Sorry, Disney And Comcast. Netflix Is In The Lead.

June 1, 2018

 

  By Justin Biel, trends editor at Grow Wire


In short:

  • Netflix is taking on media industry giants, beating out Disney and Comcast in terms of total subscribers and, occasionally, market value.
  • Their secret sauce? Lots of original content, coupled with a change in the industry’s financial paradigm.
  • Follow the Netflix model -- selectively and smartly, of course -- to challenge legacy brands in your own industry.

Needless to say, Netflix(opens in new tab) has come a long way since its debut in 1997. The service, which started with a fairly simple offering of mail-order DVDs, is now a media conglomerate rivaling legacy companies: Last week, Netflix’s market value briefly topped Disney and Comcast’s(opens in new tab) with a valuation of over $153 billion(opens in new tab).

Since its inception, Netflix has pushed the boundaries of entertainment consumption and culture as a whole. (Case in point: They singlehandedly created the concept of binge-watching(opens in new tab), which is now a bone fide dictionary entry(opens in new tab)).

Cable TV companies vs. Netflix? Come on, that’s not a fair comparison.


Like it or not, on-demand video services ARE the future of cable(opens in new tab). Thus, this comparison is valid.

In 2017, total U.S. Netflix subscribers totaled over 50 million(opens in new tab), which means more Americans are watching Netflix than traditional cable TV. At the same time, cord-cutting is at an all-time high, with traditional cable TV subscriptions expected to decline 4 percent in 2018(opens in new tab)

Maybe Netflix's popularity is due to its binging opportunities, or maybe it’s the public’s general distaste for TV commercials. Or maybe people got sick of all those cable channels that no one watches in the first place: A 2014 Nielsen study found(opens in new tab) the average cable TV user watches only 18 of 189 available channels.

But enough bashing cable. Instead, let’s investigate the factors that led to Netflix’s massive growth.

Netflix’s secret sauce: lots and LOTS of original content


Netflix spent over $6 billion on original programming in 2017, resulting in a seemingly endless slate of new shows and movies(opens in new tab) on the platform. The bet is paying off: Netflix added more subscribers in the first quarter of 2018 than anticipated, and analysts say original programming drove that growth(opens in new tab)

Netflix originals include the Emmy-winning series(opens in new tab) "The Crown." (Credit: Netflix.com)

Not all Netflix programs are homeruns, but the sheer amount of programming has generated some award-winning shows that further legitimize Netflix in the industry. At the 2017 Emmy Awards(opens in new tab), Netflix took home a total of 20 awards(opens in new tab). The only network to win more? HBO(opens in new tab).

Netflix plans to ramp up original programming even more in 2018, spending $8 billion to produce nearly 700 shows and 80 original films.  

Here’s the takeaway for all of us aspiring change-makers: No other TV network or studio produces nearly as much content as Netflix. In fact, this year Netflix will release more movies than most major studios combined. This doesn’t apply to every industry, but in Netflix’s case, sheer volume allows them to dominate the current market.

Netflix forgot the rules, then made their own.


Plus, Netflix isn’t playing the same financial game as major studios. They don’t need to worry if their films make money at the box office. Instead, Netflix makes money from its subscription model(opens in new tab)

Netflix's subscription model has users pay a monthly fee for unlimited TV shows and movies.

When building its product, Netflix chose not to play the game of big studios and instead did the hard work of crafting a new type of entertainment business(opens in new tab). This new category has a new financial model, of which Netflix is king(opens in new tab).

So here’s another takeaway: Through foresight, innovation, and use of technology available, a single company upended the entire TV and film industry in only two decades. While traditional media companies have stayed, well, traditional, Netflix changed the paradigm and promptly took it all over.

Don’t hesitate to try their tricks in your industry. 

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