What most people don’t know about Netflix is that it has been around since 1997 – long before streaming films and TV shows online was the norm. Admittedly, in its younger years it was a mail-based DVD rental service, but it quickly developed into the all-conquering online video-on-demand streaming service we know it as today.
As early as 2007, the CEO, Reed Hastings, spotted that movies would be making their way to the internet and quickly departed from his trusted DVD format. This shift in business was largely thanks to improved data speeds and bandwidth, and the spread of Wi-Fi. Despite the attempts of other tech giants like Amazon and Apple, Netflix remains the world’s most popular television network streaming service. According to a recent report, Netflix has over 117 million subscribers worldwide. With each new year, the streaming service is further developing its services and programme offering, and quickly becoming one of the most exciting sources of online entertainment.
A streaming service without advertisements?
The Netflix business model initially seems untouchable, but upon further inspection, with such low subscription costs and the high cost of licensing, we do find ourselves wondering where the money comes from. The primary source of revenue is indeed the subscriptions, but Netflix draws income from areas you may never have considered before. Another source of income is DVD rentals and then there’s also product placement – something which has become quite the bone of contention amongst Netflix fans. No one donned the likes of a Seiko watch quite as stylishly as James Bond, which thus sent people in their droves to purchase one on online marketplaces like Chrono24 and elsewhere. Unfortunately though, Netflix has some less stylish instances of product placement under its belt. For example, there was uproar over the clunky Ford plug in the US drama Designated Survivor.
While Netflix is known for its no advertisements policy, product placement manages to sneak quite a few brands into your favourite shows. Although this may not necessarily be benefitting Netflix in the form of hard cash, it can however offset, for example, a lot of production costs for the company. The leading streaming company does however remain tight-lipped in terms of the exact gain involved in product placement.
A VOD service with an impressive scope
One vital element of Netflix, and perhaps the aspect of the service that has made it excel in comparison to its competitors, is the fact that it arrived quite early to the online streaming scene therefore allowing the company to easily forge partnerships with the most significant of studios, networks and media companies. With these relationships established at such an early phase, Netflix could slowly turn to producing their own shows and movies that reflected upon their invaluable customer-driven analytics and big data. Netflix’s top-secret recommendation algorithm is based on user ratings and takes advantage of machine learning; using this, they go on to produce wildly successful shows.
This approach famously began with House of Cards, when Netflix outbid competitors for the winning combination of Kevin Spacey, David Fincher and the already-existing BBC drama. The information on this combination was indeed drawn from Netflix’s big data. However, in light of the recent allegations surrounding Spacey, the leading star will not be appearing in the final season. Another worldwide hit was the Netflix-produced series Stranger Things, which took the entertainment industry by storm. The retro world of 1980s America with its trendy fashion, minimal sci-fi music, corny interior décor and nostalgic gadgets and games (walkie talkies, wall phones and Dungeons and Dragons) was apparently exactly what we wanted to see on our screens. Other Netflix hits worth mentioning are The End of the F***ing World, The Crown, Black Mirror and Big Mouth.
There’s no doubt that the quality of Netflix is growing from strength to strength, and most of us can happily put up with the (hopefully) discreet product placement if it provides the time, facilities or budget to produce more quality content from every corner of the world.