Netflix: Back to the Future … eh … Broadcasting 🤛🏾
On Saturday, Variety reported that Netflix will be testing a broadcasting feature in France. The idea is that Netflix will serve you with…
On Saturday, Variety reported that Netflix will be testing a broadcasting feature in France. The idea is that Netflix will serve you with the kind of content that allows you to just lean back and not have to make choices.
“Maybe you’re not in the mood to decide, or you’re new and finding your way around, or you just want to be surprised by something new and different,” Netflix said in a statement announcing the new service.
This is a lot less surprising than you would think. In fact, we have worked on a couple of scenarios with clients last year that discussed precisely this outcome. There are several reasons for that.
Like René Schäfer replied in a Twitter conversation: There are only two ways to make money in business: One is unbundling, the other is bundling. He’s right. I’d just add the fact that re-bundling was always Netflix’s destiny. We will get to that in a second.
For those who are using Netflix on their TVs — as I do — the UX has been challenging, to say the least. Many complain about the fact that the auto-play previews are disturbing the experience. And this is true. But from Netflix’s perspective, it does exactly what it is designed to do: stop scrolling, start watching. The irresistible conclusion to content abundance is that many of Netflix’s users experience “choice-fatigue” and end up either switching to a different streaming service or doing something else. That’s, of course, unacceptable for Netflix. Hence the auto-play previews. Their sole purpose is to lure you into anything and everything. Netflix doesn’t care what you watch as long as you keep watching it.
Through unbundling the broadcasting and cable market, Netflix created a monster. Even for themselves. The problem is that people expect tailored content now. Netflix delivered in speed and velocity that hasn’t been seen previously. The downside of this endeavor has been an unprecedented amount of debt. Debt because they produce more content than anyone did ever before. In many cases, Netflix is prepared to pay extraordinary amounts to talent to ensure that they have both the content and brand recognition. The only way to get out of this mess, for them, is to make sure that their user base grows. While that doesn’t necessarily make the production of content cheaper, it allows them to be Wall Street’s favorites. As long as investors are happy, Netflix can borrow money less expensive than it should be legally possible for a company that already accumulated so much debt.
As of the end of March, Netflix reported $14.17 billion in debt. Most recently, the streamer raised $2.2 billion in debt last fall. The company in its Q1 2020 shareholder letter said “our current plan is to continue to use debt to finance our investment needs.”
That’s where broadcasting comes in. What if the future of Netflix isn’t a screen with an endless array of squares that ask you to make a choice? What if Netflix doesn’t have to push certain content on top? What if there are no auto-play previews? Imagine you select the Netflix app on your TV, and it auto-plays the kind of content you actually wish for.
Granted, this is not what they are testing in France right now, but this is precisely the kind of AI-magic-juju that they have to achieve to make sure that they can get themselves out of the mess of tailoring content for even the smallest target group.
Whether Netflix’s bottom-line vision for your future watching habits is achievable doesn’t matter at this point. Netflix has been great at managing the expectation of what consumers expect from everyone else and this will continue for the foreseeable future.