How Netflix outsmarted everyone else in TV

As a technologist I couldn't be more impressed by Netflix's rise over the last decade, but the old film artist in me kind of despises the direction they are taking motion pictures.

I recently stopped using it and it was like walking out of an incredibly comfortable, yet subtly depressing cave. I found it hard to get out of the cycle of watching only films that I was likely to watch.

What humans will eventually discover after we've squeezed every last drop of value out of the monolith ML systems of today is that many facets of our culture do not benefit from traditional recommendations systems. Maybe a more democratized and transparent system for model consumption could help. If indie researchers and hackers can integrate their ML models into existing systems and offer truly diverse ML models then maybe recommendations systems have chance. But in their current state they are laughable representations of the average taste of its users, which is generally not great.

Netflix definitely found greenfield with their business model, however the next few years will be decided by who can create the best original content. Netflix has spent billions on content: signing popular writers / show runners to long term contracts and picking up movies in the indie scene for distribution. However I still don't think they've had a massive hit, nothing Netflix has made can touch Game of Thrones or the Sopranos for cultural impact, and critically even Amazon Studios has had an Oscar nominee (although I think Beasts of No Nation was robbed for not getting a best actor nom).

Disney is rolling out their own streaming service and I'd bet that eventually they will roll ESPN+ into the deal and maybe even ESPN entirely itself. I think once sports gets into the mix the entire streaming domain will radically change.

I'm nearly ready to cancel my streaming subscription. There is less and less studio movies I want to see on there, and more Netflix originals. Not that I have an issue with the originals, there are good ones, but there is seriously nothing else worth watching. I still subscribe to Blu-Ray rentals for the following reasons.

A. Streaming quality is still poor, particularly audio. The bitstreams are compressed beyond normal DTS/DD compression, and it sounds like garbage in comparison to the lossless tracks on physical disks. To me the audio track is 90% of any movie.

B. It's impossible to find the vast majority of movies on streaming. If something pops up, it disappears in a month or so. Out of FIVE HUNDRED physical discs queued up, only TWELVE are available on streaming. I seriously fear the day they get rid of physical disk rental all together. Their catalog is expansive, and we have ZERO other options now.

I just bumped from 2 discs to 3 discs out at a time, because we no longer have 1 day turn around times on returning and sending out discs. It's nearly impossible to get one back the same week unless you send it out Monday or Tuesday.

I think the "outsmarted" part is absolutely correct to an extent. They definitely saw an opportunity that an entire industry didn't. They have absolutely changed the direction of television in pretty much all respects, from release cycle, to delivery to even marketing. However, I think the issues that Netflix has largely encountered now that others are catching on are a result of them not pushing hard enough. It's readily apparent that Hastings and his team saw this opportunity, and were in perfect position to capitalize on it but they didn't show enough faith in the model to make the sorts of long term bets that could have built them an unassailable moat. You get all these shows for whatever crazy amount that no one else would pay but you do relatively short term deals? Certainly Netlfix was ready when the deals started to expire to go all in on original content to replace the stuff they lost, but knowing that the major networks were going to come at you hard once they realized the opportunity they had signed away why wouldn't you push for longer deals? I recognize the sheer economics of the issue but outside of the originals Netflix is losing all the things that originally brought people to the service. If they did 10-15 years it would have been impossible for anyone to catch them as they are doing now.

Will we end up paying Netflix, HBO, Hulu, Sports streaming the same amount we paid for cable?

Maybe we get more granularity, but that comes with the overhead of managing more subscriptions.

Who will laugh when we end up paying for a bundle of streaming services?

The other day I noticed the drama films on Netflix this month are very strong. Led to realization that as time passes, the licensing costs for media often decline. When Netflix started streaming in 2007 films that were 5, 10, and 15 years old (less expensive) were produced in 2002, 1997, 1992 respectively. Someone starting college in 2007 would have been between 4 and 14 years old when those films were released. Today, the same 5, 10, 15 targets hit years 2013, 2008, 2002. That user from 2007 is now ~30, and would have been between 14 and 25 when those films were released. As time passes, Netflix will be able to offer more relevant content to their core users at a lower cost. It seems some of their recent original content fills some of the programming gaps for younger users. They are positioned very well.

The 'old guard' wasn't wrong; Netflix pretty much were suckers for licensing a bunch of old content. The part in the transcript where he presents this as a stroke of genius that led to the pivot to original content is a rosy-glass view that gives Netflix too much credit. In my opinion, this fate came about entirely because of the content owners and not because of Netflix.

Netflix basically needed to bootstrap its streaming service with content, so they paid a bunch for syndication. They then sold an all-you-can-eat plan at a low price. Their success butted against pay-per-view providers, other syndicators, and content owners: Netflix blazed the trail and proved that people sign up for video-on-demand in droves if it carries content people want to watch, and is cheap enough to where one doesn't have to think about every view. But this devalued the content, so studios yanked their newer seasons and put them on knock-off platforms for a separate subscription.

This development meant Netflix had to start making deals with less controlling content providers, or produce content of their own. On the other side of the house, Hulu was able to justify its price point by offering current seasons of popular shows, and being a joint venture of influential content owners, but single-owner offerings struggled for customers, unless the IP was exceptional. This is why HBO hasn't yet died in this space, and Disney will likely succeed on their own, but also-rans no longer offer enough in a crowded market.

By the end of the article, they do descend to reality and identify the magic formula: Netflix makes money from the subscription, and a constant flow of offerings both strong and mediocre will tide the user over to make them not consider cancelling. And in time, the ever-expanding catalog is insurance for a change in market headwinds.

The key, though, is will Netflix be able to convince the consumer to part with their money when other platforms with the same business model offer a more compelling catalog? In the long run, that remains to be seen.

Well, I don't agree on the "outsmarted" part. I have basically seen all there was to see and new material trickless too slow to keep me. My family is still hooked but they aren't too happy either. If they don't find a new way to keep audience they will soon face prospect of people being bored and leaving for somewhere else.

>> You were at MTV early. Early-ish.

> I sold my company to MTV in March 2000

2000 is not "early" or even "earlish" at MTV, youngun.

I am always going to disappointed that in the end the only model Netflix could follow was that of the cable companies by having its own locked in content. The cable companies didn't want to share their media via the internet and hoarded it and Netflix's attempts to be a modern delivery service failed, so they became a cable TV company over the internet with their own locked in content.

There's a lot of hype about Netflix, but beside Stranger Things, and some "old" movies here and there, I'm not that much impressed. After I watched what interested me, I cancelled my subscription.

One thing I lament about Netflix is how people's watching habits have changed around it, and how the programming has also changed in response.

A lot of people like to have something playing on the TV that they passively watch while also doing something else. Maybe they put on a show while they browse Instagram, or do house work/cook dinner, or while hanging with friends.

Seemingly as a result of this, there are a lot of shows/movies where you don't really need to pay close attention to get the plot because it has been dumbed down, reduced to the most basic strokes. There's more filler in between plot developments. It's like a lot of B-movie schlock with high production value.

These shows/movies don't interest me. When I put something on to watch, I sit there and watch it. I want deep plots and fleshed out characters and a lot of Netflix originals seem to lack this.

I feel more and more done with paid streaming services. Even Netflix seems to make their interface progressively more intrusive and less useful. Their content seems to vanish and get replaced with "original content" - conspiratorial documentaries, mostly.

For sure there is still some value there, but it's more and more distributed across platforms, with worse and worse usability. Often I find I'm paying for multiple expensive services and can't find a way to stream what I'm looking for. Or (Amazon Prime!) I can rent it from a service I already pay monthly for.

TV had lower expectations. On-demand but sort-of-not-really-and-you-have-to-pay-again-and-watch-more-ads is frustrating.

Netflix hasn't outsmarted anyone really. They are still dependent on the studios for AAA content. It remains to be seen how successful Netflix remains once studios ramp up their own streaming services and start pulling their content from Netflix. I predict it will become another HBO with similar subscription rates.

Stock market aside, it is yet to be seen if Netflix model is viable on long term. Current content budget growth is larger than revenue growth and lot of the new memberships are coming from International market which will saturate at some point. The basic hypothesis here is that $10/mo per subscriber would be enough to sustain roughly $700 million/mo content budget. This is quite possible if you had 70 million subscribers. HBO on the other hand 130 million subscribers but they do this by sneaking in package deals with cable plans. However there is no magic here with idea or business plan. You can think of whole deal as Netflix turning itself in to Internet version of HBO. It will just work as good or as bad.

9 minutes of commercials per 1/2 hour? Ice road truckers level content? The bar was really low here. I wouldn't give Netflix too much credit, although IMHO they are doing the best out of their competitors (AMZ, Hulu, etc..).

Tough times ahead for Netflix. Their model is broken and smart money is leaving the service. Why pay monthly for a bunch of crap shows I don’t like. They have no edge vs competition. Prime, Hulu, etc all offer the same thing it’s just a matter of whose lineup is better and Netflix can’t produce enough content to compete on that.

Because they track what people like and give people more of that.

man, only in this world, second rate movies, shitty shows, stupid functionalities like autoplay, they don't even have a decent search...