Netflix approached the Hollywood studios to license their content for streaming, and Hollywood snickered and took the easy money. They expected it to be a total failure on Netflix's end.<p>Then, when Netflix started growing like crazy and the studios panicked. If Netflix was the only streaming service around, it would enable them to dictate licensing contracts. Suddenly, streaming was a real thing and they wanted to extract every cent possible from their content.<p>In order to slow Netflix down the studios pulled the majority of the "good" content from Netflix, and kept licensing them their b-movies and documentaries. To this day, you still don't see a whole lot of blockbusters or theatrical releases available on Netflix.<p>Netflix knew that they couldn't remain at the mercy of the content owners. So they leveraged their head start on content delivery by producing their OWN content only available through themselves.<p>It was a brilliant strategy, and I'm sure it took a lot of cajones to go down that path.
Back in the day, when Netflix was the most successful DVD rental company, people used to point out that Netflix sent more Gigabytes of data every day as DVDs in the mail than the whole Internet transmitted in a day. Netflix was given as an example of how the Internet couldn't compete with physical delivery. Ironic.<p>Interestingly, the old Netflix DVD business is still alive and still profitable, though it's been rebranded as DVD.com - there's a piece about it here: <a href="http://fortune.com/2018/05/21/netflix-dvd-business/" rel="nofollow">http://fortune.com/2018/05/21/netflix-dvd-business/</a>
For anyone interested in company histories I strongly recommend the "Business wars" podcast by wondery.<p><a href="https://wondery.com/shows/business-wars/" rel="nofollow">https://wondery.com/shows/business-wars/</a><p>"Netflix vs. HBO. Nike vs. Adidas. Business is war. Sometimes the prize is your wallet, or your attention. Sometimes, it’s just the fun of beating the other guy. The outcome of these battles shapes what we buy and how we live.<p>Business Wars gives you the unauthorized, real story of what drives these companies and their leaders, inventors, investors and executives to new heights -- or to ruin. Hosted by David Brown, former anchor of Marketplace. From Wondery, the network behind Dirty John and American History Tellers."
It's going to be very interesting when Disney rolls out their service. They could really do some damage to Netflix (and Amazon Video).<p>For those with kids, it's a no brainer. Millions of subscriptions right off the bat.<p>Then imagine if Disney puts Star Wars exclusively on their service, same day or even before theaters. Millions more subscriptions. They could do this with all things Pixar, Marvel and other big Disney IP...<p>Now add on the merchandise. They'll have better data on exactly what people are watching, how many times they're watching it and can create offers based on that. The merchandising side is a huge advantage.
I think the two top CEO's at this time are Jeff Bezos and Reed Hastings. Both jumped in to fill a need and then boldly pivoted into new areas. Amazon went from online bookstore, to online everything store to cloud provider. Netflix went from mail order DVD to online streaming to content producer. This is somewhat reminiscent of Bill Gates and the transition of Microsoft from Basic to DOS to Windows to Office.<p>This illustrates just how much a Founder CEO who has the right mix of smarts and boldness can be absolutely vital for a company. I cannot imagine a generic MBA CEO doing such bold and aggressive moves with Netflix, that the founder CEO has been able to do.
Here's the direct link to the full article: <a href="https://www.economist.com/briefing/2018/06/30/netflix-is-moving-television-beyond-time-slots-and-national-markets" rel="nofollow">https://www.economist.com/briefing/2018/06/30/netflix-is-mov...</a><p>The linked to one is a paragraph or 2 with the above link at the bottom.
Netflix is a business success and a product success. They played a difficult game and won. I don't have anything disparaging to say about them as a company, but as a type of company....<p>We (as consumers & residents of an economy) need to pay attention to what Peter Thiel called "monopoly" when he (playing provocateur) said that "competition is for losers."<p>The reason Netflix became so successful, and managed to play with the entertainment oligopolies is that they built and control a bottleneck. They are the biggest streaming company, one of a handful in any given market.<p>Terrestrial TV came with frequency band issues. Broadcasting had to be licensed so everyone wouldn't step all over eachothers' signals. This resulted in a structural oligopoly, where only a handful of licencees could broadcast.<p>Then cable came. This came with physical infrastructure, and structural tendencies to local monopoly. They also developed an oligopolistic industry structure, where licensing and content acquisition is only really possible if you are fairly big.<p>Now internet. Online, Netflix and other streaming companies have built their companies specifically around the goal of owning a bottleneck.<p>This time, there is no tangible reason for it. It's just a tendency of digital services that one service "wins" a race to monopolize a sector.<p>There are a ton of inefficiencies in an oligopolistic market. I pay for house of cards by subscribing to Netflix. You pay for American gods by subscribing to Amazon. Why can't we both watch both shows? It wouldn't defund the shows, since we both keep paying the same. It wouldn't be skin off either of our noses either. Show creators would prefer universal availability and so would consumers. The reason Amazon and Netflix want this situation to exist, is because it maintains their respective "moats." There is no string underlying economic (pertaining to resource allocation and scarcity) reason for it.<p>Basically, we need to watch out for these intermediaries. They are very innovative and consumer friendly in their first decade or two. That's how they succeed at first. Later, they succeed by maintaining their monopolies any way they can.
< Amazon, Apple, Facebook, YouTube and Instagram are all developing programming efforts of their own.<p>If this competition is about catalogue, I don't understand why they didn't try to purchase Time Warner or 21st Century Fox like Disney or AT&T did. Are they betting they'll get a better chance by producing their own content or teaming up with Disney?
< In September 2017 Netflix streams were taking up 20% of the world’s downstream bandwidth, according to Sandvine, a network-equipment firm<p>I doubt this is real, at best it's US only.
Netflix is nowadays more of an original content creator rather than a distributor. In this context, I don't know how big of a company they truly are. Their 2017 profit was $245 million. Compare this to, say, the $1 billion Warner Bros makes a year just from syndication for 'Friends' (a show that's been off the air for close to 20 years.)
It seems to me that Netflix used to have better recommendations. It's unclear why/how/when it went bad, my suspicion is that they changed their metric and it's having bad side effects, or their old models didn't scale as their user base grew quickly.<p>I've built deep learning recommendation systems in production for clients with millions of users and it's sometimes surprisingly difficult to beat the "most trending <products>" baseline if all you care about is views/purchases. It will in the short term to meet business goals, but it hurts the user experience over time and will inevitably increase churn.
In my opinion, besides own shows, Netflix's success is also due to mobile devices availability and no commercials. I don't know if it's only me, but I find watching anything on tv, when shows/movies are interrupted by commercials really annoying, not to mention waste of time. On one of polish commercial tv stations TVN (on government owned ones there are commercials only between, not during shows) God Father II which is 3h22m with commercials was little above 5 hours. Come on!
I remember the early days of Netflix a lot of folks were predicting that Netflix was super cool and the future.... but they also predicted that the first guy in sometimes gets run over by someone who comes later. They often were referencing the content owners..... but content owners just didn't want to / didn't get it / didn't get their act together... amazing how that worked.
I wonder if the technology is sustainable. I mean, as they grow, can they continue to use the tcp/ip network that is used for everything else by everyone, or would they create their own private network. Would they become their own service providers displacing the traditional ISP's?<p>(I couldn't read the full article as I didn't have access, so not sure if this is touched upon there.)
Lately, they have been compromising on quality and focusing on quantity. I don't think the fact that they are producing more movies than the other Hollywood production companies should be seen as a good sign.<p>This is all subjective but, I do believe that the 10 movies that Disney produce will be far superior than any of the 73 movies that come from Netflix.
Haven't read the article, but I'll take a guess: They built a service that people wanted, a pure internet-based streaming service that didn't need a cable subscription.