Examining the Strengths and Weaknesses of Netflix’s Business Model in the Context of the Post-Legacy Television Market
Jessica Marple
Abstract
As the 1979 hit song by The Buggles states, “video killed the radio star.†Coincidentally, since the early-2000s, there has been speculation that the television industry may be on the cusp of its own extinction-level event, with streaming sites such as Netflix acting as the meteor. Scholars such as Lotz (2014) and Strangelove (2015) refute that theory, proposing instead the idea of ‘post-legacy’ television1. Strangelove (2015, p.4) notes: “the ‘post’ in ‘post-TV’ does not indicate the end of television itself, but does refer to the end of a particular way in which broadcast television structured viewing and the beginning of new ways of participating in television.†Enter Netflix. Since its founding in 1997, the company has evolved from an online Blockbuster to the name brand in online streaming services and “world’s leading Internet television networkâ€, with 93 million subscribers in 190 countries (Netflix 2017a). In many ways, the company has mapped the same trajectory as cable network HBO did in the 1990s- developing from an aggregator of first-run cinema and event content to the connoisseur of quality television- and prompting the slogan “It’s not TV. It’s HBO†(HBO ca.1998 cited by Miller 2008, p.ix). Now, with an expanding line-up of award-winning content2, the adage is increasingly “It’s not TV. It’s Netflix.†Still, the company has begun to experience its version of what Miller (2008) identified as the post- “Sopranos†pressure that befell HBO in the late-2000s when other channels began to adopt its specialty as their own. Netflix, despite its first- mover status, is now facing competition from other aggregators, as well as legacy television networks migrating to the online sphere. Looking forward, this essay will examine the business model currently used by Netflix, focusing on the aspects of production/distribution, content creation and acquisition, and recovery of costs (Picard 2011), particularly surrounding its original series. It will outline the company’s strengths and weaknesses regarding its use of metadata and analytics in acquisition; methods of financing and distributing content; and sources of revenue.
Author Biography
Jessica Marple
Dr. Janice Denegri-Knott worked in the not for profit sector after completing her undergraduate studies in communication and development at the Universidad Católica Boliviana. Shortly after that she earned a masters in marketing communications from the Bournemouth Media School and went on to gain her PhD from the Business School at the University of Exeter, England. She teaches consumer culture and behaviour at the Bournemouth Media School and is part of the Emerging Consumer Culture Group (ECCG). Her research deals with the structuring of consumption patterns and practices in digital virtual spaces. She has recently co-edited, Digital Virtual Consumption, a collection of essays that deal with these issues. She has published extensively in the field of digital virtual consumption and more recently about marketing and consumer behaviour in emerging economies. She has published in journals like: The Journal of Macromarketing; Consumption, Markets & Culture, Journal of Consumer Culture, Journal of Computer Mediated Communication, Journal of Consumer Behaviour and the Journal of Consumer Policy. She also belongs to the editorial boards of Consumption, Markets & Culture and Marketing Theory. Her paper with Dr. Mike Molesworth mapping out the field of Digital Virtual Consumption was granted a Best Paper Award by the editorial board of Consumption, Markets & Culture. She has also worked with major UK brands on projects dealing with the valuation and capitalization of digital content.
