The Netflix Conundrum: New Opportunities, But What Next When People Don't Buy Stuff?

We all do it. On sofas around the world, people convinced themselves that "just one more" "Breaking Bad" or "House of Cards" is in order before bedtime -- so much so that for the first time Britons are going to spend more this year on subscription services and movie downloads than buying or renting DVDs and Blu-Rays. 

It's not a big surprise, but Strategy Analytics reckons Brits will spend GBP1.31 billion on streaming and downloading this year -- up nearly a quarter on last year -- while spend on DVDs (including Blu-ray) will go down below a billion for the first time in a dozen years. Online will account for 58% of our spend, compared to 42% for physical discs.

So there you have it -- confirmation of how what we are all doing is affecting a wider industry. Streaming and downloads are most definitely in, while ordering a DVD on Amazon or, heaven forbid, buying one on the high street is most definitely out.

This raises several questions. Where does this put the big names in movies that have built empires around unbeatable distribution? Why would any movie director in a few years' time need a Warner Bros when there's a Netflix or Amazon Prime in town? Speaking of which, are we seeing the equivalent of VHS vs Betamax as two or more walled gardens compete for subscriptions, or will an eventual winner become the de facto choice?

Those are probably questions for the media industry to answer, or rather listen to what consumers demand -- but the two questions that should be keeping marketers up at night are what this means for brands in terms of getting their message across and whether there is any impact on them in a world where people don't want to own stuff. That's effectively what Netflix is all about. You don't need a pile of DVDs -- just an online library to peruse. 

Advertising on DVDs has typically been endless previews of that movie house's upcoming releases which, of course, soon look very dated. Conversely, Netflix doesn't allow advertising. If it did, or more likely, when it does, there will be a massive opportunity. Netflix has no interest in telling you what other movie houses have coming out "this summer." It could promote its own content -- that would make sense, maybe for a quick trailer -- but perhaps more likely, it could start opening up its content to little 5- or 10-second idents that sit before the show with no advertising during or after the entertainment.

As for how brands are affected by consumers preferring to have a subscription rather than own lots of individual items, that is already hitting the entertainment industry hard as start-ups, such as Spotify and Netflix, show the dinosaurs how it should be done. Everywhere you look there are clubs and subscriptions for tea and coffee, fresh fruit and vegetables, ready meals, meals that need putting together and cars that can be booked by members by the hour. We're moving away from an ownership economy to one based on club memberships that both anticipate your needs and bow to your whim.

That will have a far-reaching impact on many surprising industries -- yearly sofa replacement services, mattresses shipped to you every other year, paving that comes with a power-washing service? 

That's one for the strategists to work with clients on to determine how this new trend will affect them. For the wider industry the good news is that it's hard to imagine a near-term future where consumers' streaming and downloading will not lead to better opportunities to engage with them in a way that does not get in the way or interrupt the entertainment and can also be updated to kept it relevant and fresh.

This subscription and club movement will get you scratching your head on one hand, but then sketching ideas for idents and co-branding opportunities that were never previously available on the other.

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