{"id":8964,"date":"2017-04-13T06:03:18","date_gmt":"2017-04-13T06:03:18","guid":{"rendered":"http:\/\/www.lifeandnews.com\/articles\/?p=8964"},"modified":"2017-04-14T06:07:00","modified_gmt":"2017-04-14T06:07:00","slug":"the-unique-strategy-netflix-deployed-to-reach-90-million-worldwide-subscribers","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/the-unique-strategy-netflix-deployed-to-reach-90-million-worldwide-subscribers\/","title":{"rendered":"The unique strategy Netflix deployed to reach 90 million worldwide subscribers"},"content":{"rendered":"

Amanda Lotz<\/a>, University of Michigan<\/a><\/em><\/span><\/p>\n

In just a decade, Netflix has grown<\/a> from a video service with seven million U.S. subscribers to one that reaches 93 million people worldwide. \"The<\/p>\n

Its growth and ability to break into<\/a> well-established industries \u2013 first video rental, now television and film \u2013 is a rare accomplishment. In my book \u201cPortals: A Treatise on Internet-Distributed Television<\/a>,\u201d I explore how Netflix and other internet-distributed video services forced the existing television industry to radically change its practices. <\/p>\n

At the same time, many have struggled to understand Netflix\u2019s strategy. With other services entering the video on-demand market, how has Netflix continued to evolve and build its subscriber base? <\/p>\n

The seeds of niche TV<\/h2>\n

When Netflix first launched in the late 1990s, it distributed DVDs \u2013 mainly films \u2013 by mail. The convenience of the service disrupted the existing film rental industry and eventually led to its demise<\/a>.<\/p>\n

Television, meanwhile, was experiencing a renaissance. Cable channels began running series with complex storylines<\/a> \u2013 such as \u201cThe Sopranos\u201d and \u201cThe Shield\u201d \u2013 that were targeted at niche audiences<\/a>. Because many of these channels earned revenue from both subscribers and advertisers, they could be successful even if these programs didn\u2019t reach a mass audience.<\/p>\n

Then, during the early 2000s, advances in compression technology<\/a> \u2013 coupled with more homes gaining access to high-speed internet services \u2013 allowed large video files to be easily streamed over the internet. <\/p>\n

These developments set the technological stage for Netflix to evolve its business from DVDs by mail to a national video streaming service, which it launched in 2007.<\/p>\n

Soon, television series became an integral part of its business model. By the summer of 2016, television accounted for 70 percent<\/a> of the service\u2019s streaming.<\/p>\n

Different model, different strategy<\/h2>\n

For years, television was distributed by broadcast wave<\/a> \u2013 a revolutionary technology that sends a wireless signal over huge swaths of the country. But broadcasting technology can send only one message at a time to everyone in its range. <\/p>\n

Because video streaming services such as Netflix (what I call \u201cportals\u201d) deliver programming \u201con demand\u201d via the internet, viewers can choose what and when to watch instead of watching \u201cwhat\u2019s on.\u201d So where a traditional channel\u2019s task is to develop a schedule, the key task of a portal is cultivating a library of programs. <\/p>\n

This leads to different business strategies that, in turn, lead to different programs.<\/p>\n

Broadcast networks and cable channels make money by selling audiences to advertisers. Netflix (and many other portals, including Amazon Video and SeeSo) are subscriber-funded: Viewers pay a monthly fee for access to the library of content. Of course, HBO has also long relied on subscribers, which explains the distinctiveness of many HBO programs, despite its distribution by cable. (HBO launched the portal HBO Now in 2015<\/a> to better match its subscriber-funded revenue model with a technology that makes its library of programs available on demand.)<\/p>\n

To succeed, subscriber-funded services must offer enough programming that viewers find the service worthy of their monthly fee. Each show doesn\u2019t need a mass audience \u2013 which is the measure of success for advertiser-funded television \u2013 but the service does need to provide enough value that subscribers continue to pay.<\/p>\n

Many portals provide this value by offering a very specific type of programming. For example, to justify its monthly fee, WWE Network<\/a> offers subscribers more access to wrestling matches and wrestling-related content than fans can watch anywhere else. Similarly, Noggin<\/a>, a portal with programs for preschoolers, makes ad-free programming available for young children. <\/p>\n

Netflix\u2019s nooks and crannies<\/h2>\n

Yet Netflix doesn\u2019t try to offer content geared to a single audience with a specific interest. Nor does it aim for a mass audience. So how does Netflix \u2013 with its 93 million subscribers \u2013 pull it off? <\/p>\n

Netflix has adopted what I call a \u201cconglomerated niche\u201d strategy: It develops programs for a handful of \u2013 maybe a dozen \u2013 different audience interests. These include complicated serial dramas (\u201cHouse of Cards\u201d), action series (\u201cDaredevil\u201d), horror series (\u201cHemlock Grove\u201d) and exclusive films starring a popular actor (Adam Sandler<\/a>). <\/p>\n

This is possible only because internet distribution allows Netflix to serve those different audiences simultaneously and separately. Most Netflix subscribers might not even realize how many programs Netflix offers, since its subscribers usually aren\u2019t exposed to programs that they probably won\u2019t be interested in. <\/p>\n

Netflix can also do this because internet distribution enables it to gather extensive data<\/a> about its subscribers\u2019 behavior, which it then uses to cultivate its library and provide users with likely desired content. Netflix is notoriously tight-lipped about what data it collects, but its ability to gather viewing data from a global audience<\/a> has enabled the service to recognize micro-genres and then patterns of viewer interest.<\/p>\n

If you were to ask different Netflix subscribers about the service\u2019s brand, you\u2019d likely get different responses. There is no one Netflix; rather, think of it as an expansive library with many small nooks and rooms. Most subscribers never wander floor to floor. Instead, they stay in the corner that matches their tastes. <\/p>\n

Some other portals, such as Amazon Video, follow a similar strategy. But television and film streaming are a small part of the company\u2019s overall enterprise. Hulu is both similar and different. Since Hulu is a joint venture of the companies that own Disney, NBC and Fox, its library is mostly filled with shows owned by these companies.<\/p>\n

A quest for global domination<\/h2>\n

Some in the U.S. have doubted whether Netflix can maintain its market dominance based on a seeming lack of innovation and erosion of its U.S. library<\/a> in recent years. <\/p>\n

But Netflix hasn\u2019t grown complacent. With 49 million American subscribers<\/a> \u2013 which makes it available in 43 percent of U.S. households \u2013 the U.S. market has less opportunity for growth. For this reason, Netflix has aggressively pivoted to stake claim as the first global television network. <\/p>\n

This doesn\u2019t mean Netflix is the same everywhere. Right now its library varies considerably because the norms of international television trade \u2013 built before internet distribution \u2013 required that distributors license shows to individual countries or regions. Netflix increasingly seeks global rights to the series it develops, which will make future additions to its library available to subscribers around the world.<\/p>\n

Here, too, Netflix isn\u2019t simply distributing shows produced for U.S. audiences. It also develops original series for subscribers in non-U.S. markets that are also available to U.S. subscribers \u2013 for example, \u201cMarseille,\u201d a French political drama; or \u201cHibana,\u201d a Japanese drama about the country\u2019s competitive comedy scene. As the number of subscribers from other countries has grown, so, too, has Netflix\u2019s library of original content.<\/p>\n

No television distributor has ever been able to reach a truly global audience. Netflix\u2019s experiment as a global, subscriber-funded television portal may be the next chapter of television history.<\/p>\n

Amanda Lotz<\/a>, Fellow at the Peabody Media Center and Professor of Communication Studies and Screen Arts & Cultures, University of Michigan<\/a><\/em><\/span><\/p>\n

This article was originally published on The Conversation<\/a>. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Amanda Lotz, University of Michigan In just a decade, Netflix has grown from a video service with seven million U.S. subscribers to one that reaches 93 million people worldwide. Its growth and ability to break into well-established industries \u2013 first video rental, now television and film \u2013 is a rare accomplishment. In my book \u201cPortals: […]<\/p>\n","protected":false},"author":44,"featured_media":8965,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[36],"tags":[2164,2167,2163,652,2165,2166,536,838,1930],"_links":{"self":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/8964"}],"collection":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/comments?post=8964"}],"version-history":[{"count":1,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/8964\/revisions"}],"predecessor-version":[{"id":8966,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/8964\/revisions\/8966"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media\/8965"}],"wp:attachment":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media?parent=8964"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/categories?post=8964"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/tags?post=8964"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}