Business models
Netflix is not a tech company
Discussion of how Netflix is not a tech company but a “TV” company. One thing the analysis missed is that Netflix is using hyper-niche proprietary content to lock people in.
Netflix realised that you could spend far more money on far more hours of scripted drama than anyone had ever spent before, and you could (hopefully) make your money back by selling it on subscription directly to consumers instead of going through aggregators, using a new technology, broadband internet, that both gave you that access and made it possible for people to browse that vast selection of shows.
https://www.ben-evans.com/benedictevans/2019/7/31/Netflix
Andrew Breen is a partner at The Buy Build Fund and the principal of Assert Digital Ventures where he acquires & invests in small, cash flow positive digital businesses with growth potential. He uses his years of digital product experience to expand the market. Currently focused on health & wellness, Andrew has grown ADV’s acquisitions significantly to date. In addition, Andrew advises leading companies from startups, investors to Fortune 1000 companies on digital products and transformation. Known for his deep knowledge of the Lean framework, Andrew has significantly restructured the digital products, processes and culture of a range of companies. He is an adjunct professor at both NYU's Stern School of Business and Courant (CS) Institute teaching on a range of tech product management and innovation topics. He is contributing author on two books on tech product and cultural topics.
2 COMMENTS
Interesting article. In my mind, the problem with Netflix is that it’s not a very good TV company. I recall their CEO saying that their goal was to “become HBO before HBO becomes us” and I’d argue that they have failed to do that.
HBO is a great TV company that has done a decent job scaling up their tech – they’ve met the minimum requirement for acceptable UI/UX. Netflix is a great tech company that has a pretty spotty record of producing quality TV content. Aside from House of Cards and Stranger Things, they haven’t even come close to releasing anything as groundbreaking and culturally relevant as GoT. And that’s with them throwing literally billions of dollars at the problem. (Tongue and cheek video on this subject: https://www.youtube.com/watch?v=lqRQ5Y6OYi4 )
Similarly, while Netflix may think of itself a TV company, I’m not sure that their customers do. If my wife is any indication, an average Netflix user is much more interested in old episodes of the “Office” or “Friends” than in original programming.
Anton, thanks for the comment. Don’t let your own anecdotes skew the data. Netflix has been quite successful with content. Remember, they don’t have to product big hits like traditional TV (which is monetizing via advertising which means big audiences which means generic appealing content). They go after hyper-niche audiences giving them content they won’t find elsewhere because all someone needs to have is one thing on Netflix that’s compelling to them to keep their subscription.