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In Business, "Product not known is Product not sold." In Netflix's case, this seems to be one of many reasons why it seems not to understand its perspective on the streaming industry. From not understanding how its viewer base seems to provide free promotion to its service to not being able to properly gather back the return on investments that it has on its shows
Why so? To understand this, we need to understand the current landscape, "The Streaming Wars."
The Days of the DVD's and CD's
In the late '90s, watching any form of media, be it movies or series, was not an easy task (without pirating). Acquiring them in the form of DVDs meant purchasing them from a local retailer. Spending money on a couple of movies was not ideal.
So the solution to this? Rentals! Netflix was one of the few success stories to make the business model work. By offering DVDs as a Rental Service, they were able to garner a reasonable audience. This was right up until the explosion of the internet when the actual race was about to start.
The Internet Revolution
The internet was the next big thing in the early 2000s, and every major company wanted a piece of that pie, so they threw their shot at it to see if it sticks. The big names to make an immense profit from this were eCommerce sites like Amazon and eBay, emasculating an insane amount of growth in their following years.
Netflix was one of these companies to bandwagon on the train of the Internet revolution by introducing streaming to the general public through its rental model. While not being the first to come up with it (iTV being the first) but the most successful out of many.
Netflix being a leading force in the streaming industry meant it had to keep itself unique from its competition. Thus, apart from just offering rental streaming services, it had to bring in its shows that would be exclusive to the site. If these shows proved successful, it would allow it to stay relevant if any such big-name competitors were to join in on the race.
And join the race they did. Big international giants like Amazon and Disney participated in the streaming wars, along with many small companies like Hulu, HBO+, and Sling TV. Along with competition from local brands exclusive to specific countries, Netflix was stretched thin in its resources.
If Netflix wanted to win, it had to do something to stay relevant, so what did it do? It did what it knew best, 'Reinvesting.'
Your Greatest weapon can be a double-edged sword.
In essence, Netflix used the tactic of reinvesting. By using whatever resources it had generated to be poured into the new shows to ensure it had something fresh every season.
With competition growing ever wild, it was important for Netflix to stay relevant. Some shows had to click every season with the audience, but this, in turn, caused it to be its central problem.
Using its only generated income as a source to fund new shows causes the company to lack breathing space. So During Seasons, when the new show wasn't trending, it was a season of loss for the company's reputation.
Product not known = Product not sold
In Business, if your product is not marketed well, it's not sold. One of Netflix's other major problems is how its shows are promoted. Knowing how Netflix has built its profit cycle by reinvesting, this, in turn, creates a lot of shows, Shows that are very good in their own right but need a little bit of promotion for people to try them out.
Netflix doesn't do a good enough job when it comes to promoting the shows it produces. The last thing you want your customers to do is actively search for your product.
Binging is technically bad. (For-profit)
This is essentially one of the main reasons for Netflix's struggles as a business model in the long term. The way Netflix operates is by making a season's worth of episodes for a show and releasing them all at once, which doesn't sound like a bad thing. But this, in turn, removes a significant key factor for promotion. Free Fan promotion happens when passionate fans discuss on popular discussion platforms ( like Reddit ) or do promote by word of mouth (like chats with your friends).
A Show's popularity rises when it's still ongoing, peaks when it reaches its conclusion, and steeply declines afterward, which makes sense. As the show has concluded, there's not much to speculate about, and the only thing left to talk about is how good or bad the show was. When a show keeps going, it allows Passionate fans to talk and speculate. This allows the show to play with the audience's expectations and build valuable free promotion.
When your platform suffers from too many shows coming out at a rate faster than you can watch them,
what hits and doesn't hit the spotlight becomes a competition between your own products.
A Lesson in Marketing
The current model of Netflix, while struggling. will not cause its doom. But it will seriously act as an impediment in the future if this goes on. Netflix’s problem highlights how important it is for people to know what you sell, for your product to be sold. It helps us understand how important it is for people to remember your company’s presence and ultimately teaches us the value of customer interactions and how it's equally important to support it.
- Charan