Today, over 220 million people stream TV shows and movies online. Netflix, the DVD delivery-service-turned-streaming-network, commands almost half of that market with its 95 million subscribers. How did Netflix get so big so quickly?
The answer: original content. Original content differentiates Netflix in an ever-growing field of streaming services. In 2016, around 10% of the content Netflix promoted was original television shows and documentaries. The company’s goal, according to past statements by CEO Reed Hastings, is to one day produce around 50% original content.
While many companies have begun streaming shows online—Hulu, HBO, Starz, Showtime, and Amazon Prime among them—Netflix stands apart with the sheer number of quality shows they have produced. Amazon may have Transparent, but Netflix has House of Cards, Orange is the New Black, Stranger Things, Making a Murderer, The Crown, The Unbreakable Kimmy Schmidt, Master of None, 13th, 13 Reasons Why, and the Gilmore Girls reboot. It’s an impressive list, both in terms of the quantity and quality of original shows, but what does this mean for consumers? What is the effect, if any, when your streaming service produces many of the shows you watch on its platform? The answer may be unclear, but the bottom line is this: new companies with new business models are competing with the traditional way media is made and consumed. And that’s going to severely impact Hollywood.
There are two ways to react to that sentiment: some rejoice at the increasing personalization and accessibility of media, while others lament the corporatization of an art form. That begs another question: what happens to cinema and TV when a specific corporation like Netflix controls the selection and distribution of large swaths of original cinematic content? As John Landgraf, the chief executive of Fox-owned cable unit FX Networks, remarked last year: “I think it would be particularly bad for storytellers and for our culture if any one company, and I don’t care what that company is, were able to seize a 40%, 50%, or 60% market share within storytelling.” In his eyes, near-monopolistic control will lead to the homogenization of available content.
To some, that worry may seem overblown. Hollywood has traditionally been dominated by a small handful of production companies. Today, the Big Six film studios (Walt Disney, Warner Brothers, 21st Century Fox, Universal, Columbia, and Paramount) command almost 85% of the total box office revenue in the US and Canada. Does the rise of “cord-cutting” mean the power to manipulate media has merely shifted from these major film studios to corporations? Perhaps. And again, what does this mean for consumers?
To start off, Netflix has a huge advantage movie studios do not: data. Lots and lots of data. Data on what its viewers watch, and when, and where, and for how long. Through Netflix’s profile feature, where families can differentiate up to five different profiles on their accounts (i.e. one for Mom, one for Dad, one for the kids…), the company can even track who is watching which shows. As Joris Evers, Director of Global Communications for Netflix, commented when Netflix reached 33 million subscribers: “There are 33 million different versions of Netflix.” Each Netflix account is unique. Case in point: Netflix showed viewers ten different trailers for House of Cards based on their previous viewing histories.
This data can be mined to create shows, but also to put those shows in front of the intended audience. Netflix can use its algorithms to recommend items it believes viewers will like. Privileging Netflix’s own content under “Trending Now” or “Recently Added” banners is merely the cherry on top of an elaborate corporate sundae.
As Netflix tweeted in 2013, these content matching algorithms are working: 75% of viewing on the platform is driven by their recommendation algorithm. Accordingly, Netflix sells itself not merely as a streaming service, but as the portal through which viewers can access their culture.
Additionally, Netflix’s newest shows are much more diverse than traditional shows, featuring female leads and showcasing the talent of actors and comedians of color. Netflix empowers the consumer to demand content they want to watch, and increasingly, viewers are demanding shows that reflect the diversity of everyday life. This Netflix model of content delivery smashes the old model of captive audience distribution, where viewers in the early days of television were forced to watch whichever shows broadcast networks chose to air.
But, as New York Times Technology Correspondent Farhad Manjoo argued in an op-ed earlier this year, is this extreme choice creating yet another cultural echo chamber? By this, Manjoo means: will viewers never be challenged or pushed outside of their comfort zones by cinema because they watch only shows that appear under a “Recommended for You” tagline? The result, he claims, is a fragmentation of entertainment that hasn’t been seen since the early 20th century, when universal forms of national entertainment didn’t exist. I can stay in my “Movies with a Strong Female Lead” bubble and you can stay in yours.
While consumers may be placed in these bubbles, they’re not required to stay there. In fact, with over 8,000 movies and TV shows on Netflix, you’d have to work pretty hard to only watch shows like the ones you’ve watched in the past. However, because Netflix doesn’t release viewership numbers, there’s no way for us to know how many people are watching each show.
Perhaps we can use another metric to measure Netflix’s success: their ability to attract and retain top talent. Hollywood executives are racing to join the streaming giant. In the past few years, The Wall Street Journal reported that Netflix has successfully poached several top executives from 21st Century Fox, NBCUniversal, Sony, and Walt Disney. The points are on the scoreboard: Netflix: 1; Big Six: 0.
Regardless of the boardroom drama, consumers should not be overly concerned with the risks of a major media conglomerate taking over our TVs and laptops. For starters, that’s how the industry has always worked; entertainment used to be dominated by large movie studios, but now it’s dominated by streaming services like Amazon and Netflix. That might not be a bad thing—Netflix and Amazon have prioritized diversity in a way the big studios never have. With their mobile and online apps, they’ve delivered a personal entertainment experience that is not currently matched by television. Only time will tell if the movie studios will (or can) follow suit.