the movie had to be returned before ordering another one. This model helped Netflix eliminate late fees and attract newer customers. As word spread the service became more and more popular.
By 2000, Netflix had 300,000 subscribers and by 2005, they were shipping 1 million DVDs a day. In 2007, with the advent of better internet connectivity, Netflix launched a complimentary movie streaming service. As mobile internet speeds continued to improve Netflix gained a better footing in the market.
So why is Netflix so successful. Here are some advantages which Netflix has over the competition which have helped them become the TV giant that they are today.
One of the advantages Netflix had over the competition was that they were the first to start DVD-by-mail and were the first in the streaming market. Being first allowed them to quickly get more deals with film studios and TV channels. Starz, an American premium cable company struck a deal with Netflix allowing them to air their TV shows. This popularized Netflix greatly, as people could now watch new episodes of Starz’ shows whenever they wanted. PlayStation and Xbox also played a key role in popularizing Netflix. Before Smart TVs, Netflix on your PS or Xbox was the only way to enjoy on-demand movies. Word about Netflix spread quickly and Netflix’ subscriber base increased. In 2011, Netflix expanded to Europe and later Asia as well. Today the Netflix service is available in around 190 countries!
Having great content on the platform was probably the most significant advantage and helped Netflix tremendously. From hit comedy shows like Friends and The Big Bang Theory to serious crime-related shows like Sherlock and Lupin, Netflix has been able to curate a variety of interesting content for all audiences. While having kid-friendly and adult content, Netflix has become a service for families to enjoy.
People had already seen blockbuster movies in the theatre and shows on TV before, so there was no unique content on the platform. Licensing these movies and shows was also expensive. So, Netflix decided to produce their own Netflix-exclusive content. In 2011, they hired some of the world’s best film crew to produce House of Cards, the first Netflix Original. House of Cards was a political thriller, different from most shows seen before. Everyone loved it and Netflix became known for having House of Cards on it. Since then, Netflix has gone to produce Netflix Originals like Greenhouse Academy for kids and Money Heist for adults. In 2019, they spent around $15 billion on Netflix Originals.
Another unique thing about Netflix which is not available on most other streaming platforms is the ability to watch multiple episodes of a new show on launch day itself. In the past, for any show on regular TV, you could only see one episode a week. Netflix releases multiple episodes at a time, allowing people to binge-watch multiple episodes of shows at a go, keeping them hooked to the screen. In Prime Video, for example, a new episode of Young Sheldon used to come out every Friday. Instead of having to wait for the new episode, it is much more enjoyable to binge 5-6 episodes of the show and then take a break. This allows people to finish shows quickly as well and move on to other shows which they might want to watch. This seemingly trivial advantage, influences the user greatly and keeps them on the screen. This is a huge contributing factor as to why Netflix has been able to conquer the streaming market.
The Netflix Recommendation Engine is one of the most powerful AI tools out there. It can sort through hundreds of thousands of movies and shows, and rank them based on your past watch history. What makes it extremely powerful is its ability to collect data on what other people enjoy watching and suggest those to you as well. This spreads the word about popular or trending shows very quickly encouraging more people to watch them. It helps Netflix boost their content and showcase it at the right time to the right people to get more and more people excited about it.
And finally, the last major advantage which Netflix has over the competition is the superior User Interface. With shelves and categories which sort movies by preference as well as a “Top 10” section, users can quickly find shows they might like. When you hover over a movie or show title card you see a clip from it making the experience better and ensuring that people don’t click away. Unlike Amazon Prime Video, the Netflix software is also not clunky and boxy, allowing for a more natural feel to using the app. Having two separate themes for adult and children profiles also gives contrasting experiences and helps give parents assurance that their child is not watching stuff not meant for them. Another small but significant part of Netflix’s UI is the ability to skip the intro and move onto the next episode very quickly. While other streaming platforms like Disney+ Hotstar, allow you to do this, the button is hidden in the corner making it tougher to spot and click.
Netflix has a fascinating background. From a DVD-rental company to the next big thing in entertainment, they have revolutionised the way we think about movies and TV show. Being the first to start streaming great-quality content, releasing multiple episodes at a time and having an amazing recommendation engine are the most pivotal reasons for their success. Through the years, Netflix has been able to successfully adapt to the changing times. By being willing to junk their existing and profitable DVD-rental business and launching their streaming service, they were willing to cannibalise their own business in the hope that Netflix would grow bigger (which it did).
Featured Image Courtesy – Variety
Really great summary of what Netflix is about… I found it quite helpful in understanding their journey.
Amazing great research and info.. Really Netflix is now almost a generic name in its category.