Netflix's Path to Television Domination

In 2007, Netflix made the shift from DVD rentals and sales to streaming television and movies (CNN). This successful move opened a path for other platforms to emerge and disrupt the traditional broadcast model of television by experimenting with the idea of combining television and internet. Today, the influence of Netflix has made over-the-top-content (OTT) services more popular than ever. OTT is a term referring to video that is transmitted via the internet without an operator or multiple cable or direct-broadcast satellite television systems (Hall). The increased trend of OTT coupled with cord cutting, the act of viewers cancelling their subscriptions to multichannel subscription television services, has propelled Netflix above broadcast and cable networks (Spangler). Now, with the emergence of other competitors in the streaming industry such as Hulu and Amazon Prime, as well as the pressure of traditional networks Netflix stands at crossroads. Netflix must continue innovating the television watching experience in order to remain at the forefront of television. In order to stand out from cable and broadcast programming, Netflix must continue to create original content that appeals to a variety of niche audiences, experiment with the structure of television, encourage engagement from audiences with their shows, and allow for viewers to create their own personal programming experience. In order to stand out from other streaming services Netflix must continue to build on its convenience and accessibility, as well as continue to alter their brand identity in order to continue to be a lucrative platform.

In order to stand out from the traditional broadcast and cable networks, Netflix must continue to create high-quality, addictive original content that attracts subscribers. In Cameron Lindsey’s novel, The Netflix Effect: Technology and Entertainment in the 21st Century, Lindsey describes that releasing “More exclusive content will elevate Netflix from a simple streaming service to a full blown network of its own” (Lindsey 181). In 2016, Netflix spent $5 billion on original programming and five of the ten most searched for shows by Netflix users last year were Netflix originals. By creating more exclusive content that can only be accessed through a Netflix subscription, Netflix can draw in more subscribers who want to keep with trends and watch the top television series. For example, Netflix signed over 7.1 million new subscribers in the last quarter of 2016 when the critically acclaimed Netflix original series The Crown and The OA were released (Irish Times). Once a user subscribes to Netflix to watch one show they are highly likely to keep their subscription after seeing the wide plethora of original content on Netflix that they might also like. The company’s CEO Reed Hastings said on the final quarter of 2016 earnings call that “There’s a tipping point, one more title you’re hearing about, that causes you to join.” For Netflix, it is important that they attract users to subscribe or try the service with one show, but it is even more important for them to keep users engaged with the service by continuing to update the catalogue with new, interesting original shows. At the end of the day, it is Netflix’s cutting-edge original content that elevates it from the traditional broadcast and cable.

In addition to creating high quality original content, Netflix can stand out from traditional television networks by developing original shows that appeal to numerous specific audiences. Whereas many cable networks are for specific niche audiences, such as Syfy with science-fiction and fantasy shows or Oxygen with crime-focused shows, Netflix has the ability to be flexible and cater to the most amount of people through different shows that might appeal to more unique audiences. For example, Netflix’s Marvel’s Jessica Jones, a superhero Marvel series, appeals to a very different audience than Netflix’s The Crown, a historical drama about Queen Elizabeth II. While Marvel’s Jessica Jones averaged about 4.8 million viewers in adults 18-49 during a 35 day viewing cycle, The Crown appealed to an older and more female audience (Littleton). By developing shows that appeal across many different types of audiences, Netflix can attract more people to subscribe to the platform. In order to stand out from broadcast and cable networks Netflix should create shows that are specific to, for example, those that enjoy science-fiction, home improvement shows, or cooking shows. By creating programming for everyone Netflix can further its success by attracting a wider audience. Netflix must capitalize on the expansive content that it can provide each user to stand out from traditional networks.

Netflix should also continue to experiment with the structure of storytelling in ways that the traditional networks cannot. The broadcast and cable networks have a more rigid structure in which stories can be told. In traditional broadcast or cable shows episodes are either thirty minutes or one hour long, which brings a very specific formula for writers to create a story arch. Many of Netflix’s original shows vary in length and don’t adhere to the traditional structure of broadcast and cable. Netflix should continue to create more television shows that are nontraditional in structure to stand out from its broadcast and cable competitors. For example, Netflix has been experimenting with the idea of differing story structure with The OA. For The OA’s first season that aired last year, each episode was a different length. In an interview with film and television blogger Peter Sciretta, Zal Batmanglij, the show’s creator, explained that the differing episode length allows for each episode to stand on its own (Sciretta). Since each episode is a different length, an episode does not adhere to the structure of the previous episode. In a column by Variety’s Peter Debruge, Debruge argues that The OA evokes a new form of storytelling, “on-demand storytelling.” Creators are given more freedom to tell stories that do not fit into a two-hour time frame perfectly (Debruge). Thus, giving a different experience to the viewer each time. On traditional networks there is less flexibility for structure experimentation. Therefore, experimentation in structure allows Netflix to differentiate itself and stand out from other platforms or networks by giving subscribers a completely different experience of watching television.

In the same fashion as expanding the structures of storytelling, Netflix must expand the ways in which audiences can engage with the content they view on order to compete with broadcast and cable programming. Broadcast and cable television networks are holding onto the fact that their model allows for viewers to connect with their favorite television shows through interactive experiences more easily such as “live-tweeting.” “Live-tweeting” is when fans tweet about their reactions to a show in real time and are also able to tweet alongside the cast members of the show they are watching live. The process was made famous by ABC’s Scandal. Betsy Beers, an executive producer on the show, said in an interview with Variety, “Twitter’s become a water cooler… Now everybody’s watching shows in a different span and rate. The great thing about Twitter is that [the viewer] can always find a community” (Weinstein). Viewers love to talk about their favorite shows and connect with fans who share the same interests in respective shows. Live-tweeting expands on the ways that people can connect and discuss shows by not only connecting with fellow fans but also see what the stars of the show are saying alongside the show airing. In a study done by Nielsen, Nielsen discovered that the higher quantity of tweets surrounding a show, the higher the ratings of the show (Nielsen). “Live-tweeting” makes watching television a more interactive experience similar to the idea of “binge-watching.” Audiences enjoy connecting with other fans of the show. Netflix must develop ways for its users to engage with content and one another in order to continue to compete with the broadcast and cable networks. Even though viewers don’t watch episodes of Netflix at the exact same time, Netflix can still implement a platform similar to live-tweeting to increase audience engagement. For example, The OA garners large amounts of reactions from fans online. Specifically, the Season 1 finale was very controversial and viewers had very different opinions regarding how it ended (The OA). Netflix could work with Twitter to implement a live-tweeting aspect by asking viewers when they first watch The OA if they would want to opt-into seeing audience reactions while they watch the episode. If the viewer chooses to opt-in, throughout the episode they would see tweets that were tweeted while other fans watched the exact moment the viewer is watching. By increasing audience engagement in their television watching experience, Netflix makes the experience more interactive. Netflix must innovate how consumers interact through television so that the platform can build an experience that is unique to their platform and can only be experienced by having a Netflix subscription.

Lastly, in order to remain at the forefront of the television industry, Netflix must continue to emphasize how in comparison to broadcast and cable networks their platform encourages users to create their own personal television watching experience. In today’s golden age of television, Netflix thrives on being able to provide users the most personal television experience. Users have the ability to select the content that they want to watch from a variety of different networks, creators, genre, and more. Recently CBS experimented with the subscription-based model by launching CBS All Access. CBS All Access offers a large library of current and older CBS shows, event programming, and the ability to live stream TV for a monthly price cheaper than Netflix. Despite the cheaper price, CBS All Access has thus far been a failure due to its lack of content. Unlike CBS All Access and other potential cable or broadcast network subscription services, Netflix offers popular content from a variety of different networks. The majority of television viewers do not watch television from exclusively one network. Netflix streams many of the traditional network's’ top shows such as The Walking Dead (AMC), Grey’s Anatomy (ABC), American Crime Story (FX), NCIS (CBS), and New Girl (FOX). CBS All Access advertises that its platform contains over 8,000 episodes. In contrast, Netflix currently has over 4,335 movies and 1,197 shows (Bouma). Netflix offers the subscriber the ability to pay a monthly fee and have access to content from a variety of networks rather than just one. Despite the rise of networks shifting to the subscription-based model, Netflix will remain at the forefront of television because the platform offers a larger library of content from all networks as well as their own original content.

In addition, Netflix’s platform allows users to garner a more personal experience of television consumption compared to broadcast and cable networks through the streaming platform’s advanced algorithm. Netflix’s carefully crafted algorithm goes beyond just recommending users the most highly rated content in their catalogue but uses machine-learning capabilities in order to recommend content that is more tailored towards the viewer. Some specific patterns that Netflix’s algorithm tracks are users searches and personal ratings, if their watching patterns align with another user's same watching patterns, and 75,000 alternative genres (NBC News). For example, if a user watches and rates The Office highly the algorithm will recommend something that other users who rated The Office highly watched such as Parks & Recreation or 30 Rock. If two users both watch every season of The West Wing and one goes on to watch Madam Secretary after, the algorithm might suggest Madam Secretary to the other user. Lastly, some of the 75,000 alternative genres include everything from “Witty Independent Comedies” to “Dramas Featuring a Strong Female Lead” to “British Set in Europe Sci-Fi & Fantasy From the 1960s.” The algorithm uses these incredibly specific genres in order to craft the user’s future preferences. Through this complex system, Netflix helps the user meticulously create their own programming schedule. Whereas NBC offers little fluctuation with what you could watch on a Tuesday night, Netflix’s algorithm helps the user to not only watch something on their own time but also that might align more with their interests.

Even more so than the broadcast and cable networks, Netflix’s faces great competition moving forward from other streaming services such as HBO, Hulu, and Amazon. In order for Netflix to be stand out against these streaming services the platform must build on its convenience. Compared to HBO, Netflix comes preloaded on most mobile devices, tablets, gaming devices, and set-top devices. Subscribers are more likely to favor or subscribe to Netflix over HBO if their device comes with the app automatically installed. Similarly, Hulu’s cheapest subscription option is the same price as Netflix’s. However, while Netflix’s option offers no commercials Hulu users must sit through advertisements before and during the episode. In 2016, there was a rumor that Netflix would possibly add commercial to their shows. With this information AllFlicks conducted a survey with more than 1,2000 respondents. The survey found that 90% of those asked would rather pay more than see ads (Lovely). Audiences are growing used to the convenience of not having to watch commercials due to DVR and Netflix. Lastly, even though Amazon Prime doesn’t have advertisements, the majority of the platform’s library is a la carte, meaning that users must pay an additional fee for each movie or episode they watch (Martin). Netflix thrives on the model of being the most convenient to its users. Netflix has instilled in its users to expect the app to automatically be installed on all of their devices, to not have to watch advertisements, and to pay only one fee. If Netflix wants to remain successful against other streaming services, the company must keep innovating ways to make the television watching experience more convenient.

To remain the top streaming service, Netflix must continue to increase its accessibility by expanding the amount of content available to those outside of the US. Throughout Lindsey’s book mentioned prior, Lindsey argues that moving into international markets could be dangerous for Netflix. However, he does not acknowledge the potential for an exponential growth in subscribers if Netflix were to license more of their original shows internationally. In fact, 47% of Netflix subscribers live somewhere other than the US, however, several of Netflix’s most popular original shows are only licensed for the U.S. and cannot be broadcasted in other regions. Increasing Netflix’s content accessible outside of the US would increase the total amount of Netflix subscribers abroad dramatically the same way that the amount of subscribers increased after original content was introduced in the U.S. Despite the increased costs of broadcasting Netflix shows internationally, the huge subscriber market would help the benefits quickly outweigh the costs (Forbes).

Conversely, Netflix can remain at the forefront of the television industry compared to other streaming platforms if it continues to acquire foreign television shows to the streaming platform for American audiences. Netflix has the largest collection of foreign shows accessible in the U.S. Some popular international shows that are accessible in the U.S. include Rita (Denmark), Occupied (Norway), and The Returned (France). Continuing to expand the international catalogue of shows on Netflix is not only extremely lucrative but also leverages Netflix against the other streaming platforms by contributing to the sheer amount of content on Netflix as well as the content’s diversity. Furthermore, just how American shows do well abroad through Netflix, increasing the accessibility of international shows open up a whole world of potential revenue through new subscribers for Netflix rather than the “Netflix and Chill” brand.

In addition to continuing to build on its qualities of being convenient and accessible, Netflix must rebrand itself away from being a passive “Netflix and Chill” experience and emphasize their “Binge-Worthy” interactive television experience in order to compete against other streaming services. As Ted Sarandos, chief content officer of Netflix, explains in Kevin McDonald’s novel, The Netflix Effect: Technology and Entertainment in the 21st Century, Netflix “Restores a sense of connection between consumers and content… Audiences have lost that emotional investment in content” (McDonald 211). As stated earlier, Netflix needs to focus on audience engagement and can do so by emphasizing their brand through “binge-worthy” content that one can interact with. In the case of The OA, Netflix should illustrate and align the show and platforms’ brand identity to both being addictive content.

According to USA Today, Netflix has over 89.09 million paying subscribers (Snider). However, as competition emerges from streaming services and traditional television networks, Netflix must continue to provide a unique television watching experience to its subscribers. If Netflix focuses on creating unique original content that appeals to a wide variety of people, is the most convenient option, and develops increased ways for the audience to engage the platform will continue to transcend every boundary of the television industry and medium. By emphasizing the unique and exclusive experience that one can obtain by subscribing Netflix, Netflix can easily navigate the competitive landscape and remain at the forefront of the television industry. Since its conception television has always been a unifying force in culture. Co-workers, regardless of their race, religion, or sexual orientation could gather at the “water cooler” and discuss last night’s episode of Seinfeld. Today, society is more fragmented than ever and people need television to continue to be a unifying force. Even though there is more of an increase in the sheer amount of television and the internet has made television watching more individual, Netflix remains important in being a unifying factor for society. If Netflix wants to continue to dominate broadcast, cable, and streaming platforms it is going to have to continue to be a platform for viewers to come for, as its company values states, a “quest” (Farfan).

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