It's hard to remember now, but when Netflix released House of Cards in 2013, it made an important statement: The internet makes high-quality TV like... well, old-fashioned TV. Until then, it was generally assumed that video content destined for the Internet was stupid or, at best, low-budget and forgettable. Sure, Netflix was growing, but it was simply a matter of recycling the content created by traditional broadcasters and studios, and repackaging it to extract extra money from the studio's catalogues. But with House of Cards, Hemlock Grove and Orange is The New Black (ILONB), followed shortly thereafter, Netflix proved it could produce something that wouldn't look out of place on HBO's American premium cable TV network. The gold standard of high production values and rave reviews. We all know the story to this point: both House of Cards and OITNB shows were hits (although the less we talk about Hemlock Grove the better). As a result, the years that followed saw Netflix incorporate increasingly ludicrous sums of money into its early programming. In 2014, the company spent €3 billion on original programming, and it has grown steadily. This year, this figure is expected to reach €15 billion.
(Image credit: Netflix) Original content clearly works for Netflix: At the same time, the company, which had just under 40 million paying subscribers, grew to 148.9 million at the end of Q2019 2013. Looking specifically What Netflix paid during this period, it is likely that, like the investment in House of Cards, it has always been focused on building its credibility as a content provider. quality. This is clear on the trophy shelf: In 14, Netflix lounges received 2019 Emmy Award nominations and won three. In 112 it was nominated for 23, winning XNUMX. For every chaotic Adam Sandler comedy like Murder Mystery, Netflix took it upon themselves to counter it with such critical love as The Ballad of Buster Scruggs; the latter doesn't garner as much attention, but also earns three Oscar nominations. Serious credibility. with hollywood. However, this balance is about to change.
Tighten the bag strings
Last week, it was reported that the company's content manager, Ted Sarandos, had met with a group of middle managers at the company and ordered them to tighten the strings on the bag. He said that "any future project must attract a large number of viewers and can no longer float because critics appreciate it or it gives more credibility to society", emphasizing the fact that Triple Frontier is a budget option. . clunker that he couldn't take it anymore. So what explains this strategy reversal? Depending on your degree of charity, several explanations are possible. The first is that Netflix no longer needs to prove itself. In a few short years, Netflix is not only a big dog in the entertainment industry, but one of the biggest, perhaps only competing with Disney, Warner Bros, and Universal. The society's explosive growth means that it now controls the viewing habits of millions of people. Increasingly, Netflix is the default place to watch something to watch. Streaming has been shown to be a viable mechanism for content delivery.
Disney Plus will become a major competitor to Netflix Image Credit: Disney (Image Credit: Disney) Behind it, he transformed the entertainment industry: He broke the existing power structure, advocating simultaneous releases to film and stream. This has allowed millions of people to become "cord-cutters" and cancel their cable or satellite TV payments, and in many cases has allowed millennials to no longer care for the first time. We even started buying theaters for some reason. Second, there's the more prosaic reason: Much of Netflix's huge content spending is financed by a ton of debt. Despite all the revenue generated from subscriptions, this is still not enough to satisfy the company's desire for more content; so she spends a lot of money, hoping it will help them keep racking up lots of subscribers. And these debts are huge: in 2018, the company reported long-term debt of €8.340 billion, up 71% in 2017. Eventually, it will have to start paying it off. In other words, you need to produce more hits, instead of wasting money on content that no one is seeing. The third reason is perhaps the most important: Netflix is becoming a mature company and changing the context in which it operates. This was an observation made by Matthew Ball, an investor who previously worked as a strategy manager for Netflix's closest competitor, Amazon Video. He says that Netflix has now reached a point where it no longer needs to evolve its content offering: the first few years were basically filling the Netflix catalog with as much as possible so that people would want to subscribe. and the fastest way to subscribe. For this, the content was bought by other companies.
Laugh to the bank?
However, today, Netflix has successfully developed its own "channel" of self-produced broadcasts and production contracts with many big names, which allows it to demonstrate a lot of energy. Burning as to what he manufactures. In short, Netflix has gone from being "beggars" to "no choice," having gained the credibility of choosing who they work with. Maturity could affect the way Netflix thinks in other ways, too. Now that Netflix is king of streaming , sees their niche very differently. In their fourth-quarter results, released in January, we had an idea: They contained this nugget: "We compete with (and lose to) 'Fortnite' more than HBO." CEO Reed Hastings reaffirmed this statement with even more force. Earlier this year, Recode asked Recode to compete with Amazon and HBO. "We compete with the dream." In other words, Netflix competes for our attention with more of its traditional rivals. Our resource more precious is time.Netflix wants to retain its existing customers by maximizing the consumption of its users, since they guarantee subscription income for life.And finally, it could explain the change in strategy.According to a series of figures, per minute watched, the most watched shows on Netflix are not Stranger Things or Black Mirror, but Friends and the US version of The Office. < p class="bordeaux-image-check">
The office. Image Credit: Deedle-Dee Productions / Reveille Productions / Universal Television (Image Credit: Deedle-Dee Productions / Reveille Productions / Universal Television) Both series are quite old, but that makes sense, they are very popular classics, which we can see and that they are amazing, and maybe it shows how, by adopting a more populist strategy, Netflix can be safe. Implant even more firmly in our lives. What these two series, which have been rebroadcast continuously over the years since their inception, suggests that viewers want, above all, what I would call "comfort": not everyone who wants to watch Prestige Drama Series. , or even something new and praise from critics: Viewers want something warm, familiar, and that doesn't require intense concentration. In other words, Netflix can be expected to start producing more streams, wide and accessible. Do you want something that is not going to be a challenge that you can endure and occasionally while playing games on your phone? These broadcasts match the bill perfectly, so it's easy to imagine why they're winning in terms of minutes of viewing. And if Netflix can use such shows to become more firmly established in our lives, it should position them to become our "default" TV service. The streaming video market is about to get more crowded, with the launch of Disney+ and Apple TV+, both of which will certainly attract a lot of subscribers for their targeted and targeted offerings. . But ultimately, what if we want a place where we can reliably find something relaxing for the night? So Netflix wants to make sure we choose Netflix.