Nicole Laporte analyzes the rapid rise of the popular online company in her article published on FastCompany.com.
The audience wants the control," he says of the streaming service's willingness to do such once-heretical things as release all episodes of a season simultaneously. Viewers want "freedom," Spacey loftily proclaims. "If they want to binge . . . then we should let them binge."
This quote marks a key aspect of Netflix that is not presented in many other companies in the TV industry: audience control. Netflix dares to release entire seasons of a show at a time, sometimes even multiple, and often without a pilot, which has long been thought necessary to the success of a show. Viewers are able to watch as many episodes as they want at a time, or pick out certain episodes from the extensive list. They can stop halfway through a show and switch to another, if they choose. The viewing options are endless, and audiences flock to Netflix because they don’t have this ultimate control elsewhere.
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“And as the company has rolled out House of Cards, season four of Arrested Development, and Orange Is the New Black, Netflix's stock has soared—it almost quadrupled between January and Thanksgiving 2013. ‘There have only been a half-dozen shows,’ gripes one media executive, ‘and yet to read the press and hear the comments, you would think Netflix had found the cure for cancer.’”
The complaint by a third-party media executive displays clearly the threat that Netflix presents in the TV industry. Also, this quote brings up a point that has been touched on in almost every blog post: the new, unique shows. House of Cards and Orange is the New Black are among some of the specials that are available only on Netflix (unless you are willing to illegally download them). The popularity of these Emmy-award winning shows draws viewers in by the thousands, as they are not able to watch them anywhere else. If customers were subscribing to HBO or Hulu+, which both have a number of features to Netflix's, the longer list of shows available on Netflix, including these which cannot be found anywhere else, was the final factor pushed them to subscribe to Netflix.
But other Silicon Valley–based "disrupters" that have attempted this content play—Amazon, Hulu, Yahoo, and Google, to name a few—have assumed they could do it on the cheap. Says one agent, "Amazon aimed super low. That whole, 'Oh, let's vote on shows to see what works?' The plan is absurd." Netflix, on the other hand, "aimed high from day one," says the agent approvingly. "Netflix said, 'Hey, David Fincher, Kevin Spacey, let's get the best writers in the business.' " From the beginning, the so-called disrupter played the Hollywood way: Hire big names and pay big bucks. Unlike Jeff Bezos and Larry Page, Hastings and Sarandos understood the psychology of the town.
On the outside, Netflix seems simple. The content and licensing they pay for attracts more subscribers, which gives them the money to provide more content, which in turn attracts more subscribers. From a fifth-grade standpoint, this seems like the perfect way for a company to run. In reality, the inner workings of Netflix are much more complex, and they include psychology. Reed Hastings, CEO, understands that they have to play a big game if they want to be successful in Hollywood. They can’t just take the easy way and pay as little as possible to stream some movies; they have to pay a lot of money and bring in big names. You have to take risks to be successful, which Netflix already knows a bit about after their drastic slide to online streaming from their DVDs by mail system. For example, hit show House of Cards, starring well-known Kevin Spacey, was widely reported at budget of $100 million. Names like Spacey’s and numbers with that many zeroes are guaranteed to draw attention from the audience base along with respect from the TV community.
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