Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Netflix Flexes

stratechery.com

Post reply on HN
Print view View original

81–90 of 177 posts

Re: Netflix Flexes

#81

Post by erikbe »

I find this to be off-base in a number of ways, starting with the premise that Netflix is a two-sided platform like Facebook, Google and Amazon.

Netflix used to be a distributor. It paid content owners to license its back catalog which no longer had any value in primary channels, namely cinemas. It then charged users for access. In contrast, two-sided Facebook's user do not pay anything, but the advertisers pay for access to them. The relationship is roughly the reverse.

Netflix also do not have suppliers that build up the attractiveness of the platform to end users. Netflix paid for back catalogs. Amazon doesn't pay its merchants. Today, Netflix is both a distributor and a producer. This doesn't make Netflix twice as strong but introduces a number of dilemmas into the organization. In the same way that Disney would look to external distribution channels to maximize the return on its investment in content, Netflix now has the same incentives. Netflix has no suppliers in the sense of Amazon - it pays for all the productions on its platform. It supplies itself.

In fact, they could theoretically make more by having staggered releases where premium channels like cinema receives new titles first. Why? First, because a single ticket to the cinema costs more than a month's subscription to Netflix. Second, because the direct income from Bird Box is $0.

Certainly Bird Box has a positive effect on subscriptions but it can only be inferred. This is an enormous problem. How can you justify spending say $100 on a production which could directly generate $700M at the box office, and then just release it to a limited audience? There are going to be numerous internal battles over this. I bet we'll see Netflix go for wide cinematic release of some titles.

Another issue is capital. Not only does Netflix has to produce content from which there is no direct return. They also have to market it. A $100M production may receive half or the same amount of spend on marketing. They have to build IP that is as relevant as Marvel. In summary, the challenges Netflix has is contradictory incentives between distribution and production, mastering the art of production and building of IP, and spending on marketing new productions.

Re: Netflix Flexes

#82

Post by FiveSquared »

Spooky23 wrote: post #76
dasil003 wrote: post #52

Having dedicated nearly a decade of my life to a startup competing in this space, the OA is right about Netflix's superior strategy when it comes to user experience and content production. Netflix surged ahead of the pack because they focused relentlessly on the quality of the streaming experience while all the legacy players were focused on deal-making. In other words, while Netflix was building a solid video delive…

I wouldn’t be so sure about that. Redbox seems to be very successful with games (the redbox in my neighborhood is typically sold out of games by 7pm, daily), and there’s a deep inventory of quality games that are cheap in comparison to video and can consume many hours of engagement. Apple’s short-sighted, dependence on skinner-box free to play games demonstrates a hunger for zero marginal cost entertainment. The prod…

But what attracts people to the Skinner box games is the fact that they are Skinner box games. coughClash of Clanscough

Re: Netflix Flexes

#83

Post by jammygit »

2bitencryption wrote: post #25

My takeaway from Bird Box is that if Netflix wants to make any of their original content one of the most-watched media events of the year, they can do it, regardless of the quality of the content itself. All it takes is for them to slip it in to people's "custom, curated" lists at a higher frequency, and maybe do a little subtle social-media engineering on Reddit/Facebook, and bam: instant box office smash of a deriv…

Its not fair imho to underplay the movie itself. Maybe it wouldn't have done as well if it wasn't marketed as hard, but I didn't tell my friends about it because Netflix made me.

Bird Box was one of the best horror movies I've ever seen.

Re: Netflix Flexes

#84

Post by FiveSquared »

orev wrote: post #74
deathanatos wrote: post #64

Earlier quoted context omitted.

Perhaps. But we just recently tried CBS's streaming service, and it was terrible . AFAICT, only 720p, and the encoder they used appears to have had the quality set to "potato" (blurry, tons of what look like interlacing jaggies during rapid motion). It made me really appreciate how good of a job Netflix is doing on the technical side of things.

I have not seen it myself, but CBS is the clear loser of all the apps. They seem to be trying to build a pay service on the back of Star Trek (maybe they think the Internet is just for nerds?) and everything else they have is free content OTA anyway.

Yep, besides, why not just watch the OG Star Trek reruns (if they still do that, I don’t really follow Star Trek anymore) or pirate if the app is so crappy? And OTA.

Re: Netflix Flexes

#85

Post by MrStonedOne »

dasil003 wrote: post #52

Having dedicated nearly a decade of my life to a startup competing in this space, the OA is right about Netflix's superior strategy when it comes to user experience and content production. Netflix surged ahead of the pack because they focused relentlessly on the quality of the streaming experience while all the legacy players were focused on deal-making. In other words, while Netflix was building a solid video delive…

>video games are video games, Netflix doesn't know shit about them, and if you ask me they are better off focusing on their core competency versus trying to build a moat with a gimmicky concept.

The point wasn't that they should compete with video games, or enter the space.

The point was that in the war for attention and engagement, netflix sees better competition from non-tv streaming services than it sees from other tv streaming services. It was a dig on HBO and Disney, not a suggestion for a new business venture.

Re: Netflix Flexes

#86

Post by wutbrodo »

p33p wrote: post #16
chinathrow wrote: post #3

"Netflix is so confident in its position it is effectively stating that if customers choose to watch TV, they will choose Netflix." That is, until they stop choosing Netflixt. I cancelled my Netflix account a week ago after finally realizing what a huge time suck it has become in my life. I know I'm just one data point but I'm pretty sure others will come to that conclusion eventually.

I imagine you could say that about most things you spend your time on. Reading books? Huge time suck. Playing games? Huge time suck. Watching videos? Huge time suck. I think Ben explained it well in his podcast related to this. When people have $200 a month budgeted for entertainment, the marginal cost of a Netflix subscription isn't that much especially given the amount of potential content the service can have. Ult…

The expression "Time suck" doesn't just mean "takes a lot of time", or people would be complaining that eating is a time suck. It has a connotation of wasted or unproductive time (where "productivity" is defined personally, as loosely as you like). A useful analogy might be junk food: 600 calories of potato chips has exactly as many calories as 600 calories of a balanced steak dinner, but the former is less filling and nutritious.

It's reasonable to describe a service full of perceived low quality content as a time suck in ways that one might not consider watching better content.

Re: Netflix Flexes

#87

Post by paulie_a »

40acres wrote: post #20
Pharmakon wrote: post #15

Earlier quoted context omitted.

I think you’re right, and then we’ll see a cycle of renewed piracy, followed by the grudging realization that making some money is better than making no money. It took a while to crack the music industry, but the same inevitable forces are ultimately at play here.

For most casual consumers piracy is an inefficient way of getting content, even in the hay-day of piracy I'd bet that most consumers were getting their content via normal channels. A slight uptick in piracy may occur for the technically minded, but most consumers will pay for the convenience of streaming.

I find piracy to be faster in many cases. Between a nzb downloader and a Kodi plug-in with a drebid service I'll be streaming something just as fast as you don't find it on Netflix.

Re: Netflix Flexes

#88

Post by phs318u »

2bitencryption wrote: post #25

My takeaway from Bird Box is that if Netflix wants to make any of their original content one of the most-watched media events of the year, they can do it, regardless of the quality of the content itself. All it takes is for them to slip it in to people's "custom, curated" lists at a higher frequency, and maybe do a little subtle social-media engineering on Reddit/Facebook, and bam: instant box office smash of a deriv…

> Netflix was able to coerce more than half of its subscribers to watch this film

What definition of 'coerce' are you using? I'm a Netflix subscriber. I saw this thing popup in my feed. Had a glance. Read some articles about it. Doesn't sound overwhelmingly compelling to me. I've added it to 'My List' but keep finding other stuff to watch ahead of it. I suspect it will end up getting removed from my list without having been watched. I guess I'm in the other half of Netflix users?

Re: Netflix Flexes

#89

Post by mattnewport »

maksimum wrote: post #68
mattnewport wrote: post #30

Earlier quoted context omitted.

I was an early Netflix adopter and evangelist to family and friends. I canceled my account months ago last time they had a price increase and haven't missed it. I got sick of spending more time scrolling through uninspiring content looking for something to watch than actually watching enjoyable content. I see a flaw in a lot of subscription models in that they lead to companies optimizing for "engagement" rather than…

> I see a flaw in a lot of subscription models in that they lead to companies optimizing for "engagement" rather than maximizing the value of my time as a consumer This is really interesting. I suppose the question is how do you measure value delivered? Typically people show that they value something by paying for it. Normally you pay for goods with money, but many subscription services and F2P games are happy for yo…

It seems like there's something misleading going on with the paying with time trend. Companies can increase "engagement" for a while by making their experiences waste more of their users' time. There's a frog boiling effect where people don't really notice incremental changes but one day suddenly realize the service doesn't seem like a good use of their time any more and they ditch it completely. This has happened to me with Netflix, Facebook and Instagram and while it's not super common yet there does seem to be a bit of a trend of early adopter types ditching these services.

From the company's point of view this might look like a positive trend in engagement followed by a sudden hard to explain complete drop off.

Re: Netflix Flexes

#90

Post by trevyn »

baddox wrote: post #63
2bitencryption wrote: post #25

My takeaway from Bird Box is that if Netflix wants to make any of their original content one of the most-watched media events of the year, they can do it, regardless of the quality of the content itself. All it takes is for them to slip it in to people's "custom, curated" lists at a higher frequency, and maybe do a little subtle social-media engineering on Reddit/Facebook, and bam: instant box office smash of a deriv…

I don’t think I buy this analysis. In what sense is Bird Box a “box office smash?” Only Netflix can know the impact the film made on their bottom line, and even that internal analysis is difficult to do, especially in the short term. In other words, I’m saying that yes, Netflix can fairly easily promote a film and get millions of people to watch it, but that doesn’t mean they have a magical sustainable model. If they…

There’s a difference between content people “don’t like” and content with a mediocre, but broadly acceptable level of quality.

It seems like the real magic is the capability to make a particular piece of content the “thing that prople talk about”, and so you watch it just so that you’re able to talk about it in conversation, because it’s part of the social consciousness.

Post reply on HN