Netflix recently announced more than $1 billion in revenue for the first quarter of 2013, and now the company has released a mission statement detailing where it is, where it's trying to go, and how it plans to get there. Entitled "Netflix Long Term View," the 11-page document predicts that in the coming decades internet-based television services will eclipse, and outright replace traditional television altogether. Netflix thinks the shift will take place due to a number of factors, including the increasing proliferation of internet-equipped televisions, the ability of online streaming services to adopt 4K quicker than regular television will be able to, and perhaps most important of all — the fact that newer companies are simply improving and innovating faster than the entrenched forces.
Netflix wants to win in 'moments of truth'
In covering more immediate concerns, Netflix admits that it can't offer the same variety of programming that a cable provider or even online storefronts like iTunes can, so it has to focus instead on providing a frictionless experience for consumers that caters to their wants and needs. "We are about the freedom of on-demand and the fun of indulgent viewing," the document reads. "We are about the flexibility of any screen anywhere any time." The company feels it wins that battle in what it calls "moments of truth" — times when consumers can decide between watching TV, reading a book or listening to music, and then instead turn to Netflix because their past experiences have been positive.
Those efforts don't come cheap, however. Netflix is spending $450 million a year on marketing across the globe to promote its brand, and pouring another $350 million per year into enhancing its online service (while it believes its reliability is ahead of the competition, the document acknowledges "we have plenty of room to improve."). Content, obviously, is Netflix's biggest cost — over $2 billion a year goes to content licensing and the creation of original content. Netflix used the viewing habits of subscribers to help it decide how to move forward with House of Cards, and it feels that edge will also allow it to be more efficient in creating original content moving forward: it anticipates that it will spend less than 10 percent of its content budget on original programming in the coming years (as a point of reference House of Cards cost $100 million for its first two seasons).
Over $2 billion towards content licensing and original programs
Netflix has certainly had its share of missteps over the last couple of years, but the company's ambition and focus on the online arena has remained consistent — and that doesn't appear to be changing anytime soon. "Ours is an amazing opportunity to grow, innovate and lead for several decades," the document reads. "We know we will have great competition along the way, and we embrace the challenge."