Commentary

Why Netflix Is The Best Thing Ever

Four years ago, I wrote an article for Media Daily Newsexplaining why I thought Netflix was poised to enjoy tremendous growth. We had just subscribed, and I thought it had a potentially brilliant model for success.

I ended my article with the following:

So far Netflix hasn't had any impact on our regular television viewing, but it has cut sharply into our pay-per-view movie and DVD viewing. It's the first thing that's actually cut into my son's videogame playing.  We like the basic platform so much, however, that if and when Netflix does strike more content deals for top TV shows and movies, it will probably have a much bigger impact on our TV viewing -- especially in the summer.  The company has the right model, and seems to have hit that rare chord with kids, teens, and their parents.”   

While my wife and I only watched it occasionally at first, but my tween son loved being able to go on anytime and watch multiple episodes shows, like Family Guy.

There were some initial drawbacks, of course. Most of the stuff we wanted to watch, the best movies and most current TV shows, were not available  My then 12-year-old son said at the time, “I like Netflix, but it kind of sucks.”  I thought this was actually a profound comment that indicated why Netflix had so much potential.  If we liked it when it sucks, how would we feel when it no longer sucks?

When I told my now 16-year-old son that I’m writing another article about Netflix, his first comment was, “Tell them it no longer sucks, and we love it.”

My wife, son, and I watch Daredevil — it took us about two weeks to watch all the first-season episodes. Now, we are looking forward to AKA Jessica Jones (also from Marvel). My wife and I watch House of Cards together. (Available since February, we just started watching season 3 this week – so far two or three episodes a night.)  We will also be watching Longmire, which we watched on A&E and will soon air original episodes on Netflix. When my mother-in-law comes over, she and my wife watch Grace and Frankie.

My son likes searching Netflix for shows he hasn't yet seen but might like, recently discovering Archer - not sure how pleased I am about that. We also just started re-watching 30 Rock together from the beginning.

The main reason Netflix continues to grow and thrive is that it does not have the same constraints as ad-supported networks, most importantly needing to worry about average minute ratings. We’ve seen time and again, a broadcast or cable network unsuccessfully trying to air a program that does not fit in with the bulk of its lineup. 

While reach is considered for media planning, the only things that really matter for programming decisions are average ratings and network rankings (among artificially constructed age groups such as adults 18-49 and 25-54) and.

Netflix does not need to worry about any of this.  It doesn’t care about adults 18-49 or 18-34.  A 60-year-old has just as much value to Netflix as a 25-year-old -- maybe more so since older viewers tend to be more loyal.  Netflix wants Longmire and Grace and Frankie to appeal to different viewers than Orange is the New Black

Reach matters much more to Netflix than average audience. That’s how you get and sustain subscribers at this price point.

Ten bucks or less per month is not going to make me drop Netflix even if there are only two original shows I currently watch. My family likes some of the same, but some different shows.  Eventually, there will be another one I like.  And when the broadcast networks are in repeats, and there’s nothing I want to watch on cable, there’s always something I can find on Netflix.

It’s the best thing ever.

 


 

1 comment about "Why Netflix Is The Best Thing Ever".
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  1. Ed Papazian from Media Dynamics Inc, June 25, 2015 at 6:45 a.m.

    Good points, Steve. Regarding the issue of reach against frequency, I think that, as its penetration expands, Netflix will have to become more concerned with how often its subscribers use the service as more and more of the newer recruits will be of the heavier viewing type, not the more selective lighter viewers who were probably the first to sign up. Since income, not age has been the pimary driver of Netflix's growth, as it broadens its base, other demos---age, lifecycle, ethnicity, etc. will probably play a more important role and this suggests that more new content and greater diversity will be neded. I think that people with modest incomes who are drawn in will be less inclined to renew their subscriptions if they don't watch a lot of Netflix content.

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