NETFLIX: Will Our First “True Love” Last?

Innovations in television over the last four decades have been like crushes for America’s loyal viewers.  First came the VCR bringing us the ability to watch movies when we wanted, if you could find a video rental store, and record our favorite shows while our parents came to our piano recitals.  It was thrilling, until your parents made you watch the video of your family vacation…AGAIN, because you only had one real movie on VHS and it was rated R.  By the late 1980’s cable was widely available if you could afford it, so usually only the cool people had it.  Then came our favorite neighborhood video store, Blockbuster.  And we couldn’t wait to rush there on our way from from school on Friday’s to rent the hottest video before they ran out!  Who cared if we had to wait in line for 30 minutes and got charged massive fines if we didn’t turn it in on time.

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By 1999 our love affair with our VCR’s and VHS tapes started to fizzle as DVD Players and DVD’s became more affordable and the Digital Video Recorder (DVR) was introduced en mass by TiVo.  TiVo was so sweet and reliable, and cute, it just made us swoon.  At this point cable, a.k.a. the most popular guy in school, was getting some competition from satellite providers; and they both decided that TiVo was not only cute, but pretty darn smart, so they decided to step up their games by added DVR options.  Now we’re in the early to mid 2000’s and the quiet, kind of mysterious guy that moved in a while back (1997) is starting to catch our attention.  I’m back at work Monday morning talking to a co-worker when I realize I’ve forgotten to return that one day video rental and I’m going to have to pay the fine…AGAIN.  That’s when my co-worker asks, “Don’t you have Netflix?”  “Net what?” I say.  “Netflix,” she replies.  “You know that online DVD service.  You just go online, sign-up, make a list of the movies OR T.V. shows you’ve been wanting to see, and they mail the first couple to you.  When your done watching them you just pop them back into the pre-paid envelope, stick it in your mailbox, and in a few days you’ve got the next couple of movies on your list.  I’ve had it, like, forever.”  “Yeah, but I bet it’s super expensive,” I retort, a little defensively.  “Nope, you pay less than $10 bucks a month.”  NO WAY!!! I think to myself.  WHY HAS SHE BEEN KEEPING THIS HOTTIE TO HERSELF?? I think. As soon as I  get home I get online and sign up.  A month later my husband says, “I’m really liking this video mail thingy.”  “Yep,” I reply smugly, “it’s Netflix.”  And I think to myself, where has this been all my life?  I’m in love…

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So that little story may have been a bit over the top, but not too much.  Netflix truly revolutionized the way many of us watch television.  It’s like the online video streaming godfather. It’s already taken out Blockbuster, who will it go after next? And where the leader goes others shall follow.  I’ll be honest, my family LOVES television and movies and YouTube videos…OK, we love it all.  And we have it all, well a lot of it: Netflix, Hulu, Amazon Prime Instant Video, HBO Now, CBS All Access, YouTube Red, and probably some others I’m forgetting.  For us each service offers enough different content from the others that it’s worth it.  But if there’s one we CANNOT live without it has to be Netflix.  And now I’ve been asked to evaluate and consider the sustainability of my favorite online video streaming service.

In “Questioning Netflix’s Revolutionary Impact: Changes in the Business and Consumption of Television,” Cameron Lindsey examines Netflix’s rise to power, as well as it’s competition and outlook for the future.  Like so many innovators throughout history Netflix’s founders Randolph and Hastings took a calculated risk with their initial business model.  Hastings, who is also the Chairman and CEO, has continued to take measured risks to bring Netflix where it is today.  That’s not to say he’s done everything perfectly, “In 2011, when Nettlix raised its subscription costs for users that wanted both instant streaming and ‘DVD-by-mail services, they lost roughly 800,000 subscribers” (Lindsey, 178).  While it has rebounded well from that fiasco, Netflix has made business choices that could still wind up ending it’s time at the front of the pack.  According to Forbes, as stated in Lindsey’s piece, Netflix’s content licensing costs were on the rise as of 2014, with 70% of it’s expenses being spent there.  Another shocker is that “Netflix does not own licensing rights to many of its best-known programs” (Lindsey, 181).  Although it looks like this may be remedied, “In an interview with Bloomberg Business, CEO Reed Hastings said that the company plans on taking a larger role in its original programming including production and ownership” (Lindsey, 181).  Netflix still has a great deal of competition, especially when one of it’s rivals is backed by a united group of for broadcasting rivals (Lindsey, 176).  Netflix will need to continue to rely on its strengths, original content and no commercials while continuing to take those measured risks. One that may give the giant a sustainable future is symbiotic partnerships similar to the one it has formed with Marvel Cinematic Universe.  Even if Netflix eventually fades into the sunset I believe it has made a revolutionary impact on the world of television.  In “Individual Disruptors and Economic Gamechangers: Netflix, New Media, and Neoliberalism,” Gerald Sim refers to the argument from author Harry Jenkins that supports this.  Jenkins argues that consumers with a firmer grasp of technology “are demanding the right to participate within the culture…[and] have wrestled away from the industry the power to control their experience.”  Media writer for The New Yorker Ken Auletta reported that by eliminating the requirement of commercial watching for the public Netflix has taken advantage of what Hastings “calls viewers’ ‘managed dissatisfaction’ with traditional television” (Sim, 187).  Sim’s article also touches on an additional success of Netflix, the algorithm they use to predict and suggest shows for their viewers.  Having been a Netflix customer for over a decade and a streaming customer from the time they began the service I can say from my experience this is what first drew me to the service.

No one person can predict the future of Netflix or any of the other online video streaming services.  That being said, any service that wants to stay in business will need to stay relevant, take measured risk, and continue to be an innovator in the realm of television.

 

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