Case Study: Investigating Netflix

Netflix is an American subscription service and production company. It offers a library of films and television series through its own productions - Netflix Originals, as well as distribution deals with other producers, content providers, distributors, and creators. The company was co-founded by Marc Bernays Randolph and Wilmot Reed Hastings. Upon entering the market in 1997, Netflix initially sold and rented DVDs through the mail. As technologies developed, Netflix realised that there was a gap in the market amidst all the brick-and-mortar marketing methods, the company introduced streaming media and video on demand in 2007. Following the success of Netflix across America, the company had its first expansion to Canada in 2010, closely followed by Latin America, Central America and the Caribbean in 2011. Many people will credit shows like House of Cards, Orange Is The New Black or Arrested Development as the first Netflix Original show. However, that title actually belongs to Lilyhammer - a Norwegian American crime drama released in 2012. 

More recently in 2020, Netflix experienced an extraordinary growth, which added more than 36 million subscribers to pass 200 million subscribers across the world. In the 2020 first quarter returns published by Netflix, it was shown that the company gained 15.8 million subscribers in 3 months, as opposed to the forecasted 7 million. This was due to the Covid 19 pandemic triggering lockdowns worldwide, when most people were desperately looking for online entertainment whilst being stuck at home. However, following the newly released fourth quarter returns, it is shown that Netflix fell short of its projections for new subscribers - only adding 8.3 million new subscribers as opposed to the predicted 8.5 million. Overall, in 2021 the company experienced about a 50% decrease in growth, in comparison to its hugely inflated 2020 numbers.

A big reason why Netflix is struggling to secure its number one spot in the market is because of its competitors. According to the product life cycle theory (Vernon, 1966), there are four stages - introduction, growth, maturity, and decline. We have witnessed the introduction and growth of Netflix, and now the company is going into the third stage of maturing. At this stage, the sales volume reaches its pinnacle and the growth stifles. It is inevitable that a market will become oversaturated - the field will be more competitive, and a surge of new and innovative competitors will enter the market. The streaming service industry and more importantly Netflix, are currently at this stage of maturity. The main objective at this stage is to defend the market share while maximising the profit. In order to achieve this, many companies will form carefully curated business plans and strategies. Many of those strategies include building new features or products that emphasise differentiation, decreasing the prices of goods and services, offering incentives to customers to encourage usage, intensifying distribution to offer a wider variety of products, etc.

Netflix’s biggest competitors as of 2022 are Disney+, HBO Max, Paramount+, and Apple TV+; as well as older streamers such as Amazon Prime and Hulu. After the huge surge of demand for streaming services occurring in the first quarter of 2020, the most prominent streamer to come out on top is Disney+. Disney+ now has over 118 million subscribers. With the huge success of the Marvel Cinematic Universe films, Disney+ responded by releasing multiple TV series that canonical fit into the timeline of the MCU. Including the most watched season premiere - Loki, Wanda Vision, Agents of S.H.I.E.L.D, and Hawkeye. In doing so, Disney pushes the audience to subscribe and watch these shows, as Marvel fans would have the fear of missing out on the plot of the MCU if they had not seen the shows released on Disney+. 

However, the main reason why Netflix can still reign as the number one streaming service is because of its versatility. By providing a wide selection of media content, Netflix can successfully attract audiences from all socio-economic groups. According to Blumler and Katz’s Uses and Gratifications theory, each individual media consumer plays an active role in choosing and using the media. The consumer seeks out a media source that best fulfils their personal needs. This theory also assumes that the consumer has alternate choices, and the freedom to choose (Katz. et al. 1973). The Uses and Gratifications theory suggests that there are four core reasons why audiences respond to different media texts - diversion, surveillance, personal identity, and personal relationships. The more choice Netflix presents to its customers, the chances of audience fulfilment increases. If the consumers feel that their needs are being met through using Netflix, it is very likely that they will continue to subscribe and use the platform, instead of moving to another streaming service.

With the public moving from being a passive audience to an active audience, on demand streaming services are becoming much more appealing to the general public. Netflix provides a service in which viewers can have full control over what they choose to watch. The fact that Netflix does not play any adverts before or during any streams is also a major positive factor.

Netflix also derives its competitive advantage from their ability to offer each subscriber convenience and a personalised experience. Netflix’s own algorithm - the Netflix Prize, gathers data from subscribers’ location, watch history and ratings to develop a personalised feed unique to each individual user. Netflix then utilises machine learning and algorithms to generate a list of recommended shows to its subscribers. Over 80 percent of the films and TV shows people watch on Netflix are discovered through the platform’s recommendation systems. By providing a customised experience, Netflix can make their subscribers feel more valued, which inspires brand loyalty, therefore increasing subscriber retention rates.

The rise of Netflix proves how well this platform fits in with the current society and its cultures. As media become pervasive and ubiquitous, forming the building blocks for our constant remix of the categories of everyday life, they become invisible (Deuze, 2011). Many people have formed different routines and habits that involve Netflix, for example, some people watch Netflix on their phone every morning during their commute, some people watch Netflix every night when they have dinner, some people have movie nights every week with their family, some people even stream random shows at any time just to have some background noise. Consumers have become increasingly reliant on this platform, for better or for worse. 

On the other hand, there are people who have never experienced using, or even heard of Netflix. Although the barrier of entry might be considered low in comparison to paid TV channels or going to the cinema, there are still apparent barriers. Firstly, there are countries in the world where Netflix is not yet available, these include China, Crimea, North Korea, and Syria. Therefore anyone living in those countries cannot access Netflix, even if they have heard of the platform and wish to use it. Secondly, the subscription fee might be too high for some people. For Netflix UK, the cheapest monthly plan is £5.99, whereas the most expensive plan goes as high as £13.99. Argentina is the cheapest place in the world to get Netflix, with its basic tier subscription being just over $3 USD. On the other hand, Switzerland has the title of being the most expensive, with their lowest tier subscription costing over $13 USD.

Digital media affects society by playing a large role in processes of mediatisation. Mediatisation describes how media have become an increasingly entangled part of our realities, a process that is accentuated by digital technology (Lindgren, 2017, pp. 21). An example of this can be coming of age films and TV shows. As of right now, the target audience for this genre of media is generation Z - people born between 1997 and 2012. Young people in this age range are still in their self discovery phase and arguably the easiest to influence. Coming of age media all aim to portray the feeling of growing up and moving from childhood to adulthood. This is a universal feeling everyone has experienced at least once in their life. Some of the most watched programmes on Netflix are coming of age films and TV series, such as Stranger Things, 13 Reasons Why, Sex Education, and The Kissing Booth. However, the problem with most coming of age media is that they set unrealistic expectations, storylines are usually wildly exaggerated, and the stereotypes and cliches start to become more and more harmful. When 13 Reasons Why was released in 2017, It quickly became a viral internet sensation due to combined factors of media convergence, cross platform promotion, and fans of Selena Gomez - executive producer of the show, supporting their idol. The show’s plot revolves around high school student Clay Jensen and the aftermath of another high school student Hannah Baker’s suicide. Through its various storylines, the show explores and depicts a wide range of social issues affecting the modern youth. One of the main plot points is that before Hannah’s death, she leaves behind a box of cassette tapes in which she details the reasons why she chose to end her life as well as the people she believes are responsible for her death. The main issue with this show is that it romantises suicide. The look and feel of the show glamorises the act by portraying it as a clever revenge plan. Unfortunately, this fictional storyline dangerously trickled down to real life, influencing teenagers to essentially recreate Hannah Baker’s suicide. According to the Cenrtre for Suicide Research at Oxford University, the portrayal of suicidal behaviour in the media may have potentially negative influences and facilitate suicidal acts by people exposed to such stimuli (Hawton. & Williams. 2002). Shortly after 13 Reasons Why was released, a study published in the Journal of the American Academy of Child and Adolescent Psychiatry found that suicide among teenagers rose by 28.9% in the month after Netflix launched the show.

The impact Netflix has on this generation is also evident in pop culture, one particular example is a song from AJR’s album - titled Netflix Trip. Band member Ryan explained: “Netflix Trip is the one I connect to the most. It’s a song about The Office, the TV show… We’re enormous fans of the show and have been for like 10 years. The song is basically tracing different moments in my life, like my eighth grade graduation and when my grandpa died, and equating what season I was on in that moment in my life and how the show molded me.” Ryan’s experience is similar to what a lot of the current generation can relate to, developing a term called ‘the main character syndrome’ - this describes someone who presents or imagines themself as the protagonist of a film of their own life. This is very common and not inherently unhealthy. However this can also lead to a person being too self-centred, and slowly developing harmful individuality complexes or even narcissism. 

Netflix has undoubtedly established itself as one of the biggest household names of the twenty first century. The platform’s power to influence society is evident, as our everyday practises are increasingly being conditioned and manipulated. However, as society as a whole becomes aware of the control media has on us, we are also discovering ways to reclaim power by realising that individuals play an enormous role in constructing our social and cultural fields. 

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