“Over the coming decades and across the world, internet TV will replace Linear TV. Apps will replace channels, remote controls will disappear and screens will proliferate. As internet TV grows from millions to billions, Netflix, HBO, and ESPN are leading the way.”
Netflix has taken the world by storm in only the last 3 years. It has been in operation since 1997 as a DVD mailing company, but remained as such until 2008 where they opened an API (Application Programming Interface), allowing subscribers to access most of their DVD content online. This is a fundamental version of what we know as streaming.
When we think of streaming, we think of watching our favourite shows online via a click point interface, giving us access to whatever video content we want, when we want. The new on demand digital revolution paved the way for Netflix to become a powerhouse of streaming videos, as it had already pre-emptively been utilising this technique for years before it became more popular across the world. What separates Netflix from other companies such as Stan, Presto and Hulu, is that Netflix offers what they call ‘genre splitting’. Genre splitting is the analysis of a subscribers history and patterns when watching their online content. Netflix will then take that information, put it through algorithmic data programmes, and identify similarities between their thousands of movies, and then suggest different sub genres or films that they think will be the most appealing to you. In a blog by Netflix in 2012, they stated that “Members connect with these [genre] rows so well that we measure an increase in member retention by placing the most tailored rows higher on the page instead of lower.” This conveys how Netflix aims to tailor viewer selection and deliver it in the most convenient and audience receptive way possible. It also offers a user and Netflix rating system, giving the movie a rating out of 5 stars to help determine similar movies that you would like. This has further increased the notion of ‘what we want, when we want’ that we can now not even have to think about what genre we want before we get a whole array of movies displayed on a silver platter for our 11 dollars a month. Alexis C. Madrigal, contributing editor of ‘The Atlantic’ claimed that ‘[They] discovered that Netflix possesses not several hundred genres, or even several thousand, but 76,897 unique ways to describe types of movies’ showing how advanced their analytics are in terms of genre splitting for user/customer service. However, Netflix only offers a certain amount of films, and has received feedback numerous times from subscribers that the selections of movies are too narrow, repudiative, and small in number. This is something that Netflix has been working on since their financial boom in 2014, making it to 66 million subscribers in their second quarter.
One of the most successful ways that Netflix is able to reel in subscribers is by creating Netflix original content, the producing and making of their own shows. One of the most popular Netflix originals has been ‘House of Cards’ featuring Academy award winning actor Kevin Spacey, and critically acclaimed Robin Wright. The utilisation of genre splitting also came into play with their original content. ‘According to Todd Yellin, VP of Product at Netflix the goal was to “tear content apart” with tags for genres, characterisations, etc. This data was first used to improve Netflix’s recommendations metrics, but has since been applied to the original content. For instance, House of Cards is a dark, political thriller with charming yet immoral characters, while Orange is the New Black is a comedy-drama with strong female leads. Each are specific yet popular genres, meaning the shows had a built in audience.’ (‘How Original Content Has Been The Secret to Netflix’s Success’, David Molofsky). What is notable, is that the sole purpose of Netflix original content was based upon the analysis of popular shows watched on Netflix, and the culmination of particular key audience receptive elements of each of the popular shows, to create Netflix original content that encapsulates an entire targeted demographic and fitted audience. Netflix has not revealed the monetary or subscriber amount they believe to have been made off of their original content, but ‘House of Cards’ is entering its 4th season on a 60,000,000 dollar budget, and Netflix has made roughly under a billion dollars in gross revenue as of October 2014 based on their subscription amount.