Skip to main content

Ten years in, Netflix is watching the throne

Ten years in, Netflix is watching the throne

/

‘We want to be your primary, your best friend’

Share this story

Photo by Jasin Boland / Netflix

Netflix’s last decade turned a video rental startup into streaming’s king. The next decade will see executives doing everything in their power to keep the crown.

Yesterday, Netflix announced its second quarter earnings to investors, and executives spent much of the call addressing what they have planned for the next few years, including continued international expansion and ambitious bets on new content. While some executives might play coy about their conquest plans, Hastings didn’t shy away from wanting Netflix to be the streamer that makes people forget about everyone else.

“We want to have so many hits that when you come to Netflix you can just go from hit to hit to hit and never have to think about any of those other services,” Hastings said on the call. “We want to be your primary, your best friend. And of course, occasionally there’s Hamilton and you’re going to go to someone else’s service for an extraordinary film, but for the most part we want to be the one that always pleases you.”

“We want to have so many hits that when you come to Netflix you can just go from hit to hit to hit and never have to think about those other services.”

At this point, Netflix is a foundational streaming service. With nearly 200 million subscribers around the world, and continuously growing, it’s one of the few streamers that many people keep as a constant in their homes. Just over a few years ago, that was partially because Netflix was one of the only major streamers available. Back when it was mainly Netflix and Hulu, people came to Netflix as the place “they used to watch what they missed on other networks,” newly minted co-CEO Ted Sarandos said on the same call. Original content didn’t begin until 2013 and didn’t pick up in earnest until later.

Netflix still has the lead on its competitors, but the space has changed radically since the early days. Disney Plus, Peacock, and HBO Max have all launched. CBS All Access is getting a major rebrand now that Viacom and CBS are one company again. Hulu, under Disney’s control, is undergoing a big facelift. People are figuring out where they want to spend their money and their time. Then there are different streaming platforms outside of the traditional entertainment competitors that Netflix has to compete with for time and attention, like Twitch, Facebook, and YouTube.

Still, Hastings said he isn’t focused on the competition. Even if people leave Netflix to go check out other services, Hastings told analysts he’s confident people never leave for good.

“It’s always temporary,” Hastings said, speaking to Netflix’s churn, a word used in the industry to describe when subscribers cancel their subscriptions. “They’re going to come back. We want people to get a taste of Netflix, [and]we hope they stay for 50 years, but if they drop out we think it’s always temporary.”

“We want to be the one that always pleases you.”

A big part of Netflix’s approach to reducing its churn rate comes from its content. Under Sarandos’ watchful eye — and a powerful executive team of Hollywood talent — Netflix transformed itself from that place people finally watched AMC’s Breaking Bad into the streamer “where they come to us for their favorite show,” Sarandos said on the call.

If Netflix is “trying to become more your go-to destination” for everyone’s favorite form of entertainment, the service has to expand its offerings. After starting out with prestige scripted series like House of Cards, Orange Is the New Black, and Unbreakable Kimmy Schmidt, Netflix now produces reality TV shows, competition series, anime, documentaries, stand-up comedy, and animated films. It’s not just about building the brand; it’s about producing anything and everything subscribers want.

That includes content that executives like Sarandos weren’t interested in developing even five years ago. In 2015, Sarandos spoke about “the kind of disposable nature of reality” programming at an investor conference, as reported by Bloomberg. He added at the time that it “basically doesn’t have much of a long shelf life,” noting “it hasn’t been a great category for us.” Now, Sarandos has changed his tune. Netflix is all in on unscripted programming and reality television — and numbers cited by Sarandos seem to back it up. (Netflix doesn’t release public numbers for all of its programming, so it’s hard to say for certain.)

It’s not just about building the brand; it’s about producing anything and everything subscribers want

But two of Netflix’s most recent reality TV shows, Floor is Lava and Too Hot to Handle are some of its “biggest hits ever,” Sarandos said on the call. Prior to Floor is Lava and Too Hot to Handle, shows like Love is Blind and The Circle dominated pop culture conversation; Netflix renewed both for two more seasons right out the gate. Sarandos added that Too Hot to Handle was just as popular in Japan as it was in the United States, and as Netflix tries to find content that’s received well around the world, it’s a good sign of what to expect. Sarandos said as much on the call, arguing that “the biggest motivation to invest in reality and unscripted is not that it’s a cost saving production,” but rather “how important it becomes in people’s lives.”

“If we’re trying to become more of your go-to-destination for entertainment, to ignore a form of programming that kind of dominates broadcast would be silly of us,” Sarandos said.

Netflix is also betting big on franchises, which may help its library compete with Disney, NBCUniversal, WarnerMedia, and ViacomCBS’s incredible well of IP. Four of Netflix’s most popular movies are either actively developing sequels or end with enough room for a sequel: Chris Hemsworth’s Extraction, Mark Wahlberg’s Spenser Confidential, Sandra Bullock’s Bird Box, and Ryan Reynolds’ 6 Underground. Today, Netflix announced a new $200 million spy movie from Avengers: Endgame directors Joe and Anthony Russo that is designed as a franchise builder.

Blockbuster movies and franchise plays, which also include shows like Stranger Things, Money Heist, and The Witcher, not only bring in subscribers, but they keep people engaged. Extraction and Spenser Confidential were watched by 99 million and 85 million accounts, respectively, within their first four weeks of release, according to Bloomberg. Having access to big IP and building franchises is key to Netflix’s future, and even though some may flop, Hastings said he’s “excited that we’re taking those risks.”

“We got lots of places to put the money. We’re definitely focused on creating franchises.”

“Ted has big plans to spend future billions on movies and [TV] series and animation,” Hastings said. “We got lots of places to put the money. We’re definitely focused on creating franchises.”

The problem is, everyone else is spending billions, too. Netflix wants to rule the next decade, and the company is in a good position. But Disney Plus is growing at incredible speeds, WarnerMedia is investing everything into HBO Max, and other services are trying to figure out how to take attention away from Netflix. Netflix was the undeniable king of the last decade, and now it’s going to have to fight to keep that crown.

Today’s Storystream

Feed refreshed An hour ago Striking out

A
Andrew WebsterAn hour ago
Looking for something to do this weekend?

Why not hang out on the couch playing video games and watching TV. It’s a good time for it, with intriguing recent releases like Return to Monkey Island, Session: Skate Sim, and the Star Wars spinoff Andor. Or you could check out some of the new anime on Netflix, including Thermae Romae Novae (pictured below), which is my personal favorite time-traveling story about bathing.


A screenshot from the Netflix anime Thermae Romae Novae.
Thermae Romae Novae.
Image: Netflix
J
Twitter
Jay PetersSep 23
Twitch’s creators SVP is leaving the company.

Constance Knight, Twitch’s senior vice president of global creators, is leaving for a new opportunity, according to Bloomberg’s Cecilia D’Anastasio. Knight shared her departure with staff on the same day Twitch announced impending cuts to how much its biggest streamers will earn from subscriptions.


T
Twitter
Tom WarrenSep 23
Has the Windows 11 2022 Update made your gaming PC stutter?

Nvidia GPU owners have been complaining of stuttering and poor frame rates with the latest Windows 11 update, but thankfully there’s a fix. Nvidia has identified an issue with its GeForce Experience overlay and the Windows 11 2022 Update (22H2). A fix is available in beta from Nvidia’s website.


A
External Link
If you’re using crash detection on the iPhone 14, invest in a really good phone mount.

Motorcycle owner Douglas Sonders has a cautionary tale in Jalopnik today about the iPhone 14’s new crash detection feature. He was riding his LiveWire One motorcycle down the West Side Highway at about 60 mph when he hit a bump, causing his iPhone 14 Pro Max to fly off its handlebar mount. Soon after, his girlfriend and parents received text messages that he had been in a horrible accident, causing several hours of panic. The phone even called the police, all because it fell off the handlebars. All thanks to crash detection.

Riding a motorcycle is very dangerous, and the last thing anyone needs is to think their loved one was in a horrible crash when they weren’t. This is obviously an edge case, but it makes me wonder what other sort of false positives we see as more phones adopt this technology.


A
External Link
Ford is running out of its own Blue Oval badges.

Running out of semiconductors is one thing, but running out of your own iconic nameplates is just downright brutal. The Wall Street Journal reports badge and nameplate shortages are impacting the automaker's popular F-series pickup lineup, delaying deliveries and causing general chaos.

Some executives are even proposing a 3D printing workaround, but they didn’t feel like the substitutes would clear the bar. All in all, it's been a dreadful summer of supply chain setbacks for Ford, leading the company to reorganize its org chart to bring some sort of relief.


J
External Link
Jay PetersSep 23
Doing more with less (extravagant holiday parties).

Sundar Pichai addressed employees’ questions about Google’s spending changes at an all-hands this week, according to CNBC.

“Maybe you were planning on hiring six more people but maybe you are going to have to do with four and how are you going to make that happen?” Pichai sent a memo to workers in July about a hiring slowdown.

In the all-hands, Google’s head of finance also asked staff to try not to go “over the top” for holiday parties.


E
External Link
Insiders made the most money off of Helium’s “People’s Network.”

Remember Helium, which was touted by The New York Times in an article entitled “Maybe There’s a Use for Crypto After All?” Not only was the company misleading people about who used it — Salesforce and Lime weren’t using it, despite what Helium said on its site — Helium disproportionately enriched insiders, Forbes reports.


J
Youtube
James VincentSep 23
Nvidia’s latest AI model generates endless 3D models.

Need to fill your video game, VR world, or project render with 3D chaff? Nvidia’s latest AI model could help. Trained on 2D images, it can churn out customizable 3D objects ready to import and tweak.

The model seems rudimentary (the renders aren’t amazing quality and seem limited in their variety), but generative AI models like this are only going to improve, speeding up work for all sorts of creative types.