Wednesday, July 20, 2016

Netflix had a disastrous quarter and I think a lot of it has to do with the fact that "Netflix and Binge" is an unsustainable business model.

Yesterday on CNBC there was all kinds of speculation as to why Netflix stock is tanking. Most of it has to do with how they are hemorrhaging subscribers. I don't personally have any stake in Netflix, so I feel like weighing in on this topic by observing what I see in my friends.

As a caveat, I don't have any friends with similar tastes at all. I just haven't found any. Everyone I know is as different to me as black is to white. So it's no surprise that I also differ in how I watch my television. I like watching shows that put their episodes out a week at a time, one at a time. Yep...I'm not a "Netflix and binge" kinda guy. I don't mind waiting in lines. I was raised that patience is a virtue and that the best things come to those who wait.

I have a friend that's completely different of course. He prefers consuming everything like gorging at a table and stuffing food down his mouth with a shovel. The faster one can get "through" something, the more time that is left for binging on video games...literally staying up for 48 hours in a row until eyes are raw and body odor is thick. He said (and I think he thought himself "wise" at the moment) that, "Netflix sees how it should be done. They put up the whole season, they put lots of money into it to make it excellent, and then the consumer is rewarded by being able to watch it all at once, free of commercials, and without having to wait." Nevermind that he actually pirates the programming. I suppose it's us (the subscribers out here in "real life" land) that actually pay for things like "Daredevil" and "Jessica Jones." The point that I'm making here is that someone who is completely devoted to consuming content, can do so and basically run out of things to watch before a single month is out (plowing through basically every original series). Then a "pat" on the back ensues because (at most) they paid like $10 bucks if they weren't using a friend's password to begin with, and they proclaim loudly as to what a deal they got.

And yeah...they got a really good deal. But it was a shitty one for the company that will have little incentive to keep producing good content if all they get is ten measly bucks.

Anyway, it's this kind of consumer that is in fact, threatening to destroy Netflix. It may seem brilliant at the moment (for them to load entire seasons up at once), but the fact that Netflix has gone down in subscribers (despite increasing the amount of countries that have Netflix available into the hundreds) is a tell-tale sign that people are binging, and then canceling their subscription (if they even bother to pay at all). So it's an unsustainable business model. They think they can blow billions of dollars on original series and by doing so inspire loyalty in their subscribers. However, human nature is way different. Most humans want to maximize their gains. No one wants to be "taken advantage of" and when a good deal comes along, many will rape the deal to make sure to maximize what they get out of it. So with Netflix, what happens is that people consume and then bail until such time as there is more to consume. Netflix is in fact pouring so much money into their original content, that it has affected their ability to secure series and movies from other sources. As an example, if you maintained your subscription you probably have noticed that Starz bailed on Netflix taking lots of movies with it.

I am not one of those people (and I suppose am in the minority). I realize that if I want to continue to have good content, I need to pay for it. But there are fewer people like me out there all the time, and more people like the friend I just described who "gluttonizes" content and doesn't pay a thing. It'll be interesting to see what changes Netflix makes in the future. Perhaps they're going to have to start releasing shows with only one episode a week. I imagine that will cause yells and screams from people across the world. However, as I see it the other way they've been doing things isn't going to work. It's like that old saying, "Give a man a fish, and he eats for a day. Teach a man to fish, and he depopulates the ocean by making a business that employs low-wage slaves and pollutes the water to maximize his total gain."

Yep, I'm sure that's how that saying goes. If not...the way I wrote it is definitely more accurate.


8 comments:

  1. It's a Federal crime to use someone else's NetFlix password.
    Hopefully NetFlix, and all the other similar companies, can find a way to balance it and keep subscribers. Because I want to see more shows like Stranger Things. And I'm willing to pay for it every month. Have for years.

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  2. Bingeing is the only way to watch. The last time they raised prices they lost subscribers briefly before rebounding.

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  3. Good analysis. I personally can't stand people who steal creative content. I don't understand how they don't understand that it hurts the ability of creative people to make a living being creative. But you give someone a chance to get away with stealing, and they steal. That's just how it is. Netflix somehow didn't realize that the binge culture it envisioned had already been done, with a similar fate, as digital music. So they'll have to go away from subscription service, and thus lose what made them a thing in the first place. That's called irony, folks.

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  4. If they released one new show a month (at least), loading the entire series at one time would not be an issue.
    Personally, I don't have time to binge watch anything (I still haven't finished the second season of Daredevil), and I'm not leaving Netflix anytime soon.

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  5. Maybe they should off year long subscription plans at a discount that way people will be tempted to stay longer.

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  6. I'm pretty sure Netflix missed its growth targets but they are still growing but I've always thought they were a long shot to remain independent in the long run. The Big 6 have rights to a vast library and the ability to make more content. Netflix doesn't own a production company and doesn't own most of the content produced for it. Netflix is useful to the Big 6 for now but won't be for much longer. At that point one of the 6 will buy them (my guess is Disney).

    I do think the Netflix is being stupid by releasing content all at once. They've released 4 times as much content as HBO this year but even Vinyl has gotten more press than all the Netflix releases combined. Netflix gets one article when something is released and that's it. No water cooler talk. No articles predicting the future. Interest drops off as it is too hard to know what people are watching on Netflix so TV based writers stick with things they know people are watching. It's silly on Netflix's part and I bet it will change now that it their era of easy growth is over.

    Can you imagine the conversations about Stranger Things if it was released a week at a time? I'm almost sad I binged it (I couldn't help myself, it was so good).

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  7. Your rewrite of the saying is much more accurate for today.

    Netflix has changed the way we interact with video. For good or ill. There are those that will always try to get what they can for as little as possible. But those two things aren't necessarily going to destroy Netflix. They'll just have to adapt.

    I, also, can't binge series. I can watch maybe two episodes of something at a time. Any more, and I feel ill. Kind of like overindulging in anything. So, I don't.

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  8. I pay for Netflix because it gives me convenience. I share two screens with my brother who was suprised to find out I already subscribed and asked me to increase screens. I was fine with that but I rarely binge watch. Did so with Daredevil Season 2 and sort of with Agents of Shield season 2. I did the Amazon Prime free trial but ended up not subscribing because while I loved it's set up, I ended up finding out I couldn't view most movies because of my location. I mean seriously? At least Netflix does not show why I can't watch. But Man in the High Castle is a great series and I think I'll go back when the show returns. Sadly right now Prime has little long term benefits for me. But I have a Kindle Unlimited Subscription.

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